Asia-Pacific banks continue to be stable despite lingering adverse market events such as the Middle East conflict and inflationary pressures, S&P Global Ratings said on Tuesday.

The region's banks have limited direct Middle East exposure, S&P financial institution ratings sector lead Gavin Gunning said.

Spillover effects from the conflict pose the greatest risk for the banks, with the indirect impact being manageable but increasing for certain economies, Gunning said.

S&P holds a stable outlook on 92% of rated Asia-Pacific banks, indicating stable trends over the next one to two years.

Financial institutions have ample buffers for war-linked constraints, although credit losses could increase by $180 billion under S&P's downside scenario.

Banks also face medium risk from the negative hit of technological advancements such as AI-linked cyber risks, S&P said.