Banking stock hot in Abu Dhabi ahead of earnings

Markets Update: Abu Dhabi banks were among the top gainers in the capital ahead of second quarter results.

Investors poured into Abu Dhabi's banking stocks ahead of a slew of second quarter results expected in the next few weeks.

National Bank of Abu Dhabi, the UAE's second biggest bank by assets, gained 1 per cent to Dh11.15, while First Gulf Bank edged 0.8 per cent higher to Dh18, though the number of traded shares remained weak.

That was also partly because of anticipation that this stock will become more liquid after it increased its limit on foreign ownership to 25 per cent from 15 per cent.

But analysts also pointed to limited growth for the country's banks.

A recent Goldman Sachs report downgraded several of the UAE's top banks, and slashed earnings estimates by 10 per cent on average from 2011 to 2014 because of expectations that a new regulation that limits retail fee income will effect lenders' top line.

"It is very unlikely that banks in the UAE are going to grow significantly," said one analyst from an international bank who did not want to be named.

Stock-specific news has played an important role in traders' decision-making, the analyst said, particularly regarding Abu Dhabi Commercial Bank, which sold its stake in Malaysian lender RHB Capital to Aabar Investments.

Shares in the country's largest lender by assets rose 2.5 per cent to Dh3.28 at the end of last week, the highest level in 3 weeks.

Elsewhere, Saudi Arabian companies continued to report second quarter earnings, as Yanbu National Petrochemicals Company said earnings role to 963.7 million Saudi riyals from 502.4 million riyals a year ago.