Two of the five largest Saudi banks reported mixed earnings, which may leave investor interest lacklustre following recent underperformance of Saudi banking stocks, while analysts expect further momentum in the UAE bourses rally.
Saudi British Bank (SABB) posted a bigger than expected 24.4 percent rise in fourth-quarter net profit, with its loans portfolio, customer deposits and earnings from special commissions all rising over the year.
Riyad Bank on Monday posted a 4.1 percent rise in fourth-quarter net profit, although the figure missed the average forecast of analysts.
The bank shares index slipped 3.2 percent in the fourth quarter against the main benchmark decline of 0.6 percent. These recovered slightly, gaining 6.3 percent so far in January against the market's 4.2 percent rise.
"Saudi banks had been oversold during the last quarter of 2012 due to expectations that a default by Mohammad Al Mojil Group (MMG) would increase their credit losses and hit their bottom line; however banks are now reporting better than expected results boosted mainly by commission income," al Masah Capital says in a note.
Shareholders in MMG last year rejected the idea of liquidating the construction company, which is burdened by heavy losses and debt. The company's recovery plan include asset sales, cutting bank debt and absorbing accumulated losses.
Saudi International Petrochemical (SIPCHEM) will be in focus after saying its fourth-quarter net profit rose 1.2 percent to 157.7 million riyals.
Elsewhere, the chief investment officer of Abu Dhabi-listed Finance House has resigned from the company, after just three months in the post, two sources familiar with the matter said on Monday.