Fitch Ratings revealed that the rate cut during the fourth quarter of 2024 to 2026 will be negative for the profits of most Gulf banks due to the repricing of interest-bearing assets (IEAs) faster than interest-bearing obligations.
UAE banks are likely to be the hardest hit, unlike Saudi banks, which are likely to be the least affected due to the high share of financing at a fixed interest rate, although the impact on each bank will depend on its level of funding for individuals.
Kuwaiti banks typically experience a greater negative impact on net interest margins when interest rates fall, however, Fitch believes that CBK's actions may help mitigate this negative impact, and in addition, lower interest rates are likely to be more moderate in Kuwait than in other GCC countries due to the peg of Kuwait's currency to a basket of currencies.
