Covid pandemic to have 'long-lasting' impact on Gulf banking sector, says S&P - Arabianbusiness

Covid pandemic to have 'long-lasting' impact on Gulf banking sector, says S&P - Arabianbusiness

GCC banks' operating performance will remain constrained by the protracted recovery in key economic sectors and low interest rates despite the recent rally in oil prices and brighter near-term outlook, according to S&P Global Ratings.

In a new research note, S&P said it expects GDP growth in the Gulf countries will slowly recover from last year's sharp recession triggered by the Covid-19 pandemic and low oil prices.

However, the ratings agency added that it sees long-lasting adverse effects from the 2020 shock on GCC economies and banking sectors.

Over the past 12 months, GCC banks have set aside $10.9 billion of additional credit loss provisions for the expected negative impact of the Covid-19 pandemic and drop in oil prices on their economies.

Saudi and Qatar's banking sectors will be less affected than those in the UAE, Oman, and Bahrain, while in Kuwait the story will depend on the evolution of the fiscal impasse, S&P said.