Gulf Arab banks, including those in Saudi Arabia and the United Arab Emirates, are likely to report lower loan and investment losses in 2011 because impairments due to the global credit crisis have peaked, Fitch Ratings said.
"Lower impairment charges and cost control should lead to a gradual improvement in profitability, but revenue growth will be more difficult to achieve," the ratings agency said in an e- mailed report today. "Loan growth has been generally low, as the banks remain cautious and there is limited demand, but Fitch expects revenue to increase as infrastructure projects come on stream, stimulating the local economies."
Governments in the six-nation Gulf Cooperation Council, which also includes Kuwait, Qatar, Bahrain and Oman, are boosting spending on infrastructure projects. Oil prices above $90 a barrel will support the spending plans, Fitch said. The six GCC nations supply about a fifth of the world’s oil.
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