Monday, April 24, 2017



Don961:  Operational difficulties roiling the Gulf Islamic banks

April 24, 2017 in the media center comments on the operational difficulties roiling Islamic Banks and the Gulf closed

Dubai - agency "Standard & Poor's" credit ratings, said yesterday that the weak operating environment, will continue to put pressure on the financial performance of Islamic banks in the Gulf two years, 2017 and 2018.

The agency said in a report that the end of the economic boom with the oil decline, led to economic growth and expectations of a decline in the Gulf, which means a decrease in the liquidity of both conventional and Islamic banks.

The agency said that the decline in oil prices since mid-2014 in the Gulf economies, and reduced opportunities for growth in their banking systems, which led to a continued growth slowdown in conventional and Islamic banks in the region.
IAEA experts predict further declines in asset quality and profitability indicators of the Gulf banks, but those banks possess sufficient capital to meet the margins of the operating environment of slowing down.

And stabilized asset growth in Islamic and conventional banks at 6.4 percent last year, compared with 6.6 and 6.9 percent respectively in 2015, to drop to 5 percent in the current year, due to reduced government spending and revenue enhancement initiatives.

The report predicted that rising non-performing loans ratio among Islamic banks to between 4 and 5 percent over the next two years, after reaching 3.1 percent on average by the end of 2016.

It is clear that the Gulf Islamic banks, the conditions are not the same, despite slower growth in Saudi Arabia, the Islamic banking activity in the Gulf countries last year appeared rapidly, thanks to its strategy to increase its presence in the sectors of companies and small and medium enterprises. Islamic banks in the UAE continued to expand high single number, despite lackluster economy and the decline in property prices, according to the agency.

The slowdown was more profound in Qatar, as the low liquidity and cut government spending, prompting banks to reduce the pace of expansion, and did not check the assets in Kuwait almost no growth in 2016, as a result of the decline in the value of some foreign currencies.

London-based Arab


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