GCC banks can weather the storm, but shareholders won’t be necessarily happy

Shareholders of GCC banks could be looking at a 50% cut to their 2026 dividends as execs look to shore-up their balance sheets against fallout from the war. A Bloomberg Intelligence estimate assumes a two-month conflict — and while it’s bad news for the shareholders, a two-month cushion suggests good fundamentals for GCC banks, which entered this period of heightened tension with robust Tier 1 capital and low NPLs.

Safety-first math: The sector is expected to take a 5-15% hit to its bottom line, driven by rising risk costs and cooling credit growth. By halving 2026 dividends, the industry could preserve an estimated USD 10 bn in capital. This move would effectively add roughly 50 bps to risk-weighted assets as an extra “safety margin.”

While giants like QNB and KFH sit on massive cushions, others are closer to the scrutiny zone of 13-14%. In the UAE, ADIB and DIB have tighter capital buffers that might necessitate dividend restraint. In Kuwait and Qatar, NBK and the Commercial Bank of Qatar have narrower margins than their local peers, making them prime candidates for capital reinforcement. And in Saudi Arabia, Bank Al Jazira and SAIB remain the most sensitive to capital shifts.

What’s next: To protect capital, banks are expected to pull back on non-essential corporate lending. This could potentially slow down private-sector projects as lenders focus their remaining capacity on strategic sovereign priorities.