Bahrain
Banking sector profile — Middle East & North Africa
Data as of September 2026 • TGB Intelligence Unit
Policy rate as of 7 October 2026: 4.50% (source: Central Bank of Bahrain)
Banking sector at a glance
Structure and performance
Bahrain is a regional wholesale and Islamic banking centre with a small domestic economy. The Central Bank of Bahrain (CBB) licensed 83 banks in January 2025: 29 retail banks (13 locally incorporated, 16 foreign branches) and 54 wholesale banks, 15 of them Islamic. Banking-system assets were US$249.0bn in July 2026, about five times GDP, split almost evenly between retail banks (US$125.3bn, or BD47.1bn) and wholesale banks (US$123.6bn). Foreign assets account for 58% of the total, reflecting the offshore orientation of the wholesale segment.
Retail banks are the main channel of domestic intermediation. In July 2026 loans to non-banks were 28.7% of retail-bank assets, private-sector deposits made up 65% of their deposit base and dinar deposits 58%; domestic loans totalled BD11.3bn in April 2026. Islamic banks held US$69.6bn of assets, 28% of the system. The largest Bahrain-headquartered groups, Bank ABC and Al Baraka Group, have extensive operations abroad, while Al Salam Bank, National Bank of Bahrain (NBB), which owns 80.21% of Bahrain Islamic Bank, and BBK lead the domestic market.
Prudential metrics for locally incorporated banks are sound. The sector capital adequacy ratio was 21.3% in June 2026, with Tier 1 capital of 20.1%, and the non-performing loan ratio was 2.8%, with specific provisions covering 57%. Return on equity was 10.3% and return on assets 1.1% in 2025. Dinar interest rates track the US Federal Reserve under the currency peg: the CBB raised its overnight deposit rate to 4.50% from 4.25% in September 2026, following the Fed's first increase since 2023.
The main vulnerability is the sovereign. Public debt is high, S&P rated Bahrain B with a stable outlook in November 2025, and banks' domestic claims on general government were US$27.2bn in July 2026. The 2026 regional conflict added pressure: the CBB launched a loan-deferral and liquidity programme in April and the UAE provided an AED20bn (US$5.4bn) currency swap. Consolidation is advancing, with NBB and BBK negotiating merger terms and Standard Chartered planning to exit retail banking in Bahrain.
Structural trends
The shifts shaping banking in Bahrain.
Wholesale deleveraging: wholesale banks' assets fell to US$123.6bn in July 2026 from US$134.8bn at end-2025, while retail banks' assets rose to BD47.1bn from BD45.0bn.
Islamic banking scale: Islamic banks held US$69.6bn of assets in July 2026, 28% of the banking system, up from US$65.3bn a year earlier.
Domestic consolidation: NBB raised its stake in Bahrain Islamic Bank to 80.21% in February 2026 and submitted proposed merger terms to BBK on 26 April 2026.
Capital build-up: the sector capital adequacy ratio rose to 21.3% in June 2026 from 19.7% at end-2023, while the NPL ratio eased to 2.8% from 2.9%.
Leading institutions
Largest banks in Bahrain by total assets.
| # | Bank | Total assets (US$) | Type |
|---|---|---|---|
| 1 | Bank ABC (Arab Banking Corporation) | US$49.9bn | Commercial |
| 2 | Al Baraka Group | US$31.0bn | Islamic |
| 3 | Al Salam Bank | US$21.4bn | Islamic |
| 4 | National Bank of Bahrain | US$16.6bn | Commercial |
| 5 | BBK (Bank of Bahrain and Kuwait) | US$13.2bn | Commercial |
| 6 | GFH Financial Group | US$12.2bn | Investment |
Total assets, latest audited financial year (FY2025), consolidated; Bahrain-headquartered banking groups; BHD figures converted at the peg of BHD0.376/US$
Supervision and capital rules
The CBB is the single regulator for banks, insurers, investment firms and capital markets under the Central Bank of Bahrain and Financial Institutions Law No. 64 of 2006, applying a detailed Rulebook with separate volumes for conventional and Islamic banks. Basel III capital, leverage and liquidity standards, including the LCR and NSFR, are embedded in the Rulebook. Deposits and unrestricted investment accounts of individuals are protected up to BD20,000 per depositor through pre-funded schemes introduced under Resolution No. 34 of 2010. The Bahrain Open Banking Framework was launched in 2020 and the CBB licenses crypto-asset service providers. In April 2026 the CBB cut the reserve requirement to 3.5% from 5.0% and temporarily lowered LCR and NSFR minimums to 80%.
What changed in 2026
- April 2026: the CBB launched a loan-deferral and liquidity programme on 13 April, offering three-month instalment deferrals, unlimited dinar liquidity against eligible collateral for six months, a reserve requirement cut to 3.5% and LCR and NSFR minimums of 80%.
- April 2026: the UAE and Bahrain agreed an AED20bn (US$5.4bn) currency swap on 8 April.
- June 2026: Standard Chartered announced plans to sell its Bahrain wealth and retail banking business over 18–24 months, retaining corporate and investment banking.
- September 2026: the CBB raised its overnight deposit rate by 25bp to 4.50%, effective 17 September, following the US Federal Reserve.
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