First News
Volume:7, Number:25
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Business & Finance 3

GCC Banks to Benefit from Stable Crude Prices

The operating environment for GCC banks remains challenging but they will benefit from oil price stabilization while economic growth in 2017 will remain positive at two percent and slightly above 2016 levels (1.9 percent), Moody's Investors Service said

The stable outlook for 2017 on GCC banking sectors reflects the rating agency's expectation of their resilience to persistent economic and funding pressures. The ratings agency said GCC countries would continue posting fiscal and external deficits, which will lead to fiscal reforms. However the stabilization of Brent crude at an average of USD45/barrel for 2017 will ease fiscal pressures and we expect countercyclical spending policies, albeit reduced, to continue to support regional non-oil GDP growth, it said. Asset quality will remain solid overall for the GCC (non-performing loans at three to four per cent), while Moody's expects new problem loan formation and increased loan restructurings due to sluggish economic activity and tightening liquidity.

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