Fitch Ratings said there would be continued asset-quality and profitability pressures for Islamic banks across the GCC, but capital buffers and liquidity is expected to remain stable and adequate for the risks.
The Ministers of Finance of the Kingdom of Saudi Arabia, the United Arab Emirates, the State of Kuwait…
173 | the publication reaches you by | Bahrain News“The Negative Outlook on the Saudi sovereign and pressures on the Saudi operating environment result in Negative Outlooks on the Saudi Islamic banks,” said the Fitch report, which focuses on the 2021 outlook for GCC Islamic banks.
“This reflects the continued weakening of the sovereign’s fiscal and external balance sheets, which has been accelerated by the coronavirus pandemic and lower oil prices despite the government’s strong commitment to fiscal consolidation.
“Fitch has Stable Outlooks on all other rated Islamic banks in the GCC. This mainly reflects stable sovereign ability to provide support to domestic Islamic banks.”
The ratings agency said GCC Islamic bank ratings are highly sensitive to sovereign pressures as potential sovereign support drives 88 percent of their long-term issuer default ratings, reflecting the strong record of sovereign support.
Writing by Imogen Lillywhite
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The Arab states of the Persian Gulf are the seven Arab states which border the Persian Gulf, namely Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).This excludes the non-Arab state of Iran. All of these nations except Iraq are part of the Gulf Cooperation Council (GCC).
