Saudi Banking Sector Set for Strong Earnings Growth in Q2 2024
Get ready for a surge in earnings in the Saudi banking sector as financial analyst Hussein Al-Attas predicts a whopping 9 percent annual growth in the second quarter of 2024.
In an interview with Al Ekhbariya, Al-Attas exudes confidence in the upcoming performance of the banking division, hinting at significant improvements in the petrochemical industry as well.
Positive Outlook for Banking, Communication, and Retail Divisions
Consulting firms are painting a rosy picture for the second quarter’s results, especially in the banking, communication, and retail sectors. However, opinions are split when it comes to the cement and petrochemical fields.
Despite the differing views, the sector is expected to show better performance in Q2 compared to the same period last year, although slightly less than the stellar performance in the first three months of this year.
Challenges and Opportunities in the Saudi Economy
Saudi Arabia, known for its rapid economic growth, is exploring revenue diversification avenues that offer banks the chance to invest in low-risk public and private sector projects.
With the private sector driving around 90 percent of total bank assets, the robust economy, higher oil prices, and government support are paving the way for anticipated growth in banks’ asset bases.
Petrochemical Industry Outlook
Being a major global petrochemical producer, Saudi Arabia accounts for roughly 7 percent of the world’s supply, establishing itself as a key exporter of petrochemical resources.
While the industry has seen significant growth, challenges persist, including uncertain demand recovery, high interest rates, logistical issues from Red Sea problems, and seasonal fluctuations affecting demand.
Notable Improvements Expected for Key Companies
Al-Attas predicts remarkable strides for companies like SABIC, Advanced, and Yansab, which have seen increased sales volumes and completed maintenance in the first quarter.
These companies are now operating at full capacity in Q2, with certain petrochemical products showing improvements despite global demand volatility due to geopolitical tensions.
Anticipated Earnings Growth in the Petrochemical Sector
According to Al-Jazira Capital’s forecast, the sector is set to experience a substantial 95 percent earnings growth compared to the previous quarter, with SABIC leading the charge post-first quarter turnarounds.
Expect Tasnee and Advanced to bounce back to profitability in this period, contributing to the overall earnings of the sector.