Immaterial Direct Global Banking Exposures to the Middle East, but Further Escalation May Dampen Economic Growth

Tensions continue to escalate in the Middle East with fears of a wider conflict rising dramatically over the past several days.

-- While no banks in our global coverage universe have any material direct exposures to this geographic region, knock on effects from a wider conflict could be considerable.
-- A wider conflict could lead to an oil price shock that would complicate the outlook for inflation and dampen spending by consumers and businesses.
-- Nonetheless, we see no near-term adverse impact to our banking global credit ratings.

"If economies do deteriorate, loan loss provisioning/the cost of risk will likely increase, pressuring profitability," said Michael Driscoll, Credit Rating Officer, Global Financial Institution Ratings. "However, we do not expect any imminent impact on our credit ratings."