Gulf banks' capital expected to remain high, says S&P report
Source: Standard & Poor's Ratings Services , Author: Posted by BI-Me staff
Posted: Tue June 26, 2012 4:00 pm

INTERNATIONAL. Banks in the Gulf Cooperation Council (GCC) region have capitalization that generally exceeds their international peers', says Standard & Poor's Ratings Services in its report "Gulf Banks' Capital Positions Compare Well With Those Of Global Banks," published today.
 
Our risk-adjusted capital (RAC) framework, which we use to measure banks' capital adequacy, indicates that the average RAC ratio for GCC banks stood in the 12%-13% range as of end-December 2011--about 5 percentage points higher than the 7.4% average we projected for the 100 largest banks we rate in September 2011.

"We believe there are two primary factors underlying GCC banks strong capitalization metrics," says Standard & Poor's credit analyst Paul-Henri Pruvost.

"First, banks in all GCC countries, except Saudi Arabia, must maintain regulatory capital adequacy ratios above 10%. In addition, GCC banks tend to operate with substantial headroom ranging from 3% to 23% for the banks we rate," added Mr. Pruvost.
 
While GCC banks tend to outdo their larger international peers in terms of capitalization, they have weaker risk positions. Their risk profiles include sizable single-name, sector, and geographic concentration in countries that have higher economic risk than more mature markets in Western Europe or North America.

Still, these risks aren't sufficient to threaten their capital positions, which we expect will remain broadly stable over the next two years. This is because we forecast subdued growth in risky assets, particularly corporate financing, combined with a gradual recovery in internal capital generation thanks to reduced impairment charges.

Our expectations for GCC banks reflect this: 21 of the 26 GCC banks we rate have stable outlooks.

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: January 23, 2018
DAVOS. Optimism in global economic growth reaches record level and rises in all countries; US reinforces its lead on China as a target market for growth in 2018; Terrorism, geopolitical uncertainty, cyber and climate change rise as threats to growth.
date:Posted: January 23, 2018
DAVOS. Global research explores C-suite views on readiness for the impact of the Fourth Industrial Revolution on society, strategy, the workforce and technology investments.
date:Posted: January 23, 2018
BOSTON. Apple, Google, Microsoft, Amazon, and Samsung top the list of the world's 50 most innovative companies, according to The Boston Consulting Group; Growing digital divide between strong and weak innovators on digital design, mobile capabilities, Big Data, and speed of adopting new technology.
DAVOS. Optimism in global economic growth reaches record level and rises in all countries; US reinforces its lead on China as a target market for growth in 2018; Terrorism, geopolitical uncertainty, cyber and climate change rise as threats to growth.
dhgate