Shares in National Commercial Bank (NCB) dropped on Wednesday, despite the Saudi lender reporting a 15.4 percent rise in third quarter (Q3) net profit for the year 2018, which was in line with what analysts had expected.

Q3 net profit amounted to 2.45 billion Saudi riyals ($653.17 million), compared to 2.13 billion Saudi riyals for the same period last year. Q3 total revenue for special commissions/investments was of 4.70 billion Saudi riyals, compared to 4.26 billion Saudi riyals a year ago.

NCB’s results were largely in line with analysts' expectations, with SICO bank having forecast it would make a quarterly profit of 2.46 billion Saudi riyals.

“NCB reported net income broadly in-line with consensus. The growth in interest income and asset yields were lower than what we have seen for other Saudi banks this quarter so far but is still healthy,” Pritish Devassy, head of equitiy research at Al Rajhi Capital, told Zawya by email.

In an announcement to the exchange, the bank said that the increase in net income quarter-on-quarter is “derived from higher total operating income and lower total operating expenses”.

Net impairment charges for financing and advances reached 610 million Saudi riyals for the current quarter against 707 million Saudi riyals in the similar quarter of the previous year, resulting in a decrease of 13.7 percent.

Despite the positive earning announcement, NCB’s share price dropped 2.05 percent on Wednesday, while the Saudi index ended the day 0.49 percent lower.

So far this year, the bank’s stock had added 18.26 percent, outperforming the stock market index which has risen 4.26 percent since the start of 2018.

Data from Eikon shows that the Saudi banking sector has added more than 9.75 percent from January to date.

“A rise in oil prices when compared to last year has boosted the fundamental outlook of (the) entire Saudi banking sector,” Vijay Valecha, chief market analyst at Century Financial Brokers, told Zawya by email.

On NCB, Valecha said: “The stock has a lot of room to run up as foreign ownership right now is only 1.58 percent when compared to the maximum permissible limit of 49 percent.”

According to data from Eikon, two analysts have a 'strong buy' rating on the stock, two analysts have a 'buy' rating, while five analysts recommended a ‘hold’ rating.

In May 2018, NCB announced the appointment of Faisal Omar Alsakkaf as CEO. (Read more here)

Elsewhere in the region, Dubai’s index dropped 0.55 percent on Wednesday, Abu Dhabi’s index dropped 0.89 percent, Qatar’s index fell 1.09 percent, Kuwait’s index gained 0.74 percent, Bahrain’s index edged 0.36 percent down while Oman’s index ended the day mainly flat and Egypt’s stock market fell 1.24 percent.

(Reporting by Gerard Aoun; Editing by Shane McGinley)


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