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Gulf banks' outlook seen stable amid regional economic recovery, higher oil prices

Gulf banks' outlook seen stable amid regional economic recovery, higher oil prices
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Mubasher: Moody's Investors Service expected the outlook for GCC banks to be stable over the coming 12 to 18 months, backed by economic recovery in the region as well as higher oil prices, according to a report on Tuesday.

The Gulf lenders’ credit profile is enhanced by high capital buffers, solid profitability, in addition to improving economic conditions.

Meanwhile, unexpected fiscal measures, lower oil prices, and future COVID-19 variants would form a risk to the stable outlook; this could lead to imposing lockdown measures once again.

The banks’ credit growth will likely be backed in 2022 in line with implementing regulatory measures and large infrastructure projects.

Ashraf Madani, a Vice President - Senior Analyst at Moody's, said: "Banks' asset quality will remain high, even as non-performing loans rise slightly as repayment holidays expire.”

Loan performance is expected to weaken as payment holidays expire. The UAE and Bahrain are forecast to see the heaviest impact, which is likely going to be less pronounced in Qatar and Kuwait.