LONDON: Banks in the Gulf are expected to see their financial position stabilize this year as they reap the benefits of some regional economic improvement, according a report from the ratings agency S&P Global.
“2018 will mark the stabilization of the financial profiles and performance of GCC banks, after two years of significant pressure,” the report said.
Most of the banks in the region rated by the agency have a “stable” outlook, with the exception of Qatari institutions which have “negative” outlooks due to the continued uncertainty surrounding the boycott on the country imposed by a Saudi Arabia-led coalition of Arab states.
Lending growth in the Gulf banking sector is forecast to remain “muted” in 2018, according to S&P Global. Private-sector lending rose by an annualized 2.6 percent in the first nine months of 2017, which compares to 5.7 percent in 2016, the report said.
Strategic initiatives such as Dubai Expo 2020 and the Saudi Vision 2030 are expected to push up private-sector lending growth to around 3-4 percent between 2018 and 2019, the agency said.
Non-performing loan (NPL) ratios are forecast to continue to deteriorate in the first six months of the year before eventually stabilising, S&P said.
At the end of September 2017, NPL to total loans ratio for the region’s banks reached 3.1 percent compared to 2.9 percent recorded at the end of 2016.
Declining real estate prices in the UAE could reduce asset quality of Emirati banks, though the deterioration is likely to be “contained.”
Funding is improving in the region, with government deposits in the banking sector growing, particularly in the UAE and Saudi Arabia. In contrast, deposit growth is under pressure in Kuwait due to increased government spending.
The agency said Gulf banks’ funding profiles were “satisfactory,” with core customer deposits dominating funding, while the use of wholesale funding remains limited.
While there were some improvements in banks’ profits in the first nine months of 2017, S&P Global does not see this trend lasting.
It predicted that bank profitability will “plateau” this year, due in part to muted lending and reduced risk appetite.
The introduction of new regulations such as IFRS 9 will push up the cost of risk for banks, putting some off taking on more lucrative but higher risk exposures.
GCC banking sector to stabilize in 2018, says S&P Global
GCC banking sector to stabilize in 2018, says S&P Global
Saudi EXIM reports record credit facilities of $10bn in 2025
RIYADH: The total credit facilities provided by the Saudi Export-Import Bank surpassed SR40 billion ($10.6 billion) in 2025, according to the institution’s chairman.
In an interview with Argaam, Saad Al-Khalab said that since its establishment in February 2020, the bank has now extended cumulative credit support exceeding SR100 billion.
This portfolio is allocated with approximately 40 percent dedicated to direct financing and 60 percent to insurance solutions, designed to bolster Saudi exporters, local financial institutions, and foreign buyers of Saudi goods.
Sectorally, industrial exports receive the largest share of support at 60 percent, followed by over 20 percent for the mining sector. The remaining facilities are directed towards services, technology, and agricultural industries.
Al-Khalab highlighted a significant surge in demand for both raw and processed mining products. To meet this demand, Saudi EXIM has established revolving credit facilities worth over $1.5 billion for more than eight major exporters and global trading firms, facilitating exports to over 150 countries worldwide.
The chairman outlined the bank’s ongoing mission to address financing challenges for exporters, strengthen export risk insurance, and help penetrate new international markets.
Key initiatives include the Jusoor program, which allows manufacturers in the Kingdom to secure international financing for importing essential raw materials and equipment, and the introduction of investment insurance for Saudi ventures abroad.
In terms of geographic focus, Saudi exports continue to prioritize Asia, Europe, and the Americas. The bank is simultaneously driving expansion into African markets, supported by operational offices in Johannesburg and Casablanca, with a planned branch in Cairo to enhance coverage across the continent.
