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|28 April, 2019

Saudi's Arab National Bank reports rise in earnings, shares follow

Improving asset quality, managed opex and NIM expansions are the positives, while deposits outflow was the negative, analyst says

Image used for illustrative purpose. Saudi Arabian currency.

Image used for illustrative purpose. Saudi Arabian currency.

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Saudi Arabia’s Arab National Bank reported a rise in first quarter earnings (Q1) for 2019, triggering a rally in the bank’s shares on Sunday.

Q1 2019 net profit amounted to 920.1 million riyals ($245.71 million), compared to 816.5 million riyals in Q1 2018, translating into a 12.69 percent increase, while SICO Bank’s estimate was 7 percent lower.

“The beat to our estimate was on the back of lower provisioning charges estimated to SAR 153mn, down 13 percent YoY (year-on-year),” Chiro Ghosh, research manager at SICO Bank, told Zawya by email.

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“The bank’s net interest income rose 14 percent YoY, supported by an estimated 34bps (basis points) NIM (net interest margin) expansion,” Ghosh added.

Q1 2019 total revenue for special commissions/investments amounted to 1.94 billion riyals, up by 26.8 percent from 1.53 billion riyals in Q1 2018.

“We expect the market to react positively to the result. Improving asset quality, managed opex (operating expenses) and NIM expansions are the positives, while deposits outflow was the negative,” SICO’s Ghosh said.

Arab National Bank’s opex rose by 2 percent year-on-year, while its lending book marginally declined by 0.7 percent quarter-on-quarter, although it was 6 percent higher year-on-year, Ghosh added.

The bank’s shares rose 2.25 percent on Sunday to 27.3 riyals at 13:55 GST and have added 28.37 percent so far in 2019. Ghosh said that SICO maintains a “Buy” recommendation on the stock.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(gerard.aoun@refinitiv.com)

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© ZAWYA 2019

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