Banks in the six-nation Gulf Cooperation Council, which includes the United Arab Emirates, will continue to recover from the 2008 credit crisis as loan loss provisions decline at most lenders, Standard & Poor’s said.
Since 2008, “despite slower balance sheet growth, most GCC banks have maintained healthy earnings generation before provisioning,” the ratings agency said in a report released in Dubai today. “Even though pockets of risk persist, asset quality continues to improve” and banks do not need to provision as much to cover loan losses, according to the report.
Non-performing assets of the 26 GCC banks S&P rates jumped to $18.7 billion in December 2011 from $5.9 billion in 2007 due to a decline in property prices and a fall in share prices in the region, according to the report. The reported NPA to gross loans ratio peaked in Saudi Arabia, Oman and Kuwait in 2009 and in Qatar and Bahrain in 2010, according to the report.
Lending is likely to grow by 10 percent in Saudi Arabia this year, by 4 percent to 5 percent in the U.A.E. and decelerate in Qatar from last year’s 28 percent, Timucin Engin, a credit analyst at S&P told reporters in Dubai today.
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