Recovery in Saudi Banks' lending, says Nomura

Recovery in Saudi Banks’ lending, says investment banking and securities firm

Global investment banking and securities firm raises Samba to "buy" from "neutral" and cuts CIB to "neutral" from "buy" while staying more positive on Saudi and prefering Qatari banks

April 8, 2011 12:15 by Reuters

Saudi banks would see a partial recovery in lending this year, driven by steady retail and reviving corporate businesses, Nomura said.

“We continue to believe that Saudi banks represent the best opportunity in an environment of rising interest rates,” said analyst Tarik El Mejjad, who upgraded Samba Financial Group to “buy.”

Nomura, which remains cautious on UAE banks, said profitability at the banks would remain under pressure amid “uninspiring” core revenues and elevated loan loss charges.

Nomura downgraded Commercial International Bank (CIB) , Egypt’s biggest private bank by assets, to “neutral” and cut its 2011, 2012 earnings estimates on expectations of a sharp slowdown in lending and a rise in loan loss charges.

However, it expects a “rapid recovery” in CIB’s revenue in 2012 driven by a gradual improvement in the domestic political situation.

The brokerage said Qatari banks remain among the most profitable within its Eastern Europe Middle East Africa coverage universe and Qatar remains its preferred market.

Qatari banks offer high and sustainable dividend yields and believes the likely MSCI EM inclusion of Qatar is not priced in, it added. (Reporting by Mary Meyase in Bangalore; Editing by Don Sebastian)