Gulf banks show "improvement", says international rating agency

For Al-Shorfa.com
2010-09-02

While banks in the Gulf spent more than $20 billion to cover bad debt and investments over the past two years, they are beginning to show "signs of improvement", according to a new report by international rating agency Standard & Poor’s.

GCC economies are recovering from the effects of the global financial crunch due to higher oil prices and prudent government policy, the agency said in a statement. "We believe that these countries are highly likely to provide extraordinary support to their systemically important banks in case of need," read a statement.

The ratings agency downgraded some Gulf banks in the past because of excessive exposure to high risk borrowers such as Dubai World.

Gulf banks are showing "good margins and efficiency [that] will provide a solid foundation for their return to high profitability," Mohamed Damak, a Dubai-based credit analyst for Standard & Poor’s, told Gulf Daily News on Thursday (September 2nd).

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