Saudi stocks continue to fall for the third session despite positive bank results

The Saudi stock market posted a combined decline across several major sectors for the third straight session, amid noticeable pressure from energy, banking and basic materials stocks, despite about half of listed banks announcing third-quarter financial results that beat analysts’ expectations. The TASI general index fell by 0.3% today, Tuesday, approaching 11,600 points. Selectivity by stock valuations. Mary Salem, a financial analyst at Al Sharq, believes that the reaction to shares in the banking sector is not only controlled by results, but also by share valuations. She added: “For example, the earnings multiple of Al Rajhi Bank shares is higher than that of the banking sector index, while the National Bank share has a low multiple, which may drive investors to be selective.” Bank shares fall Six out of ten listed banks have released their financial results for the third quarter so far, and the results were mostly higher than the average expectations of analysts, but the shares of most listed banks fell by between 0.1% and 1.25% in morning trading. Salem explained that the results of most banks show an improvement in operating performance, indicating the ability of banks to improve operating income despite the challenges arising from factors such as interest rates and others. She added: “The stability or decline in provisions also indicates the banks’ improved management of non-performing loans, or perhaps their adoption of a new policy regarding cost management, which has improved profit margins.” Expectations of more debt issuance to meet financing. Muhammad Al-Farraj, Senior Head of Asset Management at Arbah Capital, indicated that the six banks that announced their results so far recorded a growth in deposits of about 24 billion riyals, offset by an increase in financing of about 52 billion. He expects that the banks will tend to issue more debt instruments. He added during an intervention with Al-Sharq: “So far, about 19 companies as a whole have announced their results, with a total growth of about 16% over the same quarter of last year, and this may give an impetus to the market during the coming period.” In the basic materials sector, the shares of most cement companies fell, led by Al-Yamamah Cement, which fell by the maximum 10%, after the company’s third quarter profit fell by 63%.