A slide in banking shares after earnings at a major bank missed analysts' estimates dragged down Saudi Arabia's stock market on Monday, while markets in the rest of the region were mixed.
Riyad Bank, the first major Saudi bank to report fourth-quarter earnings, posted a 66 percent fall in net profit to 293 million riyals ($78 million), citing higher impairment charges for credit losses as well as lower operating income from fees and commissions.
It was the sixth quarter in the last seven in which Riyad Bank reported either declining or flat profits, highlighting the challenges the kingdom's banks face as growth in lending and deposits is constrained by sagging oil prices, which have dampened spending by the government, companies and consumers.
Analysts polled by Reuters had on average forecast Riyad Bank would make a profit of 780 million riyals, and its results were taken as a sign that fourth-quarter earnings at other banks might also disappoint.
Riyadh Bank shares dropped 2.7 percent on Monday. In all, shares in 11 of 12 listed Saudi banks fell, with Banque Saudi Fransi losing 3.0 percent. The Saudi stock market index fell 1.6 percent to a seven-week low of 6,824 points.
Oil shipper Bahri sank 5.0 percent after its quarterly net profit came in at 327.8 million riyals versus 566.4 million riyals a year ago. Alistithmar Capital and Albilad Capital had forecast 454.6 million and 431 million riyals.
Two petrochemical firms reported quarterly earnings in line with estimates but still saw their shares fall.
Saudi Kayan Petrochemical Co dropped 4.0 percent after swinging to a net profit of 103.65 million riyals from a loss of 624.14 million riyals a year ago. And Saudi Arabia Fertilisers Co slipped 1.0 percent after reporting a 24.9 percent drop in profit.
Falling stocks outnumbered gainers by 147 to 15. Among the gainers, Al Jouf Cement climbed 1.1 percent after announcing a 10 percent capital increase through an issue of bonus shares.
Dubai's Emirates NBD, the biggest bank in the emirate, beat analysts' estimates with a 13 percent fall in profit to 1.86 billion dirhams ($506 million); analysts had on average forecast 1.62 billion dirhams.
But its illiquid shares still fell in thin volume, closing 1.2 percent lower, and Dubai's index edged down 0.3 percent as trading volume halved from the previous day.
In Qatar, the index edged up 0.2 percent to a fresh four-month closing high of 10,759 points.
Qatar National Bank dropped as much as 2.2 percent in early trade after reporting an 8.3 percent increase in fourth-quarter net profit to 2.75 billion riyals ($755 million); EFG Hermes had forecast 2.99 billion riyals and SICO Bahrain, 3.44 billion riyals. But the stock closed 0.4 percent higher at 166.50 riyals.
"Net interest margins continued to compress amid intense rivalry in local lending market and higher funding costs, while a negative USD position (which deteriorated further last year) poses downside risks to margins," Arqaam Capital said of QNB's earnings. It rates the stock "hold" with a 163 riyal target.
Kuwait's index, which has surged 8.2 percent since the end of last year, outperforming the region after a long period of sluggish performance, closed up 0.02 percent but well off its intra-day high.
Trading activity shrank slightly from the massive volume registered on Sunday, but was still at its second highest level since January 2014.
In Egypt, the index fell 0.2 percent. Global Telecom dropped 3.9 percent to 7.41 Egyptian pounds ($0.40) after its board approved a plan to buy back 524.6 million treasury shares and cancel its listing of global depository receipts on the London Stock Exchange.
But Commercial International Bank rose 3.0 percent to 78.40 pounds after HSBC raised its rating of the stock to "buy" from "hold" and lifted the target price to 88 pounds from 70 pounds.
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