Asset quality holding up; stay Market Weight: GCC banks

Research evidence excerpt

FICC Research

Credit Research

20 August 2026

GCC banks

Asset quality holding up; stay

Market Weight

GCC banks delivered resilient Q2 results despite the ongoing

conflict, with limited impact from deferrals. Strong capital

and liquidity buffers continue to support the sector. We see

select trading opportunities in Qatar and UAE bank debt,

where valuations compensate for risk.

Trade ideas:

• Perps: Buy CBQKQD 6.25% perps outright or as a switch from NTBKKK 6.375% perps

• Tier 2s: Buy FABUH 36s Tier 2s; Sell NTBKKK 36s Tier 2s

• Seniors: Buy COMQAT 30s and EBIUH 5.125% 31s; Sell FABUH 5% 2031s

Key ratings changes:

• Upgrade: CBQ/COMQAT (OW from MW), FABUH (MW from UW)

• Downgrade: NTBKKK and ADCBUH (MW from OW)

Geopolitical risks persist, but sovereign buffers remain supportive

Geopolitics continue to be the key risk for the GCC credit complex given disruptions of trade in

the Strait of Hormuz1 . Banks we cover operate in UAE, Kuwait and Qatar. Of the three, Qatar

appears the most exposed, given limited near-term alternatives for LNG export routes and lower

sovereign buffers than Kuwait and the UAE. Kuwait looks somewhat less vulnerable, supported

by stronger sovereign buffers, while the UAE appears the least exposed of the three, benefiting

from its ability to partially bypass Hormuz, a more diversified economy and substantial

sovereign buffers2 .

The UAE sovereign wealth funds manage a combined c.$2.4trn in assets (as of April 2026)3 , in

addition to the UAE Central Bank FX reserves at $252bn (May 2026)4 . Kuwait's sovereign wealth

fund, the Kuwait Investment Authority, has c.$1.1trn5 of assets under management, alongside

This document is intended for institutional investors and is not subject to all of the

independence and disclosure standards applicable to debt research reports prepared for retail

investors under U.S. FINRA Rule 2242. Barclays trades the securities covered in this report for its

own account and on a discretionary basis on behalf of certain clients. Such trading interests

may be contrary to the recommendations offered in this report.