GulfBase GCC Cap Indices
Large Cap4,023 0.80
Med Cap3,850 0.49
Small Cap4,907 0.91
Micro Cap8,519 0.62

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Ticker Price Volume
GFH 0.46 3,578,848
QNBK 135.9 109,396
SABIC 98.06 2,513,945
DSI 0.39 45,711,538
AMLAK 1.09 12,534,009
AIRARABIA 1.12 4,055,524
EEC 18.03 354,774

Commercial Bank of Qatar

Source: NBK Capital

Performance of Banking Stocks in 2010

We take a look at the performance of a sample of banking stocks in the first 11 months of 2010, comparing them in terms of price change, total return, liquidity, volatility, return per risk, and valuation multiples. We attempt to shed some light on stock performance, taking into account not only price appreciation but also the other mentioned indicators that we believe are important criteria investors look at when assessing their investment decisions. The sample consists of 16 of the largest banks in Saudi Arabia, the United Arab Emirates (UAE), and Qatar.

In Figure 1-1, we plot the price changes in the first 11 months of this year, i.e., from the end of December 2009 to the end of November 2010. The outperformance of Qatar National Bank (QNB), Abu Dhabi Commercial Bank (ADCB), and the Commercial Bank of Qatar (CBQ) is very clear, as these banks rallied by 52%, 44%, and 40%, respectively, significantly outperforming their respective country banking indices. While the performance of the Qatari banks, especially QNB, was driven by superb financial results and a very strong fundamental story relating to public sector growth in Qatar, the rally in ADCB’s share price can be attributed more to a significantly cheap valuation as the bank’s P/B was around 0.4x at the start of this year. One reason for this cheap valuation is that ADCB was hit on many fronts in the past few years, with material losses and provisions relating to its exposure to subprime-related investments, the two troubled Saudi groups (Al Gosaibi and Saad), and, last but not least, Dubai World.

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