Riyad Bank results may boost Saudi sentiment

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Saudi Arabia banking stocks are likely to be buoyant on Monday after the kingdom’s third-largest lender, Riyad Bank, posted estimate-beating earnings.

The bank’s first-quarter profit rose 5.5 percent on back of higher income. Riyad’s better-than-expected results may spur investors to buy bank stocks, but some will remain cautious until top listed lender Al Rajhi Bank also reports.

The banking index is up 1.8 percent this year, lagging the wider benchmark’s 4.6 percent gain after muted loan growth and pressure on net interest margins weighed on earnings in the previous quarter.

“We expect a bottoming out of margin contraction in 2013 and hence expect current valuations to improve,” NCB Capital says in a research note. “We continue to prefer large-caps banks such as Al Rajhi, Samba Financial Group and Riyad, which trade at attractive levels and offer high dividend yields.”

Elsewhere, Qatar National Bank (QNB) will be in focus after it posted a 6.7 percent jump in first-quarter net profit, in line with analysts’ estimates. QNB shares fell 0.7 percent on Sunday before the results were announced against a wider index decline of 0.5 percent.

In Kuwait, a unit of logistics company Agility has won a three-year contract with an estimated revenue of $190 million to supply an international mission in Sudan’s Darfur region.

In Abu Dhabi, telecom operator Etisalat has lined up an $8 billion dual-tranche loan facility to finance its bidto acquire Vivendi’s VIV.PA stake in Maroc Telecom IAM.CS, bankers working on the deal said.

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