Mubasher: Banks of the GCC states except Qatar are expected to witness a financial stability in 2018, Standard and Poor's (S&P) said in a report on Tuesday.
"After two years of "significant pressure," GCC banks will have recognized most of the impact of the softer economic cycle on their asset quality by mid-2018," the official Xinhua news agency reported, citing S&P's study.
Liquidity of GCC banks reboundedin 2017, and it is not projected to see a major change in 2018, said Mohamed Damak, credit analyst at the Dubai branch of the US rating agency.
"We think GCC banks' cost of risk will increase in 2018 because of the adoption of IFRS 9 and the higher amount of restructured and past due but not impaired loans sitting on their balance sheets," he added.
The International Financial Reporting Standard (IFRS) 9 was designed by the U.S. International Accounting Standards Board (IASB) in a bid to tackle the accounting of financial products, the data showed.
GCC banks’ profitability will remain stable at a lower level on the back of the increased cost of risk and the introduction of the value added tax (VAT) that a number of lenders will pass on to their customers, Damak highlighted
In January, both Saudi Arabia and the UAE have imposed 5%VAT for the first time on most of goods and services except education, the study noted.
The rest of the GCC nations, except Qatar, announced that they would impose the VAT by the end of 218 or by 2019.
