Gulf banks to benefit from financial buffers

Updated 06 December 2017
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Gulf banks to benefit from financial buffers

LONDON: Gulf banks are expected to benefit from an uptick in the regional economy next year, according to Moody’s.
The credit ratings agency said the outlook for GCC banks was stable — reflecting strong financial fundamentals, particularly in the largest banking systems.
Still, fiscal and geopolitical challenges remain for some economies in the Gulf, it said in a report released on Wednesday.
It forecasts that real GDP growth in the region will pick up slightly to around 2 percent in 2018 from no growth in 2017, as oil prices stabilize between $50 and $60 a barrel.
“Although fiscal consolidation efforts in the region will persist, key regional infrastructure projects, such as UAE Expo 2020, World Cup Qatar 2022 and the Saudi National Transformation Program will support capital spending and credit growth which should expand by 5 percent in 2018,” Moody’s said.
Low cost and stable funding, combined with elevated liquidity buffers will remain a credit strength of GCC banks.
In 2017, governments injected liquidity from international debt issuances, thereby easing a lengthy funding squeeze which had stemmed from low oil prices.
“The strong financial fundamentals in the Gulf banking systems makes the industry more resilient to lower profitability and weaker loan quality issues,” said Olivier Panis, a vice president and senior credit officer at Moody’s.
“Nonetheless, fiscal and geopolitical risks pose challenges in Qatar, Oman and Bahrain.”
Individually, in the UAE, Saudi Arabia and Kuwait, which account for around three quarters of GCC banking assets, the outlook is stable.
However Bahrain and Oman are more weakly positioned.
In Qatar, a diplomatic row with several other GCC members has severely impacted trade and tourism, putting pressure on banks’ loan quality, Moody’s said.
Problem loans for the region’s banks are expected to increase next year following sluggish economic activity in 2017, and banks remain vulnerable to high borrower and sector loan concentrations.


More Saudi sectors opened to foreign investment

The Cabinet amended the sectors excluded from foreign investment at the meeting chair by King Salman. (SPA)
Updated 24 October 2018
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More Saudi sectors opened to foreign investment

  • The amendment allows foreigners to invest in labor services and jobs, including recruitment offices; audio and video services; road transport services; and brokerage services for real estate

RIYADH: Saudi Arabia will allow foreigners to invest in audiovisual services, land transport and real-estate brokerages, the Cabinet decided on Tuesday.

The Cabinet amended what it described as types of activity that had been previously excluded from foreign investment, after concluding its weekly meeting chaired by King Salman.

The amendment allows foreigners to invest in labor services and jobs, including recruitment offices; audio and video services; road transport services; and brokerage services for real estate.

Meanwhile, about 320 foreign institutions have registered as qualified foreign investors in the Saudi stock market, the exchange’s chairwoman told the Future Investment Initiative in Riyadh.

Sarah Al-Suhaimi, chairwoman of the Saudi Arabian stock exchange (Tadawul), said 200 more are expected to register.

Global index provider MSCI classified the Saudi equity market as an emerging market in June, a move expected to attract billions of dollars of passive funds.

Al-Suhaimi said she expected the number of qualified foreign investors to increase before and after the inclusion in the index, which is expected to happen in phases coinciding with index reviews in May and August 2019.