Asian banks have resumed lending to Gulf borrowers after months of caution from the ongoing Iran conflict, signalling renewed confidence in the region even as geopolitical risks still remain.
This renewed appetite for Gulf credit reflects the current situation facing lenders across Asia where there is abundant liquidity but a lack of attractive lending opportunities in their home markets.
According to reports, more than $6.8 billion in total deal requests have been made though it has not been disclosed how much will actually be provided.
Major Gulf borrowers, including Qatar National Bank, Boubyan Bank and Kuwait’s sovereign wealth fund, obtained financing from Asian banks and other lenders in August.
Meanwhile, Saudi Energy Co – the state-owned utility formerly known as Saudi Electricity – is in discussions to secure a $300 million loan that is expected to be led by a major Chinese lender, according to a document reviewed by Bloomberg.
Asian banks are still Gulf’s top financiers
Deals in the Gulf region took a pause after the United States-Israel war on Iran broke out, sharply deteriorating the Asian optimism for growth prospects for the Middle East, especially as momentum was slowing back home in Asian markets over intensifying competition.
It is well known that Japanese, Chinese and Singaporean banks have become the dominant Asian providers of cross-border loans to Gulf Cooperation Council (GCC) sovereigns, banks and corporates, with Saudi Arabia and the UAE attracting much of the capital.
Gulf borrowers received more than $17 billion from Asian lenders in 2025, according to data compiled by Bloomberg, a record and roughly three times the amount recorded in 2024.
Japanese megabanks Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group and Sumitomo Mitsui Banking Corporation (SMBC) have continuously leveraged decades-long relationships with sovereign wealth funds, energy companies and infrastructure developers across the GCC. They are consistently among Asia-Pacific’s leading syndicated loan arrangers and have taken lead roles in financing landmark projects across Saudi Arabia, the UAE and Qatar, including energy, transport and industrial infrastructure linked to Saudi Arabia’s Vision 2030 programme.
Meanwhile, Chinese banking giants Industrial and Commercial Bank of China (ICBC) and Bank of China have also expanded rapidly in the region, supporting Belt and Road-linked infrastructure and providing financing for sovereign and corporate borrowers across the Gulf.
Singapore’s leading banks are also strengthening their Gulf presence, with DBS, United Overseas Bank (UOB) and OCBC increasingly participated in syndicated loans for Gulf banks and corporates while expanding transaction banking, treasury and trade finance services for companies operating across Asia and the GCC. Their growing role was highlighted in recent financing deals for Qatar National Bank and Emirates NBD, where Asian lenders were among the core bookrunners and participants.
What lies ahead
As the financial momentum picks up again, the Middle East enters a new phase of capital demand driven by long-term economic diversification rather than short-term liquidity needs. The outlook for Middle East financing remains constructive, but lenders are expected to remain selective.
The International Monetary Fund (IMF) expects growth across the Gulf Cooperation Council (GCC) to slow to 2.0% in 2026 following disruptions to energy production and trade routes, before rebounding to 4.8% in 2027 as oil output normalises and economic activity strengthens. The broader Middle East and North Africa (MENAP) region is projected to grow 1.4% in 2026, recovering to 4.6% in 2027, highlighting the region’s resilience despite recent conflict-related shocks.
For Asian banks, the recovery story extends beyond oil as Gulf governments continue investing in infrastructure, logistics, renewable energy and digital transformation under long-term diversification plans. The World Bank estimates that non-hydrocarbon sectors now account for more than 60% of GCC GDP, creating sustained demand for syndicated lending, project finance and trade finance across the region.
The Gulf’s strategic importance to Asian lenders is also reinforced by its position at the centre of global trade and energy flows. The World Bank estimates that around 20% of global oil consumption and liquefied natural gas (LNG) trade passes through the Strait of Hormuz, making the region one of the world’s most important trade corridors despite ongoing geopolitical risks.
As supply chains stabilise and cross-border investment between Asia and the Gulf continues to expand, banks from China, Japan, South Korea and Southeast Asia are expected to deepen their presence across the region, supporting corporate clients with working capital, cross-border payments and large-scale infrastructure financing. While lenders are likely to remain selective in pricing geopolitical risk, the medium-term outlook suggests Gulf borrowing demand will continue to be underpinned by structural economic diversification rather than short-term market cycles.
