The public revolts against regimes across the Middle East and North Africa from the beginning of last year have taken their toll on the profitability of the banking and financial services industry in the region. Bankers and analysts say the impact is likely to linger for many years.
Rating agencies and international organisations such as the Institute of International Finance (IIF) and the International Monetary Fund (IMF) have projected a gloomy outlook for the banking sectors of the affected countries, particularly Egypt and Lebanon.
Last month, rating agency Moody’s changed its outlook for Lebanon’s banking system to negative from stable. Moody’s cited slower economic growth following a sharp GDP deceleration in the first half of 2011; downside economic risks due to regional political uncertainty, particularly in Syria; and the banks’ asset and loan exposures to other regional countries experiencing political unrest and/or an economic slowdown such as Egypt and Jordan as the rationale for the rating action.
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