The international rating agency, Standard & Poor's, expected that during the next 18 months, Gulf banks will face the crises of declining profitability, deteriorating asset quality, and possibly increasing pressure to reduce operating costs through the implementation of merger deals. The agency built its forecast on the performance of Gulf banks on the basis that the world will be able to find an effective vaccine to control the Corona pandemic by the middle of next year, and stabilize oil prices around $50 a barrel during the year 2021.
Standard & Poor's also expected that the Gulf economies will grow by 2.4% during the next year compared to the contraction they are suffering from this year, which was estimated to reach 5.6% by the end of this year. Indicating that in the absence of a successful vaccine, the situation of Gulf banks will worsen. The rating agency focused its forecast on rated banks in the Gulf States, with a focus on Saudi, Bahrain and UAE banks.
Moody's, the US credit rating agency, expects the losses of Gulf banks to reach 13 billion dollars this year. It also expected the costs of bad assets to continue to rise due to the poor performance of many sectors of the economy and the absence of government support. It also disclosed that the low US interest rate adopted by the Gulf central banks contributes to the decline in the profitability of banks due to the weak profit margins of loans, noting that the Gulf currencies are linked at a fixed rate against the dollar.
Source (Al-Araby Al-Jadeed Newspaper, Edited)
