Goldman Sachs raised its rating on Doha Bank to "neutral," from "sell," following the recent sell off in the company's shares.
Since being added to the brokerage's pan-Europe sell list in January, shares of Qatar's fifth-largest bank, have dropped 27 percent, Goldman said, and removed the stock from its pan-Europe sell list.
"In our view, the stock price already incorporates the bank's relatively weak competitive positioning, below-sector-average loan growth, margin pressure from mix deterioration and relatively weaker asset quality and capitalization," analyst Waleed Mohsin wrote in a note to clients.
Separately, Goldman analysts, including Mohsin and William Mejia, said the lack of disclosure and challenging market conditions made it difficult to assess MENA banks liquidity levels.
"However, looking at comparable metrics we determine that only in the case of Abu Dhabi Commercial Bank , relatively low liquidity, exacerbated by challenging funding conditions could result in sub-par growth and/or margin pressure," they said.
UAE banks remain relatively exposed to external debt markets and any permanent uptick in the cost of debt could negatively impact growth and/or margins, they added.
Saudi banks, however, continue to exhibit abundant liquidity, potentially sheltering the sector from challenging external funding conditions, the analysts said, adding they had a similar view for Qatar National Bank and Doha Bank.
Shares of Doha Bank were trading up more than 2 percent at QR48.80 by 0928 GMT on Wednesday, while those of ADCB were up nearly 2 percent at AED2.23.
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