The Fed’s Pivot: Implications for GCC Banking

As the U.S. Federal Reserve takes another step toward monetary easing, the GCC banking sector enters a shifting operating environment marked by easing funding costs and supportive credit conditions. However, narrowing interest margins, evolving liquidity dynamics, and intensified competition for deposit acquisition may weigh on profitability, even as balance sheets remain resilient. While strong capital buffers and sound asset quality continue to underpin sector stability, banks with diversified income streams and efficient cost structures are best positioned to navigate the evolving rate cycle and sustain profitability.