Credit profile of GCC banks to weaken over COVID-19, lower oil prices | ZAWYA MENA Edition

Credit profile of GCC banks to weaken over COVID-19, lower oil prices | ZAWYA MENA Edition:

Standalone credit profiles of GCC banks are set to weaken following the coronavirus pandemic and the drop-in oil prices, Fitch Ratings said.

GCC governments announced stimulus packages for their banking sectors to mitigate the economic impact of the pandemic, but Fitch expects banks' profitability and asset quality to deteriorate, leading to pressure on some banks' viability ratings.

“GCC countries announced monetary, fiscal and macro-prudential stimulus measures dwarfing any previously seen in the region. These are equivalent to significant proportions of GDP and could be increased if the crisis deepens,” the ratings agency said.

For example, the UAE and Saudi Arabia announced support packages of $77 billion and $56.5 billion respectively. This is over 15 percent of GDP for the UAE and over 7 percent of GDP for Saudi Arabia.