Saudi, U.A.E. Bank Revenues Seen Pressured by U.S. Rate Cuts - Bloomberg: Saudi Arabia and United Arab Emirates banks may have their annual revenue estimates cut by one or two percentage points for every 25 basis basis point decline in U.S. interest rates, according to Bloomberg Intelligence.
A 25 basis point cut in U.S. rates will pull down the net interest margin at banks by about 6 basis points, analyst Edmond Christou said in a report on Sunday. The margin is the difference between what a bank earns on assets such as loans and what it pays out on liabilities such as deposits.
Currencies in Saudi Arabia and the U.A.E. are pegged to the dollar, and the two countries usually follow interest-rate changes made by the U.S. Federal Reserve. The market is pricing in about a 75 basis point reduction in U.S. rates by year-end, data compiled by Bloomberg show.
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