Islamic Banks Stay Strong Amid Regional War
Bahrain’s Islamic banks are set to ride out the Middle East war and other strains across the region, helped by strong funding, bank mergers and steps taken by the Central Bank of Bahrain, S&P Global Ratings has said.
Islamic lenders now make up about 30% of the kingdom’s banking sector, including wholesale banks. They also hold about 70% of all Islamic retail banking assets.
S&P said the run of mergers seen in recent years was likely to carry on. Larger banks should be able to cut costs, work more efficiently and absorb shocks with greater ease.
The ratings agency also expects measures taken by the Central Bank of Bahrain to curb pressure on loan books, even as war weighs on trade, growth and credit across the Middle East.
S&P said its forecasts remain highly uncertain because the length and reach of the Middle East war cannot yet be judged.
The fighting could hit commodity prices, supply chains, growth and lending conditions. The agency said it would review its forecasts as events unfold.
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