Goldman: GCC banks no longer offer deep value

Gulf Cooperation Council (GCC) banks "no longer offer deep value," but strong balance sheets show they are better positioned to address funding constraints amid growing tensions in global financial conditions, Goldman Sachs said. GCC bank shares have outperformed their emerging markets peers by 20 percent year-to-date, the brokerage said and downgraded Kuwait Finance House and Qatar Islamic Bank to "sell" from "neutral." However, Saudi banks offer an attractive combination of strong fundamentals and relatively undemanding valuations, the brokerage said and raised its price target on Arab National Bank and Banque Saudi Fransi. It also raised its price target for Burqan Bank, National Bank of Kuwait and Doha Bank QSC, and said besides strong balance sheets, "GCC banks' operations are broadly confined within the Middle East and North America region, which partly insulates them from the ongoing economic slowdown in the developed world. The brokerage, however, cut its price target on Kuwaiti banks like Commercial Bank of Kuwait saying they were overvalued and exhibit a weaker growth and asset quality profile.