GCC Islamic Banking Sector to See More Mergers in 2022

According to Fitch Ratings (Fitch), the Islamic banking sector in the Gulf region will see more mergers and acquisitions (M&A).

Why it Matters?

Fitch anticipates more M&A in 2022, as many Islamic banks have weak franchises with limited competitive advantages, particularly in pricing, cost of funding, and expansion opportunities. Adding that asset quality, profitability and, potentially, capital pressures on these banks could lead to more tie-ups.

Its outlook for Gulf Cooperation Council (GCC) Islamic banks in 2022 is neutral, owing to a modest economic rebound and higher oil prices and expects continued pressures on profitability. Asset quality is not projected to worsen significantly when the forbearance measures lapse, while capita...