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Sunday, 9 April 2017

Saudi banks overcome liquidity crunch but profits to shrink further | GulfNews.com

Saudi banks overcome liquidity crunch but profits to shrink further | GulfNews.com:

"The worst effects of the liquidity crunch that hit the Saudi Arabian banking sector in 2016 have subsided with fresh liquidity injections by the government into the banking system and reduced pressure from government’s domestic borrowing programmes, according to analysts. “The banks came through the period largely unscathed, with liquidity coverage ratios recovering and capital strength intact despite a dip in earnings. However, we expect profitability to continue declining in 2017, reflecting rising impairment charges and funding costs. Our analysis shows that liquidity metrics have recovered at banks that have reported their 2016 results,” said Andrew Parkinson, Director Financial Institutions at Fitch Ratings. Saudi banks’ average liquidity coverage ratio improved to 204 per cent by end-2016, down just one percentage point year on year, having dropped to 156 per cent at end-September 2016. The volatility of liquidity ratios highlights the concentration risk in many banks’ funding."



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