PHOTO
08 May 2017
Consolidation in the banking sector sent positive cues to the Abu Dhabi and Saudi markets- the only two GCC markets closing with gains for the month of April.
Abu Dhabi witnessed positive momentum, with the index in the UAE capital up 1.8 percent in April, buoyed by a 5.3 percent gain in the banking sector.
The catalyst was the completion of the merger of National Bank of Abu Dhabi with First Gulf Bank, creating First Abu Dhabi bank, which has become the largest bank in the UAE, with total assets worth $ 186 billion.
The news was welcome among analysts after a drought in mergers and acquisitions across the Gulf’s banking sector.
“A major impact of FGB and NBAD merger is that it’ll trigger similar tie ups. The markets are anticipating another consolidation in the banking sector in Abu Dhabi towards the end of 2017, which would be accelerated with a recipe ready in this merger for another one sooner than later. Research houses are already factoring this in their assumptions,” a MENA equities specialist, asked to remain anonymous, told Zawya in a telephone interview.
The Saudi market was also under the spotlight as the kingdom’s banking sector now faces the prospect of consolidation.
Saudi stocks got a boost on talk of a potential merger between Alawwal Bank and Saudi British Bank, which would create Saudi Arabia’s third largest bank, with an asset base of $78 billion and the GCC’s seventh largest bank by market value.
“SABB’s biggest shareholder HSBC, which is being mandated on Aramco IPO, is eyeing a bigger stake in the kingdom and getting the blessings of the authorities. The current environment looks very promising for HSBC which advised the kingdom on the sovereign bond issue and such a merger makes perfect sense for it. Saudi Arabia is also trying to qualify for an upgrade to MSCI Emerging Market Index and they want to create bigger and stronger entities along with more accessibility to investors,” the MENA equities specialist told Zawya.
Saudi market ended the month in the positive zone gaining 0.2 percent.
Saudi banks’ earnings
Middle East stock markets have been tracking first quarter earnings in the month of April. The results looked promising at the beginning of the month, with Dubai Islamic Bank, the first in the region to report earnings, announcing a 4 percent increase in first quarter net profit.
Momentum then faded for most regional markets, as a mixed bag of earnings affected investors’ sentiment.
The Saudi banking sector has seen some of the best first quarter earnings in the region. All Saudi banks have now reported results. Most beat analysts' expectations, helping to boost the sector.
Al Rajhi reported a first quarter net profit gain of 10.1 percent, in line with analysts’ forecasts, while National Commercial Bank reported a 2.7 percent rise in first-quarter net profit beating analysts’ forecasts.
Arab National Bank posted a quarterly net profit up 2.5 percent year-on-year, beating analysts’ forecasts.
“Banking sector first quarter results were good, and generally ahead of consensus estimates. The two key areas of surprise were stronger non-interest income, and provisioning numbers that have eased off comparably to the fourth quarter of 2016,” Murad Ansari from EFG-Hermes told Zawya in early May.
Banque Saudi Fransi, Bank Aljazira, Saudi Investment Bank, Riyad Bank, National Commercial Bank, Samba and Saudi British Bank have all met or exceeded analyst’s estimates.
Alawwal Bank reported a 3.3 percent drop in first quarter net profit, missing analysts’ forecast.
© Zawya 2017
Consolidation in the banking sector sent positive cues to the Abu Dhabi and Saudi markets- the only two GCC markets closing with gains for the month of April.
Abu Dhabi witnessed positive momentum, with the index in the UAE capital up 1.8 percent in April, buoyed by a 5.3 percent gain in the banking sector.
The catalyst was the completion of the merger of National Bank of Abu Dhabi with First Gulf Bank, creating First Abu Dhabi bank, which has become the largest bank in the UAE, with total assets worth $ 186 billion.
The news was welcome among analysts after a drought in mergers and acquisitions across the Gulf’s banking sector.
“A major impact of FGB and NBAD merger is that it’ll trigger similar tie ups. The markets are anticipating another consolidation in the banking sector in Abu Dhabi towards the end of 2017, which would be accelerated with a recipe ready in this merger for another one sooner than later. Research houses are already factoring this in their assumptions,” a MENA equities specialist, asked to remain anonymous, told Zawya in a telephone interview.
The Saudi market was also under the spotlight as the kingdom’s banking sector now faces the prospect of consolidation.
Saudi stocks got a boost on talk of a potential merger between Alawwal Bank and Saudi British Bank, which would create Saudi Arabia’s third largest bank, with an asset base of $78 billion and the GCC’s seventh largest bank by market value.
“SABB’s biggest shareholder HSBC, which is being mandated on Aramco IPO, is eyeing a bigger stake in the kingdom and getting the blessings of the authorities. The current environment looks very promising for HSBC which advised the kingdom on the sovereign bond issue and such a merger makes perfect sense for it. Saudi Arabia is also trying to qualify for an upgrade to MSCI Emerging Market Index and they want to create bigger and stronger entities along with more accessibility to investors,” the MENA equities specialist told Zawya.
Saudi market ended the month in the positive zone gaining 0.2 percent.
Saudi banks’ earnings
Middle East stock markets have been tracking first quarter earnings in the month of April. The results looked promising at the beginning of the month, with Dubai Islamic Bank, the first in the region to report earnings, announcing a 4 percent increase in first quarter net profit.
Momentum then faded for most regional markets, as a mixed bag of earnings affected investors’ sentiment.
The Saudi banking sector has seen some of the best first quarter earnings in the region. All Saudi banks have now reported results. Most beat analysts' expectations, helping to boost the sector.
Al Rajhi reported a first quarter net profit gain of 10.1 percent, in line with analysts’ forecasts, while National Commercial Bank reported a 2.7 percent rise in first-quarter net profit beating analysts’ forecasts.
Arab National Bank posted a quarterly net profit up 2.5 percent year-on-year, beating analysts’ forecasts.
“Banking sector first quarter results were good, and generally ahead of consensus estimates. The two key areas of surprise were stronger non-interest income, and provisioning numbers that have eased off comparably to the fourth quarter of 2016,” Murad Ansari from EFG-Hermes told Zawya in early May.
Banque Saudi Fransi, Bank Aljazira, Saudi Investment Bank, Riyad Bank, National Commercial Bank, Samba and Saudi British Bank have all met or exceeded analyst’s estimates.
Alawwal Bank reported a 3.3 percent drop in first quarter net profit, missing analysts’ forecast.
© Zawya 2017
