Sudanese PM thanks Saudi leadership for unlimited humanitarian support    Saudi Arabia exit FIBA Asia Cup after overtime heartbreak against Philippines    Cristiano Ronaldo and Georgina Rodriguez announce engagement after eight years together    In call with Abbas, Saudi Crown Prince condemns brutal Israeli practices in Gaza    Bahri categorically denies transporting shipments to Israel    Saudi Arabia's ranking on Mining Investment Attractiveness Index jumps to 23rd from 104th globally    Funerals held for journalists killed in Israeli strike on Gaza City    Saudi Crown Prince, Jordanian King discuss developments in Gaza    Kuwait grants tourist visas on arrival to foreign GCC residents    Turkey earthquake flattens buildings in north-east Balikesir province    New voters list in Indian state includes wrong photos and dead people    Adidas designer sorry for shoes 'appropriated' from Mexico    GASTAT: Saudi Industrial Production Index jumps 7.9% in June    Tourism Ministry: Late arrivals won't extend hotel check-out time    Mexico accuses Adidas of cultural appropriation in sandal design    Saudi Film Commission invites local filmmakers to submit for first-ever Oscar entry    Al Hilal sign Uruguay striker Darwin Núñez from Liverpool    Al Ahli sign Enzo Millot from Stuttgart on three-year deal    Saudi woman donates 80% of her liver to co-wife in rare act of generosity    SFDA marks World Breastfeeding Week with awareness push on mother-child health    Sholay: Bollywood epic roars back to big screen after 50 years with new ending    Ministry launches online booking for slaughterhouses on eve of Eid Al-Adha    Shah Rukh Khan makes Met Gala debut in Sabyasachi    Pakistani star's Bollywood return excites fans and riles far right    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Saudi banking outlook revised to stable
Published in The Saudi Gazette on 16 - 03 - 2017

Moody's Investors Service has revised its outlook for the Saudi Arabian banking system to stable from negative. The stable outlook reflects high risk-absorption buffers and easing funding pressures, as Saudi banks' credit profiles are expected to remain broadly stable over the next 12 to 18 months, said Moody's Investors Service.
"Despite low oil prices, which we expect to fluctuate between $40 and $60 a barrel over the next 18 months, and cuts in oil production, the Saudi economy will gradually recover, supported by government spending. As a result, Saudi banks' liquidity and funding conditions will improve.
Although profitability and loan performance will continue to soften, Saudi banks will maintain robust capital and loss absorption buffers compared to regional and international peers over the outlook horizon," said Olivier Panis, a Vice President at Moody's.
According to Moody's, the operating environment for Saudi banks will recover. Whilst the rating agency expects real GDP growth to contract by -0.2% in 2017, increased government spending and projects to diversify economic output will support a gradual recovery of the non-oil economy, which will grow by 2% in 2017 versus 0.2% in 2016. Consequently, Moody's expects credit growth to remain low at 3% in 2017, but to gradually pick up from 2018.
Moody's expects non-performing loans (NPLs) to increase to 2.5% of gross loans over the outlook horizon, from a low level of around 1.4% as of September 2016. Although banks will also remain vulnerable to high single-party exposures and opacity in the corporate sector, banks will maintain the highest level of loan-loss provisioning coverage in the region.
Banks will maintain a solid operating performance, although subdued loan growth, rising provisioning charges and lower fee and commission income will weigh on profits. The impact will be partly mitigated by stable margins, low operating costs and easing pressure on funding costs.
Despite Moody's expectation of reduced profitability, subdued loan growth will support capital adequacy, which will strengthen from already strong levels. Moody's anticipates the sector's average tangible common equity (TCE) ratio will increase to around 17% by the end of 2018, up from around 16.2% in September 2016.
Moody's says that access to funding will improve owing to liquidity injections from international sovereign debt issuances, the clearing of large volumes of overdue payments to contractors by the government in Q4 2016 and modest credit growth. However deposit growth will remain low until economic activity picks up more materially in 2018.
Moody's expects Saudi authorities' willingness and capacity to provide financial support to the local banks to remain high, but notes that the policy stance of the Saudi authorities may evolve as the regulator is contemplating the adoption of the Financial Stability Board's best practice on the resolution of distressed banks. — SG


Clic here to read the story from its source.