Gulf banks' profits set to slide over low oil income: S&P
Net earnings of Gulf banks are expected to slide as government spending slows due to a dive in oil revenues, the Standard and Poor's ratings agency said Thursday.
Growth in net income declined to 4.0 percent in the second quarter, compared with 7.0 percent in the first three months of the year and more than 10 percent in the previous three quarters, S&P said in a report based on a survey of 26 major Gulf banks.
"We expect Gulf banks' net income growth to decline below 10 percent in 2015 and potentially slow further in 2016," the ratings agency said.
The "good" earnings in the first half were due in part to declining credit losses and a reduction in provisions or funds set aside for doubtful loans.
"But, owing to the knock-on effects of lower oil prices on growth and asset quality, earnings could weaken over the next several quarters," S&P said.
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