{"id":102708,"date":"2025-04-17T00:00:00","date_gmt":"2025-04-17T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/uae\/fitch-says-gcc-banks-will-likely-weather-trump-tariffs-storm\/"},"modified":"2025-04-17T00:00:00","modified_gmt":"2025-04-17T00:00:00","slug":"fitch-says-gcc-banks-will-likely-weather-trump-tariffs-storm","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/uae\/2025\/04\/17\/fitch-says-gcc-banks-will-likely-weather-trump-tariffs-storm\/","title":{"rendered":"Fitch says GCC banks will likely weather Trump tariffs\u2019 storm"},"content":{"rendered":"

GCC <\/strong>banks likely to see minimal impact from Trump tariffs:<\/strong> Recently implemented US tariffs are likely to have a limited effect on GCC banks\u2019 operating environments, as GCC exports to the US remain largely limited to hydrocarbon exports, which are exempt from tariffs, credit rating agency Fitch Ratings wrote in a research note on its website<\/a>. While the GCC\u2019s non-hydrocarbon exports face a 10% tariff (or 25% for aluminium and steel), they remain relatively limited \u2014 keeping the direct effects of the tariffs on GCC economies rather minimal.<\/p>\n

Other indirect ramifications could take place, however:<\/strong> \u201cLower oil prices and weaker global demand\u201d are cited as the primary risks for banks\u2019 operating environments in the GCC, with the tariffs potentially spurring an additional drop in oil prices, which could weaken Fitch\u2019s lending growth forecasts. <\/p>\n

It\u2019s all about oil prices<\/strong> \u201cWhile the global tariff wave may stir trade tensions, GCC banks remain largely insulated, with oil prices continuing to serve as the principal barometer of sector performance,\u201d National Bank of Kuwait Senior Economist Issa Hijazeen told EnterpriseAM UAE. \u201cFitch Ratings underscores that the primary risk to GCC banking remains oil market volatility and its impact on liquidity metrics, rather than direct exposure to international tariff shifts. Despite rising protectionism globally, the region\u2019s robust fiscal buffers and sustained non-oil growth are expected to shield GCC banks from financial disruptions,\u201d he said.<\/p>\n

Brent crude futures hit USD 65.2 per barrel on Wednesday,<\/strong> as \u201chopes for renewed US-China trade talks offset bearish supply and demand signals,\u201d according to Trading Economics. However, both Brent and the West Texas Intermediate (WTI) have lost about USD 10 per barrel since the start of the month, according to Reuters<\/a>. JPMorgan now expects Brent crude to average USD 66 per barrel this year, down from its earlier estimate of USD 73, according to a note seen by Forbes<\/a>.<\/p>\n

The tariffs could also worsen credit conditions:<\/strong> Should corporates operating in sectors affected by the tariffs experience losses in their earnings and their cashflow stemming from higher operating costs and rising inflationary pressures, \u201cpressure on corporates could dampen overall credit demand and ultimately lead to higher credit risk for banks and an increase in problem loans,\u201d Fitch said. Companies could also experience higher debt costs due to potential uncertainty surrounding rate cuts. <\/p>\n

Still, GCC banks are in a good position to weather the potential storm:<\/strong> Many banks in GCC countries have strengthened their capital buffers in the last few years, which was aided by \u201csolid earnings on higher oil prices and interest rates, good liquidity, strong economic activity and favourable credit conditions.\u201d This will allow banks to handle a potential deterioration in the overall operating environment, Fitch argues.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cLower oil prices and weaker global demand\u201d are cited as the primary risks for banks\u2019 operating environments in the GCC<\/p>\n","protected":false},"author":1,"featured_media":102709,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1618],"tags":[159,7,693],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-102708","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-banking","tag-enterpriseam-uae","tag-fitch-ratings","wpautop","entry"],"acf":{"mongo_id":"68b258fd-99a5-469d-b2ba-984cc3ffa2b1","order":"8","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2025\/4\/1065.jpg","photo_position":"above","homepage_title":"","full_issue_title":"GCC banks are unlikely to be impacted by Trump tariffs \u2014 but they could face indirect ramifications, Fitch says","related_issue":[102694],"teaser":"\u201cLower oil prices and weaker global demand\u201d are cited as the primary risks for banks\u2019 operating environments in the GCC","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2025\/4\/.6a5587e4-3313-4115-b2e7-ce99ff97de8a.mp3"},"yoast_head":"\nFitch says GCC banks will likely weather Trump tariffs\u2019 storm - 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