Moody's: Bahrain banks view negative

In view of the expected weakening in the financial metrics of rated Bahraini banks within the context of weaker regional economies, the fundamental credit outlook on the Bahraini banking sector is negative, said Moody's Investors Service.

Moody's said its outlook for the Bahraini banking system expresses its view on the likely future direction of fundamental credit conditions in the industry over the next 12 to 18 months. For the most part, these expectations are already incorporated in current bank ratings, the agency said.

The negative medium-term credit outlook for the Bahraini banking system reflects an expectation that the difficult credit and business conditions will continue over the next few months, Moody's said. This expectation is driven by the ongoing economic slowdown within the Gulf Cooperation Council region, which - although less severe than in other parts of the world - is exerting pressure on asset prices and business volumes, Moody's said.

The negative outlook also is driven by the more challenging wholesale funding conditions in the region within the context of the global financial crisis and consequent risk repricing, the agency added.

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