Regional investors will be eyeing Qatar's banks this week.
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Qatar National Bank (QNB), the country's biggest lender by assets, reported on Tuesday a 32 per cent increase in profit to 7.5 billion rials - but its proposed 40 per cent cash dividend has disappointed investors, sending the shares 5.2 per cent lower, the biggest one-day drop since 2009.
No wonder investors are eagerly awaiting the fourth-quarter earnings reports from Qatar's other banks.
"The expectation for strong dividend payments are quite high," said Saleem Khokhar, the head of equities at National Bank of Abu Dhabi. "Markets are expecting companies to pay out, and if there is more disappointment, I think what we saw with … QNB will happen."
Qatar's QE Index, which outperformed Gulf markets last year, fell 1.4 per cent to 8,699.46 last week. The index has slipped 0.9 per cent since the beginning of the year.
"Investors are shifting their focus to the rest of the sector," said Marwan Shurrab, the vice president and chief trader at Gulfmena Investments in Dubai.
"While QNB's dividend was low on a yield basis, it is still attractive when compared to the rest of the region."
Analysts are expecting similar growth for the rest of the Qatari banking sector.
Commercial Bank of Qatar is forecast to report a 44 per cent increase in quarterly profit to 444.1 million rials, according to analysts polled by Reuters.
Shares of the third-largest lender by market value declined 0.7 per cent to 84.40 rials last week.
Doha Bank is predicted to post a 68 per cent increase in profit to 267.60m rials.
Shares of the fifth-largest lender by market value rose 0.7 per cent to 66.20 rials last week.
Qatar Islamic Bank is expected to show a 7.9 per cent drop in profit to 394.23m rials. Shares of the second-biggest Sharia-compliant lender declined 0.9 per cent to 83.70 rials.
Qatar, which is hosting the 2022 Fifa World Cup, may realise 19 per cent economic growth for last year, according to forecasts by the IMF in October.
Global Investment House said it was "bullish" on Qatar's banks as infrastructure projects are planned on the strength of the country's gas-exporting economy.
"Qatar's burgeoning economy will trickle down quite favourably to its banking sector," the Kuwaiti investment bank said in a note last week. "Qatari banks are still expected to exhibit one of the strongest loans disbursement in the GCC, especially as the major spending on Fifa World Cup inches closer."
In the UAE, however, a less-rosy scenario looks likely.
Emirates NBD, the country's biggest lender by assets, is forecast to report a 58 per cent drop in profit to Dh172.15m for the fourth quarter.
National Bank of Abu Dhabi, the second biggest bank by assets, is expected to show a 3.4 per cent increase in its bottom line to Dh756.43m.
The Abu Dhabi Securities Exchange General Index lost 1 per cent to 2,360.55 last week, while the Dubai Financial Market General Index slipped 0.5 per cent to 1,327.54.
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