Fitch Ratings is maintaining its stable outlook for Arabian Gulf Islamic banks, which will be buoyed by economic growth propelled by higher oil prices, that will spur credit expansion
Sharia-compliant banks will remain profitable, well capitalised and supported by Gulf governments, the rating agency said in a report.
“Fitch has stable outlooks on all rated Islamic banks in the GCC. This predominantly reflects stable state ability to provide support to domestic Islamic banks,” said the rating agency. “Credit growth will remain weak at about 5 per cent – still above financing growth at conventional banks – and will increase from 2018 levels in most countries.”
Gulf banks are posting higher profits this year compared to 2017 thanks to economic expansion led by the recovery in oil prices. Lenders are also consolidating to improve their profit margins, cut costs and compete regionally, beyond their local market.
Islamic banks just like their conventional peers are benefiting from the improvement in the regional economy.
“Most Islamic banks will benefit from rising rates due to their large proportions of non profit-bearing deposits,” said Fitch. “Nevertheless, the larger branch networks for the size of their franchises result in higher costs. Funding costs are expected to be less pressured due to higher liquidity in the system.”
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Read more:
Moody's says Gulf banks' 2019 outlook stable as oil prices boost state spending
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All Gulf countries, except for Kuwait, peg their currencies to the dollar and mimic the US Fed interest rates hikes. The Fed is expected to increase rates for the fourth time this month when it meets.
“We expect liquidity to remain strong. We expect capital levels to remain mostly unchanged in 2019,” Fitch said. “Earnings will remain high, benefiting from increasing interest rates in most countries.”
Islamic banks are also benefiting from sukuk issuances from governments, which sometimes sell Sharia-compliant bonds to finance their fiscal deficit. For example, Saudi Arabia launched last year a riyal-denominated sukuk programme that has helped Islamic banks.
“Government issuance and subsequent liquidity injections in the banking systems will continue to support solid liquidity in the region,” said Fitch. “Nevertheless, lower deposit growth will put pressure on the ability to lend, although this will be partially offset by lower demand.”
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
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Sinopharm vaccine explained
The Sinopharm vaccine was created using techniques that have been around for decades.
“This is an inactivated vaccine. Simply what it means is that the virus is taken, cultured and inactivated," said Dr Nawal Al Kaabi, chair of the UAE's National Covid-19 Clinical Management Committee.
"What is left is a skeleton of the virus so it looks like a virus, but it is not live."
This is then injected into the body.
"The body will recognise it and form antibodies but because it is inactive, we will need more than one dose. The body will not develop immunity with one dose," she said.
"You have to be exposed more than one time to what we call the antigen."
The vaccine should offer protection for at least months, but no one knows how long beyond that.
Dr Al Kaabi said early vaccine volunteers in China were given shots last spring and still have antibodies today.
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Medicus AI
Started: 2016
Founder(s): Dr Baher Al Hakim, Dr Nadine Nehme and Makram Saleh
Based: Vienna, Austria; started in Dubai
Sector: Health Tech
Staff: 119
Funding: €7.7 million (Dh31m)
Paris Can Wait
Dir: Eleanor Coppola
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Two stars
Cryopreservation: A timeline
- Keyhole surgery under general anaesthetic
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