2017 Outlook: Gulf Cooperation Council Banks

...Negative Rating Outlook: Fitch Ratings has a Negative Outlook on 30% of its rated banks in the Gulf Cooperation Council (GCC) region; most others are on Stable Outlook. The Negative Outlooks are largely driven by sustained low oil prices, which weaken sovereign ability to provide support and rationalise government spending, ultimately affecting banks' financial metrics. This does not in any way reflect lower sovereign propensity to provide support. Negative Sector Outlook: The 2017 sector outlook for GCC banks remains negative as weaker economic growth will feed through to credit fundamentals. Low oil prices continue to pressure bank liquidity and is also taking its toll on asset quality and earnings. Low Oil Price Forecast Remains: Oil generates about 70% of GDP directly and indirectly in the GCC. In Saudi Arabia, Oman and Bahrain, the fiscal deficits will continue to be large and the adjustment measures do not yet bridge the gap between actual and budget breakeven oil prices. Real Non-Oil...

Outlook