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Mohamed Damak

GCC banks on a recovery path in 2022: S&P

, January 11, 2022

Gulf Cooperation Council (GCC) banks are set to benefit from a regional economic recovery this year amid higher oil prices, still supportive government spending, and normalising non-oil activity.
 
"We expect banks' asset quality indicators to deteriorate only slightly as regulatory forbearance measures have helped the corporate sector to deal with the negative effects of the pandemic," said S&P Global Ratings credit analyst Mohamed Damak.
 
In our view, the nonperforming loan ratio will rise in the next 12-24 months without exceeding 5%, compared with 3.7% at September 30, 2021.
 
Furthermore, GCC banks should benefit from policy rate hikes in 2022 by the US Federal Reserve, which will prompt a similar reaction from GCC central banks given their currency pegs.
 
"Lower global liquidity is likely to have a limited impact on GCC banks thanks to their strong net external asset positions or limited net external debt positions. Qatar is more vulnerable than other countries due to its large and expanding net external debt position but there are some mitigants. Moreover, strong capitalisation and government support will continue to reinforce regional banks' creditworthiness," Damak concluded.-- TradeArabia News Service
 
  
 



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