GCC bank profits expected to moderate in next two years | GulfNews.com

GCC bank profits expected to moderate in next two years | GulfNews.com:



"GCC banks continue to operate with healthy profitability metrics despite the low interest rate environment they have been operating.



Banks continue to face low net interest margins (NIMs) due to low rates and margin squeeze on account of competition. NIMs have contracted by over 25 basis points in the past five years. The return on average assets for the 26 banks S&P rate was close to 1.85 per cent at the year-end 2014.



“Banks continue to benefit from their good efficiency, with a low cost of labour, limited distribution networks, and the absence of income tax. In the meantime, we expect some decline in profitability in 2015 and 2016 as the squeeze on margins continues and as credit losses begin to gradually increase from their current levels,” said Standard & Poor’s credit analyst Timucin Engin."



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