GCC banks to navigate COVID-19, oil shock on strong earning capacity: S&P | ZAWYA MENA Edition

GCC banks to navigate COVID-19, oil shock on strong earning capacity: S&P | ZAWYA MENA Edition:

The GCC banks' strong earning capacity will help them navigate the shocks related to COVID-19 and oil price drops, S&P Global Ratings said in a note.

"Most rated GCC banks have relatively strong profitability and a conservative approach to calculating and setting aside loan-loss provisions," S&P Global Ratings credit analyst Mohamed Damak said.

"Overall, we estimate that rated GCC banks could absorb up to a $36 billion shock before starting to deplete their capital base. This corresponds to about 3x our calculated normalized losses, which implies a substantial level of stress in our view," Damak added.

S&P’s study was based on a sample of 23 rated commercial banks in the GCC with exposures predominantly concentrated in GCC countries. At year-end 2019, these banks' total assets reached $1.5 trillion.