The 2018 ICC Global Survey on Trade Finance indicated that 40% of banks in the Middle East refused to finance trade transactions due to the risk profile of the clients requesting trade financing, compared to 23% of banks globally that declined such requests for the same reason. Also, 20% of banks in the region rejected trade finance transactions due to incomplete or failed due diligence checks, specifically related to Know Your Customer requirements, relative to 10% of banks globally. Further, 30% of participants in the Middle East cited higher credit limits as the most requested client service, relative to 13% of banks globally that received the same request. The survey added that 20% of banks in the region named simpler and more efficient compliance procedures as the most requested client service, compared to 8% of banks globally; while 10% of respondents cited favorable pricing as the most requested client service relative to 34% of banks globally. In parallel, the survey indicated that 85% of banks in the region tapped new markets in the Asia-Pacific region, 55% of respondents explored new markets in Western Europe, and 36% of surveyed banks tapped new markets in Africa. It added that 60% of banks in the Middle East explored new trade financing opportunities in the region last year. In contrast, it noted that 36% of surveyed banks in the Middle East region exited from one or more markets in Africa last year, 11% withdrew from North America, and 9% reduced their presence in each of Latin America and Western Europe. It added that 30% of banks in the Middle East reduced their trade financing services in the region last year. The survey was conducted between December 2017 and February 2018. 
Source: ICC Banking Commission   

S&P Global Ratings affirmed at 'B-/B' Iraq's long- and short-term foreign and local currency sovereign credit ratings, with a 'stable' outlook. It noted that the ratings are constrained by the country's low financial wealth, weak economic activity and ineffective monetary policy due to the underdeveloped banking system. However, it indicated that Iraq's external debt is low, which reduces the country's vulnerability to external shocks. It expected economic growth to average 2.1% annually during the 2018-21 period, amid political instability, fiscal consolidation and weak non-hydrocarbon sector activity. It added that tackling corruption, as well as strengthening governance, accountability and transparency could support Iraq's economic growth. Also, it said that the $30bn in pledges, loans and investments, which Iraq attracted at the donor conference in February 2018, would boost economic activity in the country, but that this would depend on the timing of disbursements. It noted that the financial stability of Iraqi banks is uncertain, and considered that the risk from the financial sector is a moderate contingent liability to the government. In parallel, S&P projected the current account balance to shift from a surplus of 2% of GDP in 2018 to an average deficit of 2.9% of GDP annually in the 2019-21 period, assuming oil prices moderate. It indicated that foreign currency reserves reached about $48bn at end-2017, supported by the government's Eurobond issuance and higher oil prices, and expected them to remain at this level during the 2018-21 period. It anticipated that the Iraqi dinar's peg to the US dollar will remain in place for several years. 
Source: S&P Global Ratings

Moody's Investors Service downgraded by one notch the standalone baseline credit assessments (BCAs) of 14 banks, and by two notches the BCAs of four other banks following the agency's similar action on Turkey's sovereign rating. It attributed the downgrade of the banks' BCAs mainly to the higher risks associated with further negative shifts in investor sentiment that could lead to a decline in wholesale bank funding, as well as to the steeper-than-expected deterioration in Turkey's operating environment. In this context, Moody's lowered the Turkish banks' Macro Profile by one notch from 'Weak' to 'Weak-'. Further, it indicated that the performance of all banks is constrained by weaker funding conditions, given their high reliance on US dollar short-term market funding that represented about 41%, or $77bn, of their foreign-currency market funding as at June 2018. It added that a shift in domestic investor sentiment could weigh on the banks' resident deposit base in foreign currency, which accounts for about 40% of the banking sector's total deposits. It considered that lower economic growth and a weaker local currency could have a worse-than-expected impact on the banks' asset quality and capital metrics. In parallel, Moody's downgraded by one notch the long-term foreign-currency deposit ratings of 12 banks, and by two notches the long-term foreign-currency deposit ratings of three more banks. It noted that the banks' ratings have a 'negative' outlook due to the vulnerability of the banks' foreign currency funding and deposits to a prolonged volatility of the exchange rate, or to a sudden drop in investor confidence. It added that the 'negative' outlook also reflects a considerably challenging financial environment, which would further negatively impact the banks' solvency.
Source: Moody's Investors Service