Dubai - Mubasher: The weak economic environment will continue weighing on the financial profiles of banks in the Gulf Cooperation Council (GCC) countries in 2017 and 2018, said a recent report published by S&P Global Ratings.

"The end of the commodities super-cycle has resulted in a significant decline in the economic prospects of the GCC region, implying lower growth opportunities for its banking systems and deteriorating liquidity," said S&P global Ratings credit analyst Mohamed Damak.

The end of the commodities boom has also increased the pressure on GCC banks' asset quality and profitability indicators, added Damak.

"Although we expect to see further weakening in some of these indicators in 2017-2018, we think that GCC banks have built sufficient buffers to make the overall impact on their financial profiles manageable," said Damak.

The report mentioned that the rated banks in the GCC continued to display good asset quality indicators, profitability, and capitalization in 2016 by global standards, albeit with signs of deterioration from 2015.

S&P also stated that it has taken a few negative rating actions in other GCC countries; these were primarily for idiosyncratic reasons.

“While we have taken a few negative rating actions in other GCC countries, these were primarily for idiosyncratic reasons. Overall, 31% of our rated banks in the GCC have negative outlooks or are on CreditWatch with negative implications," noted Damak.