Islamic Banks’ Outlook in EMEA Remains Neutral for 2026 – Fitch
Fitch Ratings has a ‘neutral’ 2026 sector outlook for Europe, the Middle East and Africa (EMEA) Islamic banks, which reflects continued solid economic conditions.
In non-rating commentary note, Fitch expects Islamic banks to maintain solid liquidity, adequate capital buffers, and stable asset quality. It noted that strong credit growth in core Islamic banks will likely remain strong despite moderating from 2025 levels.
Fitch said two-third of its rated Islamic banks in EMEA have investment-grade Issuer Default Ratings (IDRs), the majority of which are driven by potential sovereign support (59%).
It added that Banks’ standalone creditworthiness, as shown by their Viability Ratings, drives a further 21%, while shareholder accounts for another 21%.
The wide distribution of IDRs from ‘A+’ to ‘CCC’ – the lowest being in Iraq – mostly reflects domestic sovereign ratings, Fitch explained.
Two Saudi banks were upgraded in 2025 on Fitch’s view of their higher domestic systemic importance.
The rest of the upgrades were for banks in Turkiye, and these reflect Fitch’s improved assessment of the Turkish operating environment and authorities’ stronger ability to support the banking sector in foreign currency.
Fitch expects EMEA Islamic banks’ market shares to continue growing in established markets, supported by sharia-sensitivity, higher awareness and supportive regulations.
In markets where Islamic banking is still nascent, the ratings agency said organic growth should also drive market share expansion.
It revealed that core Islamic finance markets led emerging-market US dollar issuance in 2025. The GCC and Turkiye were major contributors, driven by large financing needs, diversification and maturities.
Fitch analysts said they expect continued emergence of new Islamic digital banks, such as Tam in Kuwait, D360 and Vision in Saudi Arabia and NOMO, a UK Sharia-compliant digital banking operator.
Consolidation will continue to shape the market, particularly when it comes to smaller Islamic banks with weaker franchises. # Islamic Banks Outlook in EMEA Remains Neutral for 2026 U.S. Energy Agency Raises Crude Oil Price Forecast
