You are hereHome CountriesOman
Gulf banks will likely continue steady recovery from 2008 crisis through 2013 despite eurozone turmoil
Source: Standard & Poor's Ratings Services , Author: Posted by BI-ME staff
Posted: Wed July 4, 2012 1:58 pm

UAE. Standard & Poor's Ratings Services expects Gulf banks to continue their steady recovery from the 2008 crisis and remain isolated from eurozone turmoil for the rest of 2012 and 2013, according to its published report titled "Gulf Banks Shrug Off Eurozone Turmoil To Continue Steady Recovery From 2008 Crisis."
 
"We believe the trend of declining loan loss provisions will continue for most of the banks in the Gulf Cooperation Council, resulting in further recovery in reported net profits despite adverse conditions in the eurozone and international banking markets," said Standard & Poor's credit analyst Timucin Engin.
 
Since the start of the global financial crisis in 2008 and despite slower balance sheet growth, most Gulf Cooperation Council (GCC) banks have maintained healthy earnings generation before provisioning.

Even though pockets of risk persist, asset quality continues to improve, and as a result banks do not need to set aside as many provisions to cover their loan losses. This trend of better asset quality and lower loan loss provisions is fueling the improvement in earnings at most Gulf banks.

We don't expect the eurozone turmoil to have a big direct impact on the GCC banks because their net funding dependence on European banks, and external funding in general, is largely limited and manageable, in our view.

European banks have traditionally been fund providers in international credit markets and they are now contracting their overseas exposures as they are trying to preserve liquidity and capital in line with increasing regulatory requirements and the challenges in the eurozone.

"GCC banks' lending and investment exposures to the eurozone are also very limited and their high levels of capital are also a major strength, and provide an important cushion against unforeseen stress on asset quality," said Standard & Poor's credit analyst Paul-Henri Pruvost.
 
Apart from the Kingdom of Bahrain (BBB/Negative/A-3), other GCC members have remained largely insulated from the spillover effects of the political turmoil in other parts of the Middle East and North Africa.

The other five countries that make up the GCC are the United Arab Emirates (UAE, not rated), the Kingdom of Saudi Arabia (AA-/Stable/A-1+), the Sultanate of Oman (A/Stable/A-1), the State of Qatar (AA/Stable/A-1+), and the State of Kuwait (AA/Stable/A-1+).
 
The outlook for lending growth in Kuwait and the UAE remains limited, but is healthy for Saudi Arabia, Qatar, and Oman. For most GCC banks, funding profiles have improved visibly in the past few years on the back of declining balance sheet growth.

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: October 29, 2014
UAE. Total wealth in the GCC stood at US$ 1.7 tillion in 2014, up 4.75% from 2013; Total wealth in Saudi Arabia and UAE grew by 5%; Global household wealth up 8.3% to US$263 trillion, driven by the US and Europe, according to Credit Suisse Research Institute.
date:Posted: October 29, 2014
UAE. Significant increase in inflows of private capital into UAE in 2014; UAE seen as hub between Africa and Asia; Political stability remains a major factor driving flows; UAE clear winner in the region, as other GCC countries see net outflows of private capital.
date:Posted: October 28, 2014
INTERNATIONAL. Foreign policy is what a president wishes would happen; foreign affairs are what actually happen; the problem that Obama has, which has crippled his foreign policy, is that his principles have not been defined with enough rigor to provide definitive guidance in a crisis.
UAE. Total wealth in the GCC stood at US$ 1.7 tillion in 2014, up 4.75% from 2013; Total wealth in Saudi Arabia and UAE grew by 5%; Global household wealth up 8.3% to US$263 trillion, driven by the US and Europe, according to Credit Suisse Research Institute.
dhgate