Islamic banks profits expected to fall in 2015

Reducing oil revenues in the Gulf Cooperation Council (GCC) expected to trigger Islamic banks profits in 2015.

Gradual weakening in economic conditions will adversely affect the banking industry in the GCC. Growth of net income and deposits in Gulf-based Islamic banks will slow down, while asset quality is seen to deteriorate, according to the report published by Standard & Poor’s Rating Services.

S&P predicts oil prices to remain weak throughout 2016 with Brent crude forecast to average $55 per barrel in 2015, $65 in 2016 and about $75 in 2017.

“Given the importance of oil-related revenues to the region’s economies, the ensuing gradual weakening in economic conditions for the sovereign states that make up the [GCC] – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – will in our view adversely affect their banking sectors,” S&P said in a statement.

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