Friday 17 / May / 2024
Muscat: Customer deposits in GCC banks showed a smaller growth in the last few quarters resulting in a small and gradual increase in the loan-to-deposit ratio.
Since core customer deposits form the backbone for funding for GCC banks, recent reports have pointed out liquidity issues with banks in some GCC countries, the Kamco Invest report said.
However, almost all central banks in the GCC have recently affirmed adequate liquidity in the banking sector and have reiterated continued support to the sector. An S&P report also pointed to the strong and stable funding profile of banks in the region in the form of customer deposits as well as reliance on external funding in case of stress on the liquidity front.
Recently, the governor of the Saudi Arabian Monetary Authority (SAMA) highlighted the strong liquidity and capitalisation of banks in the Kingdom and stressed that lending risks remained moderate in the Kingdom and all the precautionary ratios for the banking system have exceeded the requirements as per the Basel norms.
Central bank data shows resilient lending despite higher interest rates credit growth in the GCC remained strong during the second quarter of 2023 despite higher interest rates, indicating strong economic activity and business confidence in the region.
Manufacturing activity data from Bloomberg (Markit Whole Economy Surveys) showed PMI figures stayed strong during the quarter above the growth mark of 50 for Dubai, Qatar, Saudi Arabia and UAE. The manufacturing activity in Saudi Arabia remained robust with PMI at 59.6 points during June-2023 and remained elevated during July-2023 at a slightly lower mark of 57.7. UAE and Qatar also boasted strong PMI figures of 56.9 and 53.8 during June 2023.
