Saudi banks to deliver solid earnings growth
Riyadh, September 17, 2012
Saudi banks are set to deliver double-digit earnings growth for the next three years, owing to higher credit volumes and cost of risk leverage, which could accelerate further should monetary policy tighten, according to a new study.
Saudi banks are among the most profitable in Eastern Europe, Middle East and Africa (EEMEA) region, but the banks (excluding Al Rajhi), trade at a 12 per cent discount to the EEMEA peer group average, said the top Swiss financial services firm Credit Suisse in its study.
This partially reflects regional political uncertainty as well as structural constraints limiting growth potential, the study stated.
"However, we believe Saudi Banks will deliver the most meaningful recovery in earnings growth across the EEMEA region in the next three years, matching MENA banks’ net income momentum as implied by I/B/E/S mean consensus forecast."
"We initiate on six banks: Riyad Bank, Banque Saudi Fransi, Al Rajhi Bank (rated Outperform), SABB (rated Neutral), and Samba FG and Arab National Bank (rated Underperform), the Credit Suisse study added.
In its conclusion, the top Swiss financial group said the earnings normalisation, not growth, was likely to drive valuations.-TradeArabia News Service