DUBAI (S&P Global Ratings) – Gulf Cooperation Council (GCC) banks face less favorable operating conditions, but fundamentals remain supportive, according to our latest report.
"Banks In Major GCC Economies Remain Resilient To Less Supportive Operating Conditions," published today, covers the banking systems in Saudi Arabia, the UAE, Qatar, and Kuwait. We expect that GCC banks' capital buffers will remain comfortable, while a slowdown in credit growth and higher earnings will contribute to GCC banks' stable capital metrics.
In the short term, however, rising interest rates and OPEC oil production cuts will constrain growth prospects for GCC banks.
"Despite a slight deterioration in asset quality indicators and an increase in the cost of risk, we expect GCC banks will report stronger profitability in 2023. This is because of higher net interest margins and generally lower-cost business models," S&P Global Ratings credit analyst Zeina Nasreddine said.
