Credit Stability Anticipated for Gulf Cooperation Council Banks in 2024
Leading credit rating agency, Standard & Poor’s, anticipates a steady performance in the banking sector of the Gulf Cooperation Council (GCC) countries in 2024. The forecast suggests strong credit growth and profitability for Gulf banks, although performing slightly lower than the level in 2023. This news comes directly from our own sources.
Endurance of GCC Banks
From our information, Standard & Poor’s Global predicts that banks within the GCC region will continue to thrive with robust capital, strong liquidity, impressive provisions, and continued profitability. Among all the banking systems in this region, the United Arab Emirates (UAE) and Saudi Arabian banks are expected to foster growth. The non-oil sector’s vibrancy and economic diversification initiatives should stimulate this growth.
Potential of Oman’s Banking Sector
The banking industry of Oman should also maintain substantial credit growth, adding to the overall stability of the region’s fiscal platform. However, Standard & Poor’s Global notes potential risks that could impact the region’s financial stability, including geopolitical turbulence, relationships with high-risk nations, and oil price variations.
Expected Economic Growth in the GCC Region
On a larger economic front, our source reveals that Standard & Poor’s Global anticipates an acceleration in real GDP for all the GCC nations in 2024, apart from Bahrain. It is predicted that, despite elevated interest rates that might decrease by one percent by the end of the year mirroring the Federal Reserve’s policies, the price of oil might remain relatively steady. This stability is anticipated to bolster ongoing capital expenditure.
The economic landscape is seen as conducive to credit growth, although it may slightly decelerate as banks become more cautious about lending. Credit growth is anticipated to support asset quality and profitability, albeit profit margins may start to narrow due to expected interest rate effects and rising financial costs by the end of the year.
