Rated Gulf banks can absorb up to $36 billion shock before moving into red: S&P - Reuters

Rated Gulf banks can absorb up to $36 billion shock before moving into red: S&P - Reuters:

Rated banks in the Gulf can absorb up to a $36 billion shock before depleting their capital bases, S&P Global Ratings said on Sunday, adding that banks in Bahrain, Oman and the United Arab Emirates are the most vulnerable to increases in cost of risk.

The ratings agency said the relatively strong profits of the region’s rated banks and loan-loss provisions will help them weather the double shock of the coronavirus pandemic and the collapse of oil prices.

The $36 billion shock that S&P estimates banks can absorb is about three times the agency’s calculated normalised losses, “which implies a substantial level of stress,” it said.

S&P said it expected banks’ profitability to suffer in 2020 due to the pandemic and low oil prices.