In the wake of the biggest global financial crisis in living memory, came the Arab Spring and six months of violence across the Middle East and North Africa (MENA) region. It has been a tough two years for the banking behemoths of the Gulf, and a report published this month by ratings agency Standard & Poor's (S&P) suggested that while Gulf banks were relatively stable and could look forward to improved prospects, sluggish loan growth and difficult funding conditions would ensure a slow, painful recovery from the financial crisis.
The ongoing political troubles across the MENA region pose only a minor risk to Gulf banking institutions, S&P said, as the majority of GCC banks covered by the agency have limited operations and exposures to those "underbanked" economies. Nevertheless the ratings agency could not rule out a further real estate correction, and noted that nonperforming loans (NPLs) have risen in Bahrain and theUAE.
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