x Abu Dhabi, UAEThursday 18 January 2018

Qatar banks beat estimates

Market Wrap: Strong earnings at Qatari banks prompt gains for UAE lenders, but analysts warn that higher provisions for bad debts could be revealed in quarterly results released next week.

ADCB rose 0.3 per cent to Dh2.77.
ADCB rose 0.3 per cent to Dh2.77.

UAE banks rallied as Qatar's banking sector blew past earnings estimates and the big UAE banks prepared to report next week on financials for the third quarter.

Qatar Islamic Bank's third-quarter earnings, released after Doha's market closed on Wednesday, reported profit 34 per cent above last year's third-quarter figure at 407.2 million rials, beating estimates. The shares rallied 0.2 per cent to 80.1 rials in trading yesterday.

Doha Bank made the biggest gains on the Qatari market, rising 1.3 per cent to 62.50 rials, while HSBC analysts upgraded much of the country's banking sector yesterday, with Qatar National Bank raised to "neutral" and Qatar Islamic Bank rated "overweight".

Some optimism over Qatar's banks filtered through to the UAE's banks, but in a lacklustre trading session the Abu Dhabi Securities Exchange (ADX) General Index closed flat at 2,444.07. The Dubai Financial Market General Index rose 0.2 per cent to 1,366.34.

National Bank of Abu Dhabi led the ADX up in trading, rising 0.5 per cent to Dh10.05 per share.

Abu Dhabi Commercial Bank rose 0.3 per cent to Dh2.77, despite being cut to "underweight" by analysts at HSBC. Both banks are expected to release earnings next week, alongside other big lenders such as Emirates NBD and First Gulf Bank.

However, the Qatari banking system was different from the UAE's, and any optimism should be tempered with a recognition of lower lending growth in the Emirates, said Ankur Shah, the director of equity research at Arqaam Capital.

"In Qatar, you're still seeing really dramatic lending growth among the public sector and even the private sector," he said.