Risk Averse Saudi Banks Underperform Gulf Peers: Arab Credit - Bloomberg

Saudi Arabian equity investors are punishing the kingdom’s banks for locking assets in low-yielding investments after recovering from the region’s biggest loan defaults.

The shares of Saudi banks have underperformed their peers in the Persian Gulf this year, with the Tadawul All-Share Bank Index tumbling 14 percent. Dubai Financial Market Bank Index gained 3.5 percent in the period and the Qatar Exchange Banking Sector Index advanced 1.5 percent.

Banks in the world’s biggest oil exporter are lending mainly to “blue-chip borrowers” and parking money with the central bank at a time when interest rates are at the lowest level since June 2009, according to Asim Bukhtiar, an analyst at Riyad Capital. “The low-rate environment is not expected to turn around in the next two quarters.”

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