The novel coronavirus (“COVID-19”) pandemic has had an unprecedented impact on the global economy that may eventually surpass the impact of the 2008 global financial crisis.
The drop in global interest rates in response to COVID-19 and a low oil price environment has resulted in GCC banks facing two simultaneous economic challenges.
This impact coupled with a negative view on the economic indicators in 2020 is clearly reflected in the H1’20 results analyzed by KPMG for 54 listed GCC banks as they have continued to build their loss allowances during the first two quarters of 2020.
GCC governments and central banks also announced various economic support measures including payment holidays for borrowers and targeted liquidity support for banks. To maintain stability in the banking sector during such unprecedented times, some regulators have also provided specific relief from capital norms and certain accounting guidelines.
Through this publication, we aim to share with you the information on trends in the GCC on credit loss provisions reported by banks in their H1 2020 financial results and a summary of significant regulatory support provided in each GCC country.
We trust that you will find the publication useful and should you have any questions or comments, please feel free to get in touch with any of the country contacts listed on the webpage
With the banking profits on the decline in 2020 and the focus of stakeholders shifting towards stability, solvency, and liquidity, the question that is being asked is whether this will trigger another wave of mergers and acquisitions in the banking sector in the region.