Gulf banks performing well

by Richard Kilner

Story link: Gulf banks performing well

A report issued on Wednesday by Standard & Poor’s Ratings Services reveals that Gulf banks continue to defy global financial turmoil with strong performances.

Mohamed Damak, a credit analyst with the firm, explained that the Gulf banks were doing well because of their limited exposure to subprime mortgages and a healthy domestic market.

This positive situation means that shareholders are happy to provide capital to firms.

However, Gulf banks do face certain risks that other financial institutions do not.

They hold many loans that have not been faced with negative economic environments.

In addition, the Gulf liking for mergers and acquisitions is a double-edged sword. Though it helps banks spread their geographical footprint, it also contains potential pitfalls, such as rising credit risks overseas.