Moody's credit ratings agency expected that the corona pandemic, along with declining oil prices, would have a negative impact on Gulf banks’ revenues this year, with the capital of those banks to remain strong.
According to the agency, the profits of the banks of the Gulf Cooperation Council countries will witness a decrease this year due to the contraction of the economies of the region affected by the Corona pandemic and low oil prices, but they have sufficient capital to enhance their solvency.
Moody's stated that the economies of the Gulf Cooperation Council countries will shrink, which weakens the main sources of income for banks, namely interest on loans, fees and commissions, while provisions for loan losses will rise sharply.
The agency also expects that the real non-oil GDP in the Gulf Cooperation Council countries will shrink by between 3.5% and 5% in 2020, which will lead to weak loan requests and the desire of banks to lend, which leads to reaching the average loan contraction rate between zero and 5 percent.
The banks of the Gulf Cooperation Council countries, rated by Moody's, achieved net revenues of $34.5 billion in 2019, giving them the ability to absorb the expected losses this year.
Source (Al-Arabiya.net website, Edited)