Saudi corporates brace for uneven 1Q performance amid regional tensions -Sico

Sico Bank’s 1Q 2026 forecasts for Tadawul-listed firms reveal a market in transition, projecting a divergent earnings performance across sectors as regional geopolitical tensions begin to weigh on the kingdom’s corporate landscape, it said in its quarterly preview (pdf). While heavyweight lenders like Al Rajhi Bank and industrial giants like Maaden show resilience, cement and transportation sectors are set to face a slowdown in their net income.

Geopolitics on the income statements

Ramadan helped cushion the war’s blow: The conflict began in the third month of the quarter, overlapping with Ramadan — traditionally a slow period for many sectors, Sico’s Group Head of Research Chiro Ghosh tells EnterpriseAM. That means the immediate impact on earnings “would remain lower than market expectations.” For now, Sico’s projections are “factoring in more sector-specific effects rather than a broad-based impact” across the market.

Who Hormuz is hitting hardest: Ghosh flags that sectors “dependent on the Strait of Hormuz for their supply chains would be the most adversely affected,” particularly real estate, hospitality, and aviation. The impact would also filter into manufacturing.and basic material companies.

Banks are holding steady at the top: Al Rajhi Bank is set to lead 1Q earnings with a 7% y-o-y rise in net income to SAR 6.3 bn, while Alinma Bank posts the fastest growth at 9% to SAR 1.6 bn. ANB, however, is moving in the opposite direction, with earnings expected to fall 13%. The broader picture still points to stability among heavyweights like Riyad Bank, SAB, and SNB.

Watch the dividend safety margin: Banks are set to deliver a 9% y-o-y loan growth, driven by corporates, but higher funding costs are likely to pressure margins and compress NIMs. Asset quality should hold steady, though banks are expected to book higher provisions. Ghosh notes that while no banks have signaled dividend cuts yet, they are now a “viable option” if the conflict persists.

The saving grace? Ghosh expects the Saudi Central Bank to potentially relax capital requirements to help banks maintain payouts.

Momentum in IT services is expected to be softer, due to 1Q being a seasonally weaker period. In telecom, the pre-paid segment may see a decline as tourism slows. Elm continues to push ahead with a 9% increase, while Mobily posts a steady 8% gain. Meanwhile, STC is expected to see earnings drop 12% to SAR 3.2 bn.

The industrials

The cement sector is off to a tough start in 2026 after stronger pricing in the same period last year inflated comparisons. Nearly all major players are facing double-digit declines, led by Yamama Cement (-55%) and City Cement (-52%). Arabian Cement is the sole outlier, with earnings projected to rise 19%.

As for basic materials and mining, Maaden is expected to post an 82% y-o-y increase to SAR 2.8 bn, and Sabid Agri is expected to rise 63% to SAR 1.6 bn, while Advanced Petrochemical heads the other way with a 37% decline.

Consumer and transportation

Retail is looking strong, as staples benefit from the Ramadan effect. Americana leads with an expected 86% jump in net income, while BinDawood (+10%), Al Othaim (+5%), and Leejam (+5%) are all expected to post steady gains.

Healthcare to see mixed results amid timing and expenses: Healthcare revenue growth is expected to be weighed down by heightened geopolitical concerns late in the quarter and the timing of Ramadan. Front-loaded expenses for upcoming hospitals may offset gains from new facilities. Still, Suliman Al Habib is set to buck the trend with a 15% earnings climb, Care should remain positive at 2%, while Mouwasat faces a 14% drop.

In transportation, disruptions will take a toll: Aviation companies like SAL and SGS are likely to feel the impact of March 2026 airspace restrictions and flight cancellations. Airlines such as Air Arabia and Jazeera are expected to be hit the hardest.

The takeaway

Ghosh believes the “impact will be limited in the first quarter results,” but cautions that if the conflict persists, investors should expect a more pronounced effect in the second quarter. While the majority of firms will likely be “affected either directly or indirectly,” Ghosh highlights consumer staples and select logistics companies as the defensive plays likely to “report more favorable results” in the coming months.