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Moody's: 2017 outlook on GCC banking sector stable

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Moody's: 2017 outlook on GCC banking sector stable

Moody's has a stable outlook on banking systems in the Gulf Cooperation Council for 2017, reflecting lenders' resilience to persistent economic and funding pressures.

The rating agency said Dec. 7 that asset quality will likely remain solid across the region in 2017, with nonperforming loan ratios expected to remain at 3% to 4%. Moody's also expects the banks' loss-absorption buffers to remain robust, with tangible common equity ratios projected to stay broadly between 12% and 16%.

"While operating conditions for banks in the Gulf Cooperation Council will remain challenging, the stabilization of oil prices — albeit at a low level — and resilient non-oil sectors will moderate pressures on the banking sector from slowing economic growth, fiscal reforms and spending cuts," said Olivier Panis, a vice president at Moody's.

The agency also expects bank funding profiles in the region to remain robust and for GCC government to remain willing to support banks if needed even if their fiscal capacity is under pressure.