Slow Gulf economic recovery to have long-lasting impact on banks - S&P
- S&P 500, Dow climb for third day and close at records
- Tesla (TSLA) China Numbers 'Robust' - Wedbush
- Apple (AAPL) Shares Seen as 'Attractive' as Recent Checks Show Continuously Strong Demand - Citi
- Amazon.com warehouse workers vote to reject forming union in Alabama
FILE PHOTO: A man walks at the Dubai International Financial Centre, almost empty of people, following the outbreak of coronavirus disease (COVID-19), in Dubai, United Arab Emirates, March 18, 2020. REUTERS/Satish Kumar
Get instant alerts when news breaks on your stocks. Claim your 1-week free trial to StreetInsider Premium here.
DUBAI (Reuters) - Economic recovery from the coronavirus crisis in the oil-rich Gulf region will be slow, weighing on the region's banking sector, S&P Global Ratings said.
Gulf countries fell into a sharp recession last year as the COVID-19 pandemic affected vital non-oil economic sectors such as hospitality, commerce, and real estate, while lower oil prices hurt state revenues.
Events like Dubai Expo this year and the World Cup in Qatar next year, as well as a rebounding oil market, will provide some support but growth will remain below historical levels, S&P said.
"Indeed, most countries will not return to 2019 nominal GDP before 2023, with an even longer road for Saudi Arabia," it said in a report on Sunday.
Recovery in sectors such as aviation, tourism, and real estate will take time, and while vaccination programmes are progressing, there are downside risks due to mutations in the novel coronavirus.
These factor swill weigh on bank's asset quality with non-performing loans expected to increase, as well as on profitability, with some banks expected to post losses in 2021.
"We think that the measures implemented by most central banks in the region are supportive of liquidity but do not remove or reduce credit risk from the balance sheet of banks (yet)," said S&P.
"Cost of risk will remain elevated following a jump of 60% in 2020 as banks set aside provisions in preparation for more stress."
(Reporting by Davide Barbuscia; Editing by Bernadette Baum)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Kohl's (KSS) Sends Letter to Shareholders Featuring a Q&A with CEO Michelle Gass and CFO Jill Timm
- China's graft watchdog rebukes 'mukbang' binge-eating, drinking videos
- Two killed during anti-U.N. protests in eastern Congo protests, officials say