Banking shares boost Abu Dhabi's index on earnings optimism in the third quarter following the UAE Central Bank's call to lower interest rates to stimulate lending in the country.
Banking shares boost Abu Dhabi bourse
Banking shares lifted Abu Dhabi's index higher yesterday, as investors are expecting positive results in the third quarter following the central bank's call to lower interest rates.
National Bank of Abu Dhabi, the country's largest lender and holder of the biggest weighting on the index, was up 1.8 per cent to Dh11.20 a share.
Other banks also made significant gains. First Gulf Bank was up 2.5 per cent, Union National Bank was up 4.1 per cent, Abu Dhabi Islamic Bank was up 1.2 per cent and National Bank of Fujairah was 9.9 per cent.
Sultan al Suwaidi, the Governor at the Central Bank, said last week lenders should lower interest rates on loans to help businesses. Some analysts believe even if lending margins shrink, banks will benefit from higher loan volumes.
"Investors are expecting operational activity in the banking sector to improve in the next quarter," said Ameed Kanaan, the general manager at Al Jazeera Financial Services in Dubai.
Bank deposits in the UAE rose in March to their highest level in more than two years. Deposits stood at Dh1.1 trillion, however banks have shied away from lending during the same period.
The Abu Dhabi Securities Exchange General Index was up 1 per cent to 2,666.01 points, while the Dubai Financial Market General Index was up 0.9 per cent to 1,574.40 points.
Elsewhere in the region: Kuwait's index added 0.1 per cent to 6,390.10; Oman's index added 1.1 per cent to 6,075.07; Bahrain's measure added 0.1 per cent to 1,349.07; Qatar's benchmark lost 0.5 per cent to 8,326.90; and the Saudi Tadawul All Share Index was unchanged at 6,741.83.