MENA banks Outlook
- We are updating our models for the expected impact of IFRS 9. We use a 3 stage model ─ 12 month expected losses, assume that >30 days past due 50% will migrate to NPLs and use blended LGD for existing NPLs.
- Most Egyptian, Kuwaiti (except BURG) and KSA banks (except SIBC) hold more balance sheet provisions than required under IFRS 9. However, the picture is mixed for Qatar and the UAE (ENBD, DIB are well positioned, most negatively affected should be RAKBANK).
- NIMs should start to improve sequentially in all markets, except KSA due to lower saibor q/q. Cost of risk remains slightly elevated.
- We reduce forecasts for Qatar on slower asset growth, higher CoF and higher CoR depending on the outcome of the standoff and the liquidity that is being provided by QCB and QIA.
- It’s about selection: We play banks that benefit from rising rates and have resilient business models, including FAB, ENBD, Al Rajhi, Samba, SABB, BLOM, Audi, COMI, CIEB, HDBK and QNBA.
Established in 2007, Arqaam Capital is a specialist emerging markets investment bank, bringing regional and international product offerings to the emerging markets. Arqaam Capital combines international best practice with expertise in the markets in which we operate. Our primary role is to provide financial intermediation and create investment opportunities for frontier and emerging markets investors looking to invest in their own markets and abroad, as well as international investors seeking opportunities in target frontier and emerging markets. Arqaam Capital is headquartered in the Dubai International Financial Centre (DIFC), with additional offices in Libya, Lebanon, Egypt, and South Africa.
Arqaam Capital's research platform provides the largest coverage footprint of MENA equities and one of the largest on the African continent with a total of 300 stocks under coverage. Arqaam Capital is ranked as one of the leading research providers in the region - a reflection of its broad coverage universe, its in-depth and high quality research, as well the compelling investment ideas that the team generates. The analysts closely analyze their sectors and issue in-depth company and sector research while the strategy team connects the micro with the macro, focusing on index analysis, macroeconomics and strategy research.
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