A major regional bank reported that fallout from the Middle East conflict on loan quality has been milder than initially provisioned for, with borrowers, particularly SMEs, showing limited signs of financial stress despite ongoing geopolitical volatility. This matters because it signals continued resilience in business lending and credit conditions even amid external shocks, though the bank noted a slight softening in SME loan applications as competition from lower-cost manufacturers squeezes margins. SMEs and corporate borrowers may be affected as the bank maintains a cautious but supportive stance, continuing to monitor the situation while keeping its full-year growth and credit guidance unchanged.

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