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Islamic Finance News: decline begins to hurt banking sector liquidity

  • Saudi Arabia; banking sector is expected to face further squeeze on liquidity as banks face sustained decline in deposits aggravated by decline in economic growth and fiscal adjustments necessitated by persistent fall in oil prices. Rating agency Moody’s said last week that the declines [in deposits] are credit negative for Saudi banks because they add to the liquidity pressure that banks are already experiencing as a result of the drop in oil prices and associated government revenues, even though loan growth has remained above 9 percent since January.
  • United Arab Emirates;  Growth in demand for business credit in the United Arab Emirates slowed during the three months through June, especially in Dubai, according to a central bank survey published on Thursday. The net balance measure for business lending – the weighted percentage of respondents reporting an increase in demand for loans minus those reporting a fall in demand – fell to plus 3.1 in the quarter from plus 13.6 in the previous quarter.
  • Oman; Muscat banks’ large exposure to the real-estate sector, according to the Central Bank of Oman (CBO), could leave them vulnerable to a weakening property market. In its Financial Stability Report, the central bank said banks have substantial direct and indirect exposure to the real-estate sector and this is a potential source of vulnerability. Real estate accounts for over 30 percent of the banking sector’s total lending portfolio, which, the CBO said, is considered large.
  • Egypt; Takaful firms have managed to capture 11.46 percent of the total insurance premiums in the country throughout the first four months of the current year. In four months, the takaful firms had posted direct premiums worth 825.7 million Egyptian pounds ($93 million), according to a report released by the country’s market regulator, Egyptian Financial Supervisory Authority (ESFA).
  • Bahrain: launched a $100 million (Dh367.3 million) liquidity fund to enhance depth in its illiquid stock markets The fund will act as a market maker, providing two-way quotes on most of the listed stocks with a reasonable spread to allow the investors to actively trade their stocks. Bahrain Bourse has seen a number of initiatives in recent months. aimed at enhancing local capital markets. These include the introduction of the Bahrain Islamic Index (the GCC’s first Shari’a-compliant index), the introduction of Real Estate Investment Trusts (REITs) rules and the offering of Bahraini government bonds and treasury bills.

(EBCTV)