Gulf banks entering ‘new era’ of weaker profits after coronavirus blow

SourceArabian Business
SectorFinancial Services

Gulf banks are entering an age of weaker profits as a result of the coronavirus outbreak and a decline in crude prices, according to S&P Global Ratings. “The pandemic and drop in oil prices could mark the start of a new era,” S&P analysts led by Mohamed Damak in Dubai said in a report. “This new era is characterised by a decline in oil wealth, a lower multiplier effect in the local economies, and lower profitability.” Serious erosion in value of banking assets in pandemic-hit industries set to add to consolidation deals in region With a sluggish economic recovery likely to hold back lending in the six-member Gulf Cooperation Council, a period of reduced profitability could be “longer lasting,” according to S&P. The rating company also predicts that regional banks’ asset quality may more...