gulfnews : Gulf banks' profit, loan growth likely to remain under pressure

The financial crisis of 2008-09 and the preceding boom have left a large share of Gulf banks' loan portfolios impaired. The 2011 third quarter results of regional banks show that even after three years into the global crisis, balance sheets of the region's lenders are saddled with high levels of non-performing loans (NPLs) and profitability is likely to be subdued during the next two years, according to analysts and rating agencies.

Despite such a weak outlook, analysts say, Gulf banks are systemically strong.

"Some of the key financial soundness indicators suggest that banking systems are generally well-capitalised and that provisioning levels are satisfactory. Capital adequacy ratios are in double digits. Loan-loss provisions cover more than 80 per cent of NPLs on average," said George Abed, Institute of International Finance (IIF) Senior Counsellor and Director for the Middle East and Africa.

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