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Saudi Arabia and the UAE are expected to post strong credit growth next year on the back of high oil prices, according to Fitch Ratings.
The increase will also be supported by continued expansion in the non-oil sector. Lending activity in most other countries will likewise pick up in the coming new year.
Overall, banks across the Middle East are forecast to have a “neutral” outlook as economic conditions improve across the region.
Nearly two-thirds of Fitch-assigned Issuer Default Ratings (IDRs) for regional lenders are investment grade, mainly due to sovereign backing, as well as creditworthiness.
In Egypt, banks are projected to have a positive outlook, thanks in part to continued growth in the country’s real gross domestic product (GDP). The outlook is also due to a projected significant decline in consumer prices, strengthening of the domestic currency, as well as higher investor sentiment, among other factors.
On the earnings front, lenders in the region are due to report “sound profitability” next year.
(Writing by Cleofe Maceda; editing by Seban Scaria)
