MANAMA: The outlook for Bahrain’s banking system remains negative as more losses loom mainly due to exposure to local and regional real estate, rating agency Moody’s said on Thursday.
The agency said in a statement it expected non-performing losses to rise and that "the severity and timing of real-estate-related losses (was) still uncertain".
Bahraini retail banks such as Ahli United Bank have weathered the crisis relatively well, posting lower profits due to bad loans and provisions.
But the country’s investment sector with companies such as Ithmaar and Gulf Finance House has been badly hit by a freeze in regional investments and a sharp real-estate correction that started late in 2008.
"Our current assessment is that although real-estate loan quality has generally remained robust so far, continued weakness in this sector will eventually feed through to banks’ loan portfolios…", George Chrysaphinis, analyst at Moody’s said in the statement.
Moody’s also said most of Bahrain’s retail and wholesale banks remain well capitalized, helping them absorb more losses.
