- The market value of the banking sector shares constitutes 59% of the capital value of Boursa Kuwait
- Banks attracted 4 billion dinars of liquidity within 9 months … equivalent to 61% of the total liquidity
The Kuwait Stock Exchange was able to return to achieving gains and recovering from the shock of the “Corona” pandemic crisis, which incurred great losses since its inception in Kuwait last March, as the stock market achieved a growth of 5.1% in its market value since the beginning of the crisis, to move towards compensating all the losses it suffered, and escalating The market value for the first time since the spread of “Corona” to 33.2 billion dinars.
In conjunction with this good performance of the Stock Exchange, the Kuwaiti banking sector in the Stock Exchange was able to compensate for its losses in the market value since the beginning of the crisis, as the market value of the sector rose from its lowest level until September 29, by about 4 billion dinars, to record 18.78 billion dinars as on September 29, However, it is still about 5 billion dinars less than the highest level it reached at the beginning of 2020.
The market capitalization of banks listed on the Kuwaiti Stock Exchange had lost about 9 billion dinars, between their highest levels during the current year at 24.14 billion dinars, and the lowest level recorded after the Coronavirus crisis at 14.84 billion dinars.
During the first 9 months of this year, the market value of the banking sector listed on the Kuwait Stock Exchange lost about 3 billion dinars, meaning a loss of 14%, so that the market value of the sector was recorded at about 18.78 billion dinars, which is equivalent to 59% of the market value of the Kuwait Stock Exchange, after That it recorded 22 billion dinars by the end of 2019.
The sector attracted a total liquidity during the first nine months of 2020 amounting to 4 billion dinars, equivalent to 61% of the stock market’s liquidity, which during the same period amounted to 6.5 billion dinars, as it came at the forefront of the banks that acquired liquidity, “your house with 1.26 billion dinars, and” Al-Watani with 947 million dinars, and Al-Ahly United – Bahrain with 797 million dinars, during the first 9 months of 2020.
Bank stocks performance
As for the recovery of bank share prices from their lowest levels recorded in last April, it is evident that most banks have significantly reduced their losses in the market value, as Boubyan Bank’s share rose by 44% from its lowest close in April 2020, while it is still down by 10% from The highest close since the beginning of the current year.
Also, the share price of Ahli United – Bahrain rose from its lowest level by 43%, while its losses from the highest close amounted to 31%. National Bank of Kuwait’s share price recovered and rose by 28% from its lowest close in 2020 and is still down by 21% from its highest close since the beginning of the year. As for Kuwait Finance House, its share price increased by 22% from the lowest close and is still losing 21% from the highest Lock him up.
High sector ratings
As for bank valuations, despite the significantly lower prices, the net profits of all banks for the first half of 2020 decreased at a rate of 56% for the sector, sector assessments (profitability multiples and price-to-book value multiples) rose to high levels compared to past years.
However, most of them still constitute long-term investment opportunities based on current prices, and an improvement in valuations is expected at current prices, as the financial performance of banks during the second half of the current year and the next year may witness a moderate improvement in revenues and net profits in conjunction with the gradual return to economic activity in Kuwait after a period of economic shutdown was painful for all companies.
The banking sector listed on the Kuwait Stock Exchange is currently trading at a P / E ratio of 20.8 times based on profits for the past 12 months ending on June 30, 2020, compared to the P / E Ratio 14 times last year, while the price-to-book ratio of P / BV Ratio is 1.87 times after It was recorded 1.95 times at the end of 2019 and 1.6 times in 2018.
Burgan Bank trades at a P / E ratio of 8.5 times after it recorded 9.9 times before the decline and is considered the best among Kuwaiti banks, while Al Ahli United-Bahrain and Gulf Bank trade at a P / E ratio of 11.4 and 13 times respectively, and it is considered better when compared to the sector and stock rates.
Al Ahli United trades at 14 times the profit multiplier, while Boubyan Bank, its profitability ratio is still the highest among banks at 35.4 times, up from 23 times, in conjunction with the recovery of the share price and the decline in the bank’s net profits for the first half by 41%. As for the National Bank of Kuwait, it is trading at a profit multiplier of 19.7 times and your house at 25 times higher than the sector average, which recorded 20.8 times.
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