Saudi Arabia’s Bank AlJazira reported a rise in first quarter (Q1) net profit for the year 2019, meeting analysts’ expectations.

Q1 2019 net profit amounted to 263.3 million Saudi riyals ($70.21 million) compared to 245.3 million riyals for Q1 2018, translating into a 7.34 percent increase.

“AlJazira’s reported sequential loan growth of 3 percent comes as the quarter’s main highlight,” Monsef Morsy, co-head of research at Egyptian brokerage CI Capital, told Zawya by email.

Morsy noted that quarter-on-quarter, the bank’s Q1 2019 loan book grew by 3 percent, compared to a growth of 1.6 percent in Q4 2018, 1 percent in Q3 2018 and 1.8 percent in Q2 2018.

Q1 2019 total revenue for special commissions/investments amounted to 749.9 million riyals, compared to 622.1 million riyals in Q1 2018 - a 20.54 percent increase.

“Net income has increased by 7 percent due to an increase in operating income by 8 percent. This is mainly attributable to an increase in net special commission income, net exchange income, net banking fee(s) and gain(s) on non-trading investments,” the bank said in a statement to the exchange.

Karim Kekhia, equity research analyst at Arqaam Capital, told Zawya by email that "the bank is still targeting growth in retail, but primarily plans to expand its corporate market share within the defense, health, and entertainment sectors." 

Arqaam Capital said in a research report published on April 8, 2019 that it reiterates a 'Core Buy' recommendation on Bank AlJazira, citing the banks relatively low valuation and expansion plans. It argued that the stock's current valuation was "not capturing any RoE (return on equity) expansion potential".

The bank’s shares edged up 0.35 percent to 17.32 riyals by 12:21 GST on Monday, while the shares have gained 21.29 percent so far this year.

“The stock continues to make an undemanding valuation, trading at a P/BV (Price/Book value) of 1.2x, a 37 percent discount to local peers,” Morsy told Zawya.

(Reporting by Gerard Aoun; Editing by Michael Fahy)


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