Text size:

  • Small
  • Normal
  • Large

A poor first quarter for Saudi bank stocks

Banks have taken a beating on the Tadawul

Bank stocks are taking a beating on the Saudi bourse. Investors are not impressed with the lacklustre performances that lenders in the largest GCC economy have reported for the first quarter. Of the 11 lenders listed on the Saudi Tadawul All Share Index, eight have so far announced earnings, and six of those reported declines. Bank AlBilad and Riyad Bank are the two exceptions so far, reporting a rise in profit driven by growth in core banking activities and service fees.

But even Riyad Bank, which saw profits rise 55 per cent, missed analysts' estimates, while provisions for bad loans for both lenders also rose significantly. SABB, Al Rajhi Bank, Bank AlJazira, Banque Saudi Fransi, Saudi Hollandi Bank and Samba Financial Group have reported shrinking profits, mainly on account of a drop in revenue and rising provisions for bad loans. Samba, the second largest lender in the kingdom, at least beat forecasts, but investors are still not rejoicing.

"Profit decline was expected as provisioning is still rising and nobody had expected the asset quality to improve. In fact, banks across the region require a few more quarters before they can balance out their books," said Hassan Awan, an associate in the asset management division of the investment bank The National Investor. Saudi Investment Bank, Arab National Bank and Alinma Bank have yet to announce first-quarter financial details.

The banking index rose only once in the past five trading sessions on the Saudi bourse, and even then just marginally. Only two Saudi banking stocks had advanced at the close of yesterday's trading: Saudi Hollandi by 0.9 per cent and Samba by 0.4 per cent. Bank Al Bilad, AlJazira and Al Rajhi were the main losers yesterday, declining 3.1, 2.7 and 2.68 per cent, respectively. "The sell-off is in banking stocks, but they are also weighing heavy on the index," Mr Awan said.

Bank and financial services stocks account for almost half of the regional markets' total capitalisation, and they usually determine the direction of trade, he said. Any strength or weakness in banks is usually reflected in the movement of regional indexes. skhan@thenational.ae

Back to the top

More articles


Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

 The cooling towers of the Temelin nuclear power plant near the Tyn nad Vltavou in Czech Republic. The country wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units. David W Cerny / Reuters

In pictures: Best business images for the week to April 17, 2014

Here are some of the best business images for the week to April 17, 2014.

 Three generations of the Hakimi family tend to their stall Crawford Market in Mumbai. Subhash Sharma for The National

In pictures: Shopper’s delight at Crawford Market in Mumbai

Crawford Market is an old British-style covered market dealing in just about every kind of fresh food and domestic animal imaginable. Later on renamed Mahatma Jotirao Phule, the market remains popular among locals and visitors by its old name, taken from Arthur Crawford who was the first municipal commissioner of the city.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National