Profitability of GCC banks will continue to stabilise in H2 2021: S&P | ZAWYA MENA Edition
The profitability of banks across the Gulf Cooperation Council (GCC) has stabilised and will continue to do so for the rest of the year, according to a recent report from S&P Global Ratings.
The Gulf states are mitigating the economic impact of COVID-19, thanks to the high cost of risk and stable interest margin, as well as the government support and improving economic sentiment.
“Overall, GCC banks’ profitability stabilised in first-half 2021 due to still-high cost of risk and stable interest margins. In the absence of further shocks – pandemic or non-pandemic related – we expect this to continue in second-half 2021, aided by careful cost control,” S&P said in its report.
GCC banks’ capitalisation is also expected to remain supportive of their creditworthiness, the ratings agency said, although it raised concerns about the banking system in some states, including the UAE, which has high exposure to real estate and hard-hit sectors.
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