Fitch: Government Relief to Soften COVID-19 Impact on Islamic Banks

According to Bashar Al-Natoor, Global Head of Islamic Finance at Fitch Ratings, government relief packages amidst the COVID-19 pandemic will help mitigate near-term effects for Islamic banks across many countries, however risk factors would vary from country to country.

In Indonesia, Islamic banks are likely to be as similarly affected as conventional banks, those with significant exposure to the tourism industry being likely to be more impacted. A prolonged outbreak would pose possible downside risks to the sector’s growth and asset quality.

Al-Natoor added that credit profiles of Islamic banks in Malaysia were expected to remain steady, with sufficient loss-absorption buffe...