Saudi Arabia has strongest banking system in GCC, says S&P Global Ratings

DJEDDAH: S&P Global Ratings said on Sunday that the COVID-19 pandemic and the drop in oil prices last year had not affected all banking systems in the Gulf Cooperation Council (GCC) in the same way, stressing that the Saudi banking system appeared to be the strongest in the current environment.

“We expect the asset quality indicators of GCC banks to deteriorate only slightly thanks to regulatory and government support measures and improving economic climate,” the rating company said in the commentary.

Saudi banks will continue to benefit from the growth in mortgage lending and the implementation of Vision 2030, which it says will boost asset quality and profitability metrics, according to S&P Global Ratings.

The rating company said the most vulnerable banking system among GCC countries is the United Arab Emirates (UAE), where the pandemic has hit sectors such as hospitality, commerce and the real estate sector.

“In our opinion, UAE banks are among the most vulnerable in the GCC region, due to their high exposure to real estate and other hard hit sectors, while Saudi banks are better positioned thanks to to higher profitability, ”he said.

“Other problems include the increase in Qatar’s net foreign debt and Kuwait’s budget deadlock, which can not only harm the economy but also challenge the government’s ability to support the banking system in such a way. predictable and timely, ”he added.

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