QATAR CRISIS: Banks pushed to the brink amid Saudi stand-off, warns Moody's

Bruno Cirelli
Agosto 9, 2017

In June, Saudi Arabia and a number of other Arab countries imposed sanctions on Qatar after accusing the Gulf state of supporting extremism and fueling instability in the region.

Moody's expects tangible common equity to increase to around 15.5 percent of risk-weighted assets by end 2018 from 14.4 percent, as of December 2016, driven by slower-than-normal credit growth and higher profit retention.

The rating agency said concerns about the ability of Qatar to diversify its economy and the impact that will have on the profitability of banks as loan growth stalls and the level of non-performing loans rise underpinned its decision.

The lack of a resolution and continued uncertainty threatens to undermine Qatar's economic diversification plans, the report said.

London - Moody's Investors Service has changed on Tuesday the outlook on Qatar's banking system from stable to negative due to weak operating conditions and continued funding pressures facing its banks.

Hamad delivered a written message from the Emir of Kuwait, Sabah al-Ahmad al- Sabah, to President Abd al-Fattah al-Sisi and Crown Prince Mohammed Ben Salman during a visit to Egypt and Saudi Arabia on Monday, explaining the latest Kuwaiti talks with Qatar regarding the four boycotting countries' demands.

"We expect system-wide problem loans to increase to around 2.2 per cent of gross loans by 2018، up from 1.7 per cent as of December 2016،" said Bhojnagarwala.

Efforts led by Kuwait to resolve the rift are ongoing.

Qatar's government proceeded with capital injections totalling QAR11.2 billion (Dhs11.3 billion) to increase banks' capital buffers and allow them to participate in upcoming infrastructure projects; in addition to purchasing of a portion of banks' real-estate loans and domestic equity investments (at their original cost) for QAR20.9 billion, according to the agency.

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