GCC Islamic banks to maintain improved asset quality and profitability | ZAWYA MENA Edition

GCC Islamic banks to maintain improved asset quality and profitability | ZAWYA MENA Edition:

"The credit fundamentals of Islamic banks operating in the Gulf Cooperation Council countries have converged with those of their conventional peers and they should maintain their improved asset quality and profitability in the coming year, Moody's Investors Service said. However, the Islamic banks' still high loan concentration to real estate-related sector and higher asset growth remain key moderating factors in Moody's assessment of their standalone profiles. "Islamic banks operating in the Gulf Cooperation Council countries have benefited from sustained growth in their franchises in recent years. Their solvency has improved, supported by their efforts to reduce the stock of problem loans, and by their sound profitability. While both Islamic and conventional banks in GCC countries reported non-performing loan (NPL) ratios of around five per cent at the end of 2011, Islamic banks reported a larger decline in subsequent years, to around 2.1 per cent at the end of 2017, compared to 2.9 per cent for conventional banks,” said Nitish Bhojnagarwala, Vice President—Senior Analyst and author of the report, Islamic banks - Gulf Cooperation Council, Islamic banks' fundamentals converging with conventional peers.  "



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