Snapshot Equity Report MENA BANKS: A Performance Benchmark

Transcription

1 Snapshot Equity Report MENA BANKS: A Performance Benchmark

2 April, 2009 About This Report Equity & Fixed Income Research Reference Classification Topic Analysts BI.SAC.SER Snapshot Equity Report Banks, MENA Stéphane Abichaker ext 1226 Hamzah Abboud hamzah.abboud@blominvestbank.com ext 1233 Nicole-Clémence Khoury nicole.khoury@blominvestbank.com ext 1210 Coverage Period Up to March 31 st, 2009 Publication Date April 27,

3 MENA BANKS: A PERFORMANCE MENA BENCHMARK Outline 1. The BLOM MENA Banking Index 3 2. Purpose of the report 4 3. Methodology 4 4. Benchmarking by country 4.1. Saudi Arabia Kuwait UAE Qatar Morocco Jordan Egypt Bahrain Oman Tunisia Lebanon Risk Return Matrix Bank s League Tables 6.1. Biggest Gainers Q Biggest Losers Q Most Volatile Q Least Volatile Q Most Active Q Biggest Gainers Biggest Losers Most Volatile Least Volatile Appendix I 21 Appendix II 22 Disclaimer 26

4 April, The BLOM MENA Banking Index The BLOM MENA BANKING INDEX is a comprehensive sector index that tracks all of the listed commercial banks * across 11 Arab countries in the GCC, Middle East and North Africa. There are currently 103 stocks in the index. The number of included stocks will vary as companies get listed or delisted. There are currently no weight caps per stock or country within the Index. The Index is market capitalization-weighted and is not free-float adjusted for the time being. The base date is April 19, ,000 BLOM MENA BANKING INDEX 4,750 4,500 4,250 4,000 3,750 3,500 3,250 3,000 2,750 2,500 2,250 2,000 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 The index was created and is maintained by BlomInvest; the following are the coordinates of the person responsible for the index creation and maintenance: Bechara Bardawil, CFA Asset Management bechara.bardawil@blominvestbank.com ext 1208 Reuters: <.BMBI> and <BLOM11> Bloomberg: BLOBMEBK * Listed commercial banks excluding pure investment banks and other financial institutions. 3

5 MENA BANKS: A PERFORMANCE MENA BENCHMARK 2. Purpose of the Report The purpose of this report is to inform interested parties- including but not limited to commercial banks, investment banks, investors, and information providers- about the launching of the BMBI index. The BMBI is a handy tool for benchmarking banks in the MENA region. The time frame for the information used to create this report was between 1 st January, 2007 and 31 st March, Data and figures used in the report were extracted from Bloomberg and processed by Blom Invest. 3. Methodology We looked at the 103 constituent banks as our analysis universe. In part 4 of the report, banks are grouped by country of origin, and both performance (daily return excluding dividends) and volatility (annualized daily standard deviation of returns) are measured versus the BMBI. Four charts are represented for each country: The upper left one represents historical values for both the BMBI and the country s subindex, both being re-based at 1,000 as of January 1 st, The upper-right graph is similar to the precedent, but graphs relative instead of absolute performance: the index s level is constantly 100, while the country s sub-index values are divided by the BMBI s. The lower-left chart shows historical volatility (daily sigma annualized) for both the BMBI and the country s sub-index. Finally, the lower right chart is once again a relative representation, of the country s volatility versus the index volatility, with the latter being constantly at the 100 mark, while the former is divided by the BMBI s daily volatility level. Part 5 of the report includes risk-return scattered charts for the constituent banks and the index, for 2008 and for the first quarter of In part 6 of the report, top-10 league tables were produced for banks, for two periods, i.e. the year 2008 and the first quarter of The league tables list the best and worst performers, and the least and most volatile banks. Finally, one league table lists the most active banks in Q in terms of value traded.

6 April, Benchmarking by Country 4.1 Saudi Arabia 4 Weight in Index as of 01 Jan % Weight in Index as of 31 Mar % Performance Rank (2007- Q1 2009) 11 th of 11 Volatility Rank (31 Mar 2009) 7 th of 11 Number of Constituent Banks 10 Saudi Arabian Banks continuously under-performed the index, with Bank Aljazira for instance being among the biggest losers in 2008 with a loss of 69% (see part 6, Banks league tables). It is also clear that the volatility of the Saudi banking sector has overshot the market average volatility. 5

7 MENA BANKS: A PERFORMANCE MENA BENCHMARK 4.2 Kuwait 5 Weight in Index as of 01 Jan % Weight in Index as of 31 Mar % Performance Rank (2007- Q1 2009) 6 th of 11 Volatility Rank (31 Mar 2009) 8 th of 11 Number of Constituent Banks 9 The Kuwaiti banking sector seems to be one of the least affected by the global crisis among other Arab banking sectors. Indeed, Kuwaiti banks over-performed the index for most of the time from January 2008 till March On the volatility side, Kuwaiti banks stocks had practically the same volatility as the index; however, they started becoming more volatile since the end of 2008.

8 April, UAE Weight in Index as of 01 Jan % Weight in Index as of 31 Mar % Performance Rank (2007- Q1 2009) 10 th of 11 Volatility Rank (31 Mar 2009) 10 th of 11 Number of Constituent Banks 15 In terms of performance, UAE banks shares suffered the brunt of the global crisis with Investbank (-54.6%), RAKBank (-42.4%), and Bank of Sharjah (-31%) ranking amongst the worst performers in Q Interestingly, these banks are also among the 10 most volatile stocks during Q Overall, UAE s banking sector shows more volatility than the MENA index. 7

9 MENA BANKS: A PERFORMANCE MENA BENCHMARK 4.4 Qatar Weight in Index as of 01 Jan % Weight in Index as of 31 Mar % Performance Rank (2007- Q1 2009) 8 th of 11 Volatility Rank (31 Mar 2009) 11 th of 11 Number of Constituent Banks 8 Qatar banks stock performance was the closest to the MENA Index. It was almost the same except for some periods of time mainly the second and third quarters of Moreover, Qatari banks did not encounter big losses in 2008 as compared to their peers. However, Doha Bank was among the biggest losers in Q (-36.7%). Qatari banks seem to be slightly more volatile than the average MENA banking sector with volatility reaching its peak in the third quarter of 2008.

10 April, Morocco Weight in Index as of 01 Jan % Weight in Index as of 31 Mar % Performance Rank (2007- Q1 2009) 2 nd of 11 Volatility Rank (31 Mar 2009) 5 th of 11 Number of Constituent Banks 6 Morocco banks clearly outperformed the Index and thus outperformed market average. This is a good sign that the banking sector in Morocco is handling the crisis well. Morocco s banking sector shares have recently witnessed a surge in volatility. 9

11 MENA BANKS: A PERFORMANCE MENA BENCHMARK 4.6 Jordan Weight in Index as of 01 Jan % Weight in Index as of 31 Mar % Performance Rank (2007- Q1 2009) 4 th of 11 Volatility Rank (31 Mar 2009) 6 th of 11 Number of Constituent Banks 15 Compared to the index, Jordanian banks performed better than the average since June Jordanian banks seem to be more volatile than the MENA peer group, with some exceptions like the Housing Bank of Trade and Finance which was among the least volatile banking stock in 2008 and in Q

12 April, Egypt Weight in Index as of 01 Jan % Weight in Index as of 31 Mar % Performance Rank (2007- Q1 2009) 7 th of 11 Volatility Rank (31 Mar 2009) 4 th of 11 Number of Constituent Banks 15 Egyptian banks over-performed the index upto July 2008 and started deteriorating in the second half of the year, but seem to be recovering their health again lately. Egyptian banks seem to be the most volatile through 2008 as 6 out of the 10 most volatile stocks in the MENA banking sector are Egyptian banks. 11

13 MENA BANKS: A PERFORMANCE MENA BENCHMARK 4.8 Bahrain Weight in Index as of 01 Jan % Weight in Index as of 31 Mar % Performance Rank (2007- Q1 2009) 9 th of 11 Volatility Rank (31 Mar 2009) 3 rd of 11 Number of Constituent Banks 6 Bahraini banks performance is very close to the market average with some discrepancies in the second and third quarters of Bahrain banks shares are also close to the index in terms of risk, as their volatility is moving in line with the latter since H

14 April, Oman Weight in Index as of 01 Jan % Weight in Index as of 31 Mar % Performance Rank (2007- Q1 2009) 5 th of 11 Volatility Rank (31 Mar 2009) 9 th of 11 Number of Constituent Banks 5 Oman banks stocks reached a much higher peak than the average MENA banks as they hit their highest level at almost 2050 during Q whereas the average for the banking sector in the region reached a maximum of However, Oman banks stocks are characterized by a higher volatility than the market average. 13

15 MENA BANKS: A PERFORMANCE MENA BENCHMARK 4.10 Tunisia Weight in Index as of 01 Jan % Weight in Index as of 31 Mar % Performance Rank (2007- Q1 2009) 1 st of 11 Volatility Rank (31 Mar 2009) 2 nd of 11 Number of Constituent Banks 11 Tunisian listed banks are deemed top performers as on the one hand, they have been clearly over-performing the index since July 2008, and on the other hand, this outperformance is kept in check by low levels of volatility relatively to the BMBI s.

16 April, Lebanon Weight in Index as of 01 Jan % Weight in Index as of 31 Mar % Performance Rank (2007- Q1 2009) 3 rd of 11 Volatility Rank (31 Mar 2009) 1 st of 11 Number of Constituent Banks 3 The Lebanese banks have been beating the BLOM MENA Banking index since half one Moreover, Lebanon has witnessed a decrease in relative volatility since the second half of In this sense, the Lebanese listed banks are comparable in terms of performance and risk to their Tunisian counterparts. 15

17 MENA BANKS: A PERFORMANCE MENA BENCHMARK 5. Risk-Return Matrix Risk/Return Matrix for Constituent Banks, % 5 60% 40% 20% Return 0% 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% -20% -40% -60% -80% Risk The above chart represents the risk-return matrix for the BMBI constituent banks in One bank 1 was excluded from the matrix, due to insufficient or problematic data regarding volatility. The green dot represents the BMBI risk/return values in 2008, i.e. a 20.5% volatility and 43.4% return. The red dots represent the dominant stocks in terms of risk/returns. These were, over 2008, the following: 1. Amen Bank, Tunisia, with 26.1% annual volatility and 16.1% return. 2. Union Bancaire pour le Commerce et l Industrie, Tunisia, with 37.2% annual volatility and 17.3% return. 3. United Arab Bank, UAE, with 78.7% annual volatility and 33.3% return. 4. National Bank of Fujairah, UAE, with 131.6% annual volatility and 40.7% return. 5. The fifth bank is a clear outlier, by far beating all the others in terms of risk return. This bank is Attijari Bank, Tunisia, with 35.3% annual volatility and a staggering 75.0% return. 1 Namely, Banque de Tunisie et des Emirats.

18 April, 2009 Risk/Return Matrix for Constituent Banks, Q % Return 60% 40% % 1 2 0% 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% -20% -40% -60% -80% Risk The above chart represents the risk-return matrix for the BMBI constituent banks in Q Three banks 2 were excluded from the matrix, due to insufficient or problematic data regarding volatility. The green dot represents the BMBI risk/return values in Q1 2009, i.e. a 17.4% volatility and 13.0% return. The red dots represent the dominant stocks in terms of risk/returns. These were, over Q1 2009, the following: 1. Attijari Bank, Tunisia, with 18.2% annual volatility and 13.9% return. 2. Bank Saudi Fransi, Saudi Arabia, with 37.2% annual volatility and 23.1% return. 3. El Watany Bank, Egypt, with 45.1% volatility and 29.3% return. 4. Oman International Bank, Oman, with 57.7% volatility and 35.5% return. 2 Namely, Banque de Tunisie et des Emirats, Gulf Bank, and Industrial Development Bank. 17

19 MENA BANKS: A PERFORMANCE MENA BENCHMARK 6. Banks League Tables 6.1 Biggest Gainers, Q Bank Country Gains Oman International Bank Oman 35.5% Piraeus Bank Egypt 33.2% Egyptian Gulf Bank Egypt 29.6% El Watany Bank Egypt 29.3% Al Ahli Bank Qatar 25.1% Banque Saudi Fransi KSA 23.1% Ahli United Bank Egypt 20.6% Saudi British Bank KSA 15.6% Attijari Bank Tunis 13.9% Arab National Bank KSA 13.8% 6.2 Biggest Losers, Q Bank Country Losses Investbank UAE -54.6% Burgan Bank Kuwait -48.6% Commercial Bank of Qatar Qatar -47.6% National Bank Ras Al Khaimah UAE -42.4% Doha Bank QSC Qatar -36.7% Al Ahli Bank Kuwait Kuwait -34.0% Qatar International Islamic Bank Qatar -33.3% Ahli United Bank Bahrain % Qatar National Bank Qatar -31.7% Bank of Sharjah UAE -31.0% 6.3 Most Volatile, Q Name Country Annual Volatility United Arab Bank UAE 153.2% National Bank of Umm Al Qaiwain UAE 137.6% Commercial Bank International UAE 137.4% Bahraini Saudi Bank Bahrain 135.3% Piraeus Bank Egypt 122.2% National Bank of Fujairah UAE 113.0% National Bank of Ras Al Khaimah UAE 106.7% Invest Bank UAE 92.9% Bank of Sharjah UA 91.9% Union National Bank Egypt 88.4%

20 April, Least Volatile, Q Name Country Annual Volatility Union Internationale de Banques Tunisia 4.0% Attijari Bank Tunisia 2.0% Societe Tunisienne de Banque Tunisia 7.0% The Housing Bank for Trade and Finance Jordan 9.0% Banque de Tunisie Tunisia 7.0% Amen Bank Tunisia 5.0% Banque de l'habitat Tunisia 5% Jordan Ahli Bank Jordan 6.0% Banque Internationale Arabe Tunisia 7.0% Arab Tunisian Bank Tunisia 8.0% 6.5 Most Active, Q Bank Country Value Traded (Mn USD) Rajhi Bank KSA 1,596 Kuwait Finance House Kuwait 1,370 National Bank of Kuwait Kuwait 1,345 SAMBA Financial Group KSA 728 Boubyan Bank Kuwait 504 Qatar Islamic Bank Qatar 482 Commercial Bank of Qatar Qatar 478 Masraf Al Rayan Qatar 441 Kuwait International Bank Kuwait 306 Burgan Bank Kuwait Biggest Gainers, 2008 Name Country Gains Attijari Bank Tunis 75.0% National Bank Fujjairah UAE 40.7% United Arab Bank UAE 33.3% Union Bancaire Tunis 17.3% Amen Bank Tunis 16.1% Housing Bank Jordan 15.5% National Bank Umm Al Quam UAE 11.8% Arab Tunisian Bank Tunis 8.5% Banque de Tunisie Tunis 6.0% Banque Centrale Populaire Morocco 0.2% 19

21 MENA BANKS: A PERFORMANCE MENA BENCHMARK 6.7 Biggest Losers, 2008 Name Country Losses Suez Canal Bank Egypt -74.8% Egyptian Saudi Finance Bank Egypt -74.1% Faisal Islamic Bank Egypt -72.4% National Bank for Development Egypt -71.9% Union National Bank UAE -71.4% Ahli United Bank Egypt -71.3% Crédit Agricole Egypt -69.1% Bank Al Jazira KSA -69.0% Export Development Bank of Egypt Egypt -68.2% Abu Dhabi Commercial Bank UAE -66.7% 6.8 Most Volatile, 2008 Name Country Annual Volatility BLOM Bank Egypt Egypt 222.7% Piraeus Bank Egypt 167.8% Ahli United Bank Egypt 164.0% Al Watany Bank Egypt 158.0% National Bank of Fujairah UAE 131.6% Union National Bank Egypt 111.3% Invest Bank UAE 88.3% National Bank of Qatar UAE 87.3% Commercial International Bank Egypt 82.0% United Arab Bank UAE 78.7% 6.9 Least Volatile, 2008 Name Country Annual Volatility Banque Internationale Arabe Tunisia 1.0% Amen Bank Tunisia 0.0% Union Internationale de Banques Tunisia 4.0% Banque Nationale Agricole en Tunisie Tunisia 8.0% Societe Tunisienne de Banque Tunisia 3.0% The Housing Bank for Trade and Finance Jordan 9.0% Banque Marocaine du Commerce Exterieur Morocoo 7.0% Arab Tunisian Bank Tunisia 7.0% Bank of Bahrain and Kuwait Bahrain 2.0% Commercial Bank of Kuwait Kuwait 2.0%

22 April, 2009 Appendix 1: Constituent Banks Performance and Volatility Country Classification Country Performance (2007- Q1 2009) TUNISIA 20.7% MOROCCO 18.0% LEBANON -5.6% JORDAN -14.7% OMAN -25.7% KUWAIT -27.6% EGYPT -29.7% QATAR -39.6% BAHRAIN -41.4% UAE -42.7% SAUDI ARABIA -43.3% INDEX -34.7% Country Annual Volatility (31st Mar 2009) LEBANON 12.4% TUNISIA 15.4% BAHRAIN 19.0% EGYPT 21.5% MOROCCO 22.1% JORDAN 22.4% SAUDI ARABIA 25.0% KUWAIT 30.4% OMAN 34.8% UAE 45.9% QATAR 57.6% INDEX 15.2% 21

23 MENA BANKS: A PERFORMANCE MENA BENCHMARK Appendix 2: Constituents of Blom MENA Banking Index (In alphabetical order) Name Bahrain Ahli United Bank Al Salam Bank Bahrain Islamic Bank Bahrain Saudi Bank Bank of Bahrain and Kuwait National Bank of Bahrain Egypt Ahli United Bank BLOM Bank Egypt Commercial International Bank Credit Agricole Egypt Saudi Finance Bank Egyptian Gulf Bank El Watany Bank Export Development Bank of Egypt Faisal Islamic Bank Housing and Development Bank National Bank for Development National Société Générale Bank Piraeus Bank Suez Canal Bank Union National Bank Jordan Arab Bank Arab Banking Corporation Aran Jordan Investment Bank Bank of Jordan Cairo Amman Bank Capital Bank of Jordan Industrial Development Bank Jordan Ahli Bank Jordan Commercial Bank Jordan Investment and Finance Bank Jordan Islamic Bank Bloomberg Ticker AUB BI Equity SALAM BI Equity BISB BI Equity BSB BI Equity BBK BI Equity NBB BI Equity AUBK EY Equity MRBK EY Equity COMI EY Equity CIEB EY Equity SAUD EY Equity EGBE EY Equity WATA EY Equity EXPA EY Equity FAITA EY Equity HDBK EY Equity DEVE EY Equity NSGB EY Equity PREG EY Equity CANA EY Equity MART EY Equity ARBK JR Equity ABCO JR Equity AJIB JR Equity BOJX JR Equity CABK JR Equity EXFB JR Equity INDV JR Equity JONB JR Equity JOGB JR Equity JIFB JR Equity JOIB JR Equity

24 April, 2009 Name Jordan (cont d) Jordan Kuwait Bank Societe Generale The Housing Bank for Trade and Finance Union Bank Kuwait Al Ahli Bank of Kuwait Bank of Kuwait and the Middle East Boubyan Bank Burgan Bank Commercial Bank of Kuwait Gulf Bank Kuwait Finance House Kuwait International Bank National Bank of Kuwait Lebanon Audi Bank BLOM Bank Byblos Bank Morocco Attijari Wafa Bank Banque Centrale Banque Marocaine du Commerce et du L'Industrie Banque Marocaine du Commerce Exterieur Credit du Maroc Credit Immobilier et Hotelier Oman Ahli Bank Bank Dhofar Bank Muscat National Bank of Oman Oman International Bank Qatar Al Ahli Bank Al Khaliji Bank Commercial Bank of Qatar Doha Bank Masraf Al Rayan Bloomberg Ticker JOKB JR Equity MEIB JR Equity THBK JR Equity UBSI JR Equity ABK KK Equity BKME KK Equity BOUBYAN KK Equity BURG KK Equity CBK KK Equity GBK KK Equity KFIN KK Equity KIB KK Equity NBK KK Equity AUSR.BY BLBD LB Equity BYBP LB Equity ATW MC Equity BCP MC Equity BCI MC Equity BCE MC Equity CDM MC Equity CIH MC Equity ABOB OM Equity BKDB OM Equity BKMB OM Equity NBOB OM Equity OIBB OM Equity ABQK QD Equity KCBK QD Equity CBQK QD Equity DHBK QD Equity MARK QD Equity 23

25 MENA BANKS: A PERFORMANCE MENA BENCHMARK Name Qatar (cont d) Qatar International Islamic Bank Qatar Islamic Bank Qatar National Bank Saudi Arabia SAMBA Al Rajhi Bank Arab National Bank Bank Al Jazira Bank Albilad Bank Saudi Fransi Riyad Bank Saudi British Bank Saudi Hollandi Bank Saudi Investment Bank Tunisia Amen Bank Arab Tunisian Bank Attijari Bank Banque de L'Habitat Banque de Tunisie Banque de Tunisie et des Emirats Banque Internationale Arabe Banque Nationale Agricole en Tunisie Societe Tunisienne de Banque Union Bancaire pour le Commerce et L'Industrie Union Internationale de Banques UAE Abu Dhabi Commercial Bank Abu Dhabi Islamic Bank Bank of Sharjah Commercial Bank International Commercial Bank of Dubai Emirated National Bank of Dubai First Gulf Bank Invest Bank National Bank iof Umm Al Quwain National Bank of Abu Dhabi Bloomberg Ticker QIIK QD Equity QIBK QD Equity QNBK QD Equity SAMBA AB Equity RJHI AB Equity ARNB AB Equity BJAZ AB Equity ALBI AB Equity BSFR AB Equity RIBL AB Equity SABB AB Equity AAAL AB Equity SIBC AB Equity AB TU Equity ATB TU Equity TJARI TU Equity BH TU Equity BT TU Equity BTEI TU Equity BIAT TU Equity BNA TU Equity STB TU Equity UBCI TU Equity UIB TU Equity ADCB UH Equity ADIB UH Equity BOS UH Equity CBI UH Equity CBD UH Equity ENBD DB Equity FGB UH Equity INVESTB UH Equity NBQ UH Equity NBAD DH Equity

26 April, 2009 Name Bloomberg Ticker UAE (cont d) National Bank of Fujairah National Bank of Ras Al Khaimah Sharjah Islamic Bank Union National Bank United Arab Bank NBF UH Equity RAKBANK UH Equity NBS UH Equity UNB UH Equity UAB UH Equity 25

27 MENA BANKS: A PERFORMANCE MENA BENCHMARK IMPORTANT DISCLAIMER This research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. Blom Bank SAL or Blom Invest SAL can have investment banking and other business relationships with the companies covered by our research. We may seek investment banking or other business from the covered companies referred to in this research. Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desks that reflect opinions that are contrary to the opinions expressed in this research. Our asset management area, our trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research. We and our affiliates, officers, directors, and employees, excluding equity analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research. This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice. The price and value of the investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. Copyright 2009 Blom Invest SAL. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of Blom Invest SAL.

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