Bank of America launches Research Coverage for Digital Assets

The Bank of America, recently introduced research for digital assets as they are planning to align the trading of the cryptocurrency business. Banks even created a special unit to kickstart the growing cryptocurrencies demand which was the highest in 2020. This business was then handled by Alkesh Shah, who handles Cryptocurrency globally and the strategy of Digital assets.

The Bank of America is the first in the list of the bigger band to start with the digital assets and also get included in the blockchain. 

Bank sectors for the Gulf Cooperation Council’s banking sector are showing the sign of a strong customer deposit which also includes the important source of funding for all the regional banks, as informed by S&P Global rating.

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The rating firm even informed that Saudi Arabia has been leading and has now grown by 7.9%. This pattern was then dominated by Corporate lending and the activities by the mortgage. The steady hike in the Saudi banks’ also had a huge effect on the entire GCC rate being increased to 8.4 %in 2021, from the 6.6 % rate in 2020. 

Bank of America
Bank of America

If we compare Saudi banks to the United  Kingdom, All the other GCC countries showed a slow growth to the offered loans. Most importantly, the UAE had very little annual growth in lending; Thus is amounts to 0.6 percent. However, S&P has expectations of change in 2021.

Other than Qatar, only Bahrain had gained a 10% mark for an average external loan ratio meanwhile other countries such as Saudi Arabia and the UAE showed a decreased value. This meant that most of the banks are completely depending on the main customer deposit and not any other funding. 

Bank of America launches research on digital assets

Meanwhile, Qatar’s banking system showed a good increase in its wholesale funding in recent years as it external loan ratio was almost  40 %  for the year 2020 and 2021 according to a report by, S&P Global Ratings.  The rating firm even mentioned in the report that the Qatar banks are very vulnerable to change the investor sentiment or bringing back the Western central banks’ liquidity measures for support

All the Customer deposits made in GCC started to grow by nearly 6.6 percent annually in 2021, with an increase from the 6.3 % which was measured in 2019.

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This rise was shown due to the increase in consumer spending and all other corporate activities, which even followed a setback from all the vast effects due to the pandemic in 2020.  

The report even said that the Western and central banks’ intervening for all the small reasons helped to protect the GCC banks from any uncertain loss and also loss in asset quality. They also gave all the regional banks all the liquidity intakes and regulations for all the situations to be in control.

Bank of America Introduces Research for ‘Too Huge to Ignore’ Digital Assets

All the Islamic and conventional banks given the quality of the asset were also compared according to the report. Asset quality did not show much of a difference between the two types of banks. Islamic banks’ NPL ratio was up to 3.5 percent on June 30, 2021, compared to the conventional banks with a ratio slightly up to 4%. Islamic banks also had an additional upper hand in coverage ratio, which recorded a total of 157.3 %in the first half of 2021 in comparison to conventional banks’ whose ratio was up to 139.5 percent.

S&P even said that they consider these ratios as compared and haven’t found anything much than the slightest differences between the segments.

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The report even showed that Islamic banks mostly have a higher vision in the real estate part than any other conventional banks for the asset to be a part of Islamic finance, which in turn will result in much more collateralization.

The report even said that collateral realization is very difficult in the GCC. Along with that, real estate is considered more than collateral and its value has been decreasing in most GCC markets from the last three years.

The UAE has also seen the biggest decrease in the quality of the asset as its NPL ratio went to 6.6 percent in the first part of 2021. This was also affected due to a fraud case that involved a big corporation and depends on the construction, real estate, and hospitality sectors. 

The entire area’s NPL ratio was increased to 3.8 percent on average, which was increased from 3.1 percent by the end of 2019, according to S&P’s list of banks.  S&P is also expecting it to increase in the next 12-24 months while being below 6 percent.

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