The corporate segment will continue to drive financing growth at Saudi Islamic lender, Alinma Bank, said the Riyadh-based Aljazira Capital said in a note on Thursday.

Alinma’s loan growth was steady, albeit at a slower rate, driven by the corporate segment. The bank’s issuance of Tier 1 Sukuk worth 5 billion riyals ($1.33 billion) and receipts from the central bank, SAMA, offset the fall in deposits, the investment bank said.

The bank made a net profit of 738.1 million riyals, up 17 percent on year. 

Following the in-line results and extension of the deferral program, "we increase our EPS estimates for FY21 to SAR 1.38 from SAR 1.23, as the impact of provisions is expected to flow into FY22,” the brokerage said.

Net interest margins (NIM) at Alinma Bank appeared to bottom out with an increase in financing rate, the note said. "With a potential increase in Fed rates in the medium term, we think interest rates are likely to continue the uptrend in FY22. The quarterly lending rate increased to 1.25 percent in Q3-21 from 1.14 percent in Q2-21, signaling early signs of a trend reversal."

Aljazira Capital has a “Neutral” recommendation on the stock with a target price of 23 riyals per share.

(Writing by Brinda Darasha; editing by Seban Scaria)

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