Tuesday, May 21, 2024
Today’s News

Due to the US Fed’s Delayed Rate-Cutting, GCC Banks’ Profitability is Expected to Remain High in 2024

We expect a minor decline in profitability in 2025 because if the Fed decides to begin reducing rates in December 2024, most GCC central banks are likely to follow suit to maintain their currency pegs. However, we think several factors will lessen the overall impact,” the statement continued.

Furthermore, according to S&P, the profitability of the banks in the area is reduced by an average of roughly 9% for each 100 basis point decrease in interest rates.

This is predicated on the December 2023 disclosures from the GCC banks and assumes a fixed balance sheet and a parallel shift in the yield curve.

The statement added that lower rates should also help offset the unrealized losses GCC banks have racked up over the last few years.

For the GCC banks we rate, we estimate these losses at around $2.8 billion, or 1.9 percent on average of their total equity,” the report added.

Furthermore, S&P indicated that the Fed will not lower rates until it observes multiple consecutive readings of month-over-month core inflation slowing. This suggests that the first rate cut will probably occur in December, several months later than the agency had predicted.

Additionally, the credit rating agency persisted in its prediction that GCC banks’ profitability would decrease in 2025 as interest rates drop.

Also Read:

Iain Buscombe :Matching Top Talents in Hospitality with Gateway Jobs   

Korean Food Company Increases Participation in the Dubai Esports and Games Festival in 2024 

 

INTERVIEW

Press Release

Letest News

Lifestyle

Tuesday, May 21, 2024

Entrepreneur Mirror is a platform with a significant focus on business, technology, startups entrepreneurship, leadership, innovation, content creation, prominent business personalities, and many more across the globe. Further, the company publishes interviews, business content, press releases, articles, etc. 

SUBSCRIBE

Copyright © 2024 Entrepreneur Mirror All Right Reserved