MUSCAT: Banks in the GCC region should breathe a little easier in the year ahead, according to a report published by S & P Global Ratings on Tuesday. After two years of significant pressure, S & P believes that barring unforeseen events, 2018 will mark the stabilisation of the financial profiles and performance of the GCC banks. What’s more, the GCC banks will have recognised most of the impact of the softer economic cycle on their asset quality by mid-2018. That’s except for Qatar, where trends in asset quality will depend on how the boycott of the country evolves. Relatively sluggish economic conditions will also keep lending growth muted, as we do not expect oil prices to rebound significantly,’ the ratings agency said in a report titled ‘GCC Banks Should See A More Stable Financial Footing In 2018′.
It said that GCC banks’ cost of risk will increase in 2018 because of the adoption of IFRS9 and the higher amount of restructured and past due but not impaired loans sitting on their balance sheets. ‘However, we also think that the general provisions that the GCC banks have accumulated over the years will help a smooth transition to the new accounting standard.’ S & P said GCC banks’ liquidity improved in 2017 and it does not foresee a major change in 2018.
