Bank Albilad’s profitability set to improve, says Riyad Cap

Bank Albilad’s profitability is expected to improve on increasing spreads and controlled expenses, Riyad Capital said in a recent report.

Full-year net income is likely to jump 22.3 percent year-on-year to SAR 988 million.

Cash dividends are projected to rise to SAR 0.60 per share in 2017.

Albilad expanded its financing portfolio by around SAR 4.5 billion amid a muted growth in lending activity.

Deposit growth for the period has also been impressive at SAR 4.7 billion year-to-date as the bank reversed the downtrend that started in Q2 2016.

“We also anticipate a +17 percent Y/Y growth in deposits this year in order to maintain LDR at somewhat comfortable level and allow for more expansion on the financing side, the brokerage firm added.

Albilad’s main challenge is its high cost-to-income ratio, which has been rising due to large network expansions.

Riyad Capital resumed coverage on Albilad, recommending “neutral” rating on the stock with a price target of SAR 19.