Fitch 2018 Outlook: Gulf Cooperation Council Islamic Banks

...Negative Rating Outlook: Fitch Ratings has a Negative Outlook on 17% of its rated Islamic banks in the Gulf Cooperation Council (GCC) region; all others are on Stable Outlook. All the Negative Outlooks are in Qatar and are driven by the Qatari political dispute, which is affecting Qatar's ability, but not propensity, to provide support its banks. Negative Sector Outlook: The 2018 sector outlook for GCC Islamic banks is negative as weaker economic growth feeds through to credit fundamentals and with lower financing growth. As a result, asset-quality metrics will continue to see a mild deterioration. Nevertheless, liquidity is improving with government issuance and lower financing growth. Low Oil Price Forecast Remains: Oil generates about 60% of government revenue in the GCC. Oil price expectations indicate that the fiscal deficits will continue to be large in Bahrain, Oman and Saudi Arabia. Weak GDP Growth: Fitch forecasts mild GDP growth of 1.5% in 2018 after a 0.1% contraction in 2017...

Outlook