GulfBase Live Support
Leave a message and our representative will contact you soon
30/03/2016 10:54 AST
Persistently low oil prices continue to pressure the funding environment for banks across the Gulf Cooperation Council (GCC) countries, says Moody's Investors Service in a report published today, outlined below.
The impact of low oil prices on GCC banks' stand-alone profiles has so far been most accute in terms of more challenging liquidity conditions, reflecting increasing government borrowings, reduced deposit inflows and rising interest rates.
"Lower oil revenues are driving tightening of liquidity in the GCC, with overall deposit growth slowing down significantly to around three per cent in 2015 from around 10 per cent in 2014," says Nitish Bhojnagarwala, an Assistant Vice President at Moody's and author of the report. "Moreover, liquid asset buffers are broadly expected to decline by around 20 per cent across the region over 2016," he adds.
Although liquid asset buffers remain sound at around 20 per cent-25 per cent of total assets, these trends are driving up market funding levels of domestic banks, increasing their overall cost of funds and dampening profitability.
"While credit growth has slowed in the region due to lower GDP growth combined with falling business and consumer confidence, impact on loan performance so far has been limited and capital buffers remain robust," adds Nitish.
The report also highlights that GCC governments are increasingly financing their fiscal deficits through the banks. "The banking system exposure to their respective sovereigns is increasing, such lending is broadly supportive of bank solvency profiles given the high credit quality and higher yields associated with the new longer term borrowing" says Khalid F. Howladar, a Senior Vice President at Moody's."However, such borrowing can reduce the availability of bank credit to the private sector and increase concentration," he adds.
Moody's notes these pressures vary across the region and when combined with the pressures stemming from strong sovereign linkages drove our recent action to downgrade majority of banks in Oman and Bahrain and place the ratings of 31 banks under review for downgrade in all six countries on March seven 2016.”
CPI Financial
Ticker | Price | Volume |
---|---|---|
SABIC | 114.77 | 5,915,941 |
05/04/2018
Saudi Arabia's Public Investment Fund (PIF) has signed an agreement with Six Flags to develop and design an amusement park in Riyadh. Six Flags, the world’s leading international amusement park compa
Arab News
05/04/2018
In an exclusive interview with Arab News, Turki Mohammed Al-Shehri explains how an expanding renewables industry will boost employment as well as pave the way for a greener future.
A massiv
Arab News
05/04/2018
Dubai’s residential property market continued to soften in the first three months of this year, in line with analysts’ forecasts, with rental values recording a more pronounced fall than sales prices
The National
05/04/2018
Buoyed by a strong oil price of $70 per barrel, Saudi Arabia’s Tadawul shot up by over 6 per cent in March 2018, according to Kuwait Financial Centre’s (Markaz’s) recently released Monthly Markets Re
Times of Oman
05/04/2018
Qatar banks’ combined credit facilities to real estate sector rose by QR17bn to QR147.7bn in 2017. The banks’ credit to various sectors stood at QR911bn at the end of 2017, up from QR839bn recorded i
The Peninsula