DUBAI Oct 18 Saudi Arabia's main stock index
is likely to be weighed down on Tuesday by a string of
subdued quarterly earnings from large-cap companies while
disappointing results from a major lender in Abu Dhabi may sour
sentiment towards other financial stocks.
Domestically focused companies are bearing the brunt of an
economic slowdown, with Saudi Hollandi Bank, which
derives most of its business from corporate loans, posting a
46.7 percent fall in third-quarter net profit on Monday, widely
missing analysts' forecast as it set aside cash to cover an
increase in bad loans.
The lender made a profit of 262.8 million riyals ($70.1
million); three analysts polled by Reuters had forecast 506.4
million riyals ($135.06 million).
Telecom operator Zain Saudi reported on Monday
that its third-quarter loss widened as costs rose and revenue
dropped. The company, which has yet to make a quarterly profit
since launching services in 2008, posted a net loss of 267
million riyals, compared with a net loss of 223 million riyals
in the prior-year period.
Commodity-linked shares were also weak, with Saudi Arabia
Fertilizers Co (SAFCO) missing analysts' forecast and
reporting a 68 percent decline in third-quarter net profit.
SAFCO cited a drop in the selling prices of its products, an
increase in costs which include electricity, for the fall in
profit to 181.4 million riyals from 566.1 million riyals.
But Al Rajhi Bank, the kingdom's largest Islamic
retail bank, reported a 16.7 percent rise in its third-quarter
net profit on Monday, meeting analysts' forecast. The bank
earned 2.01 billion riyals, close to 2.06 billion riyals
forecast by analysts.
Al Rajhi, a retail focused lender, is the first major lender
in the kingdom to report higher profits for the three months to
Sept. 30, building on a run of rising profit growth in the
previous four quarters.
But investors, who have been put-off by Saudi Arabia's
military involvement in Yemen since March 2015, may take note of
the U.N. special envoy for Yemen announcing a plan for a
ceasefire in Yemen starting on Wednesday night that would last
for 72 hours. Although previous attempts of a truce have been
Elsewhere in the Gulf, Abu Dhabi's Union National Bank
, the first to report in the emirate, posted a 15
percent drop in third-quarter net profit, missing analysts'
forecasts as interest income fell. Net profit attributable to
equity holders in the third quarter was 406.64 million
dirhams($110.72 million) versus 480.59 million dirhams in the
($1 = 3.6726 UAE dirham)
($1 = 3.7495 riyals)
(Reporting by Celine Aswad; Editing by Andrew Torchia and