Dubai – Mubasher: GCC banks’ outlook is stable and reflects strong financial fundamentals, while fiscal and geopolitical risks pose challenges, according to Moody's Investors Service report on Wednesday.
The report expected that GCC’ real gross domestic product (GDP) growth would rise to 2% in 2018, and that oil prices would stabilise between $50 and $60 per barrel (pb).
Although GCC governments will boost fiscal consolidation efforts, key regional infrastructure projects, as UAE Expo 2020 and the 2022 World Cup in Qatar, will support capital spending and credit growth, Moody’s remarked.
Moody’s noted that Banks' capital levels would maintain its stability above Basel III minimum regulatory requirements.
“In 2017, GCC governments injected liquidity from international debt issuances, thereby easing a lengthy funding squeeze, which had stemmed from low oil prices,” the report explained.
"The strong financial fundamentals in the Gulf banking systems makes the industry more resilient to lower profitability and weaker loan quality issues," Olivier Panis, a vice president and senior credit officer at Moody's commented.