Risks remain high for emerging market banking sectors – S&P

Mubasher: Standard & Poor's (S&P) said that risks are to remain high for banks operating in the emerging markets, including GCC countries, Nigeria, South Africa, Russian and Turkey, according to a report issued on Wednesday.

The rating agency clarified that Nigerian and small Russian banks are the most vulnerable to the risk default, while GCC and South African banks are less defenseless against default risks.

Moreover, the banks' ratings are likely to be negatively affected by any further steep decline or sustained fall in commodity prices, slower economic growth, or escalation of political risks.

"The operating environments in these emerging banking markets are suffering the effects of low commodity prices on economic growth and investment activity, still significant political and geopolitical risks, and weakening local currencies outside the Gulf Cooperation Council (GCC)," said S&P Global ratings analyst Mohamed Damak.

The agency noted a positive recover of capital inflows that could ease liquidity pressure for some systems, expecting, however, more setback in the financial performance.

"Overall, we expect the trend of deteriorating financial performance to continue, as demonstrated by the negative outlook or CreditWatch negative (negative bias) on our bank ratings in these countries," said Damak.  

Mubasher Contribution Time: 21-Sep-2016 06:55 (GMT)
Mubasher Last Update Time: 21-Sep-2016 06:55 (GMT)