Neutral Outlook for Gulf Cooperation Council Islamic Banks in 2022: Fitch

Fitch Ratings (Fitch) has reported a neutral outlook for Gulf Cooperation Council (GCC) Islamic banks for 2022 due to modest economic recovery and increase in oil prices.

Why it Matters?

Fitch predicts pressure on earnings to continue in the GCC Islamic banks in 2022. Moreover, asset quality is not expected to deteriorate sharply following the end of forbearance measures. Capital buffers currently in place are anticipated to remain unchanged as well as liquidity, adequate to cover risks. However, negative outlooks were predicted mainly for Kuwait and Qatar. An increase in dependence on external funding as well as in asset growth in the case of all Qatari Islamic banks is speculated to have reduced the ability of the sovereign to espouse the banking sys...