Asset Quality at GCC Banks

...Asset Quality Under Scrutiny: Impaired loans ratios at Gulf Cooperation Council (GCC) banks have improved to comfortable levels over the past five years, aided by strong loan growth in buoyant environments driven by high oil prices. With the fall in oil prices, banks have entered a new era of uncertainty regarding asset quality as low oil prices reduce economic activity and weaken borrowers. This report aims to identify which GCC banking systems are better placed to face asset-quality headwinds if oil prices remain low for a prolonged period. To do so, it highlights the significant differences and gaps that exist between banking systems in their asset-quality and loss- absorption capacity, their operating environment, their concentration risk, their exposure to government-related entities (GREs) and their business mix. Gap with Headline Asset-Quality Ratios: Based on headline asset-quality metrics (impaired loans ratio, loan-loss coverage ratio and annual impairment charges), Saudi banks...

Special Report