Q1 results buoy banks, Zain Saudi soars on record profit

DUBAI / Reuters

Generally positive first-quarter results from Gulf banks helped lift financial stocks on Wednesday, while Saudi Arabia’s third-largest telecoms operator jumped by its daily limit after reporting its first ever quarterly net profit.
Shares in Qatar National Bank, the largest lender by assets in the Gulf Cooperation Council (GCC), rose 1 percent after it announced net profit of 3.2 billion riyals ($879 million) for the three months to March 31, up 12 percent from the prior year period and beating Arqaam Capital analysts’ forecast of 3.0 billion riyals.
Loan growth was up 33 percent year on year to 536 billion riyals, while customer deposits rose by 34 percent to 541 billion riyals. Its peers that trade on Doha’s exchange were also strong, with Commercial Bank climbing 2.4 percent. The index gained 0.7 percent.
In Saudi Arabia, banking shares were also robust with all but one of the 12 lenders advancing. Confidence in the sector was lifted after Saudi British Bank reported earnings that were broadly in line with estimates. Its shares closed 2.3 percent higher.
The lender made a first quarter net profit of 1.04 billion riyals, down 9.3 percent from the year-ago period. SABB attributed the fall in net profit to higher operating expenses, but said it was partially offset by a 1.6 percent increase in operating income.
Shares in telecommunications operator Zain Saudi jumped 10 percent to 10.05 riyals in their opening minutes of trade after the company made its first ever quarterly net profit since listing in 2008, of 45 million Saudi riyals. That compared to a loss of 249.7 million in the prior-year period, and beat analysts’ estimate of a loss of 104 million riyals.
Zain Saudi’s sales rose 9 percent to 1.92 billion riyals. Analysts at NCB Capital attributed the surprisingly positive result to strong top-line growth, a record-high gross margin of 67.3 percent, and lower-than-expected depreciation and financing costs.
Elsewhere, Dubai Islamic Bank extended its prior session gains to add 1.7 percent; on Tuesday the lender reported a 4 percent rise in first quarter results. The index on which it trades,, gained 0.2 percent on Wednesday.
In neighbouring Abu Dhabi, Union National Bank surged 6.4 percent after the company reported first quarter results that came ahead of analysts’ expectations. The lender made a net profit of 452 million dirhams ($123.06 million); three analysts polled by Reuters forecast a quarterly average profit of 443.62 million dirhams and this compares to a net profit of 450 million dirhams in the year earlier period.