The outlook for the UAE banking sector remains positive over the short to medium term, supported by favourable macroeconomic conditions and strong bank fundamentals, according to CI Capital Research.
While momentum in Saudi Arabia is still resilient, the firm’s GCC banks strategy report points to several headwinds weighing on the kingdom, including widening fiscal deficits, project rationalisation, softer oil prices, and tighter system liquidity.
Unlike the UAE, most Saudi bank stocks are trading at or close to historical valuation lows, reflecting investor concerns over growth and profitability. CI Capital said current valuations appear overly pessimistic, with the risk-reward balance increasingly tilted toward upside rather than downside catalysts for the sector.
The report also flagged added uncertainty from recent political instability in Venezuela and evolving geopolitical risks in Iran, which could cloud the outlook for oil prices.
Despite these near-term risks, CI Capital maintains a constructive long-term view on Saudi Arabia, with Saudi banks accounting for six of the top seven names on its scorecard.
Among GCC lenders, Abu Dhabi Commercial Bank (ADCB) ranks first, driven by its strong growth outlook and attractive valuation. Emirates NBD also features on the list, replacing First Abu Dhabi Bank, due to its appealing risk-return profile and near-term margin support from Turkey.
Saudi National Bank (SNB) is highlighted as CI Capital’s top fundamental pick across both MENA and Saudi Arabia. Al Rajhi Bank also makes the cut, seen as a key beneficiary of the removal of foreign ownership limits on the Saudi Exchange. Other top-ranked GCC banks include Saudi Awwal Bank, affiliated with HSBC, and Kuwait’s National Bank of Kuwait (NBK).
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