NCB’s Q3 net profit meets estimates, says Riyad Cap

National Commercial Bank’s (NCB) net profit of SAR 2.45 billion for Q3 2018 came in-line with Riyad Capital’s forecast of SAR 2.50 billion and market consensus of SAR 2.41billion, the research firm said in an earnings review.

Q3 net profit rose 15 percent year-on-year (YoY) on rise in total income and drop in provisions, but fell 5 percent quarter-on-quarter (QoQ) on the back of significantly higher provisions, in spite of the higher total income.

“NCB continued to grow its balance sheet, though not at the same magnitude as last quarter, especially in net loans terms,” the report said.

Loans rose by SAR 2.2 billion to reach SAR 268 billion by the end of Q3. Deposits jumped by SAR 7.8 billion to reach SAR 325 billion for the quarter.

Loan-to-deposit ration edged down to 80 percent from 82 percent.

Investments increased by SAR 1.5 billion to SAR 117 billion, in-line with the estimates of SAR 118 billion.

Total income rose 5 percent YoY and 2 percent QoQ to SAR 4.7 billion, on the back of higher net special commission income (NSCI), which surpassed SAR 1 billion for the first time since Q4 2016. Also non-core income increased on an annual and quarterly basis.

Operating expenses declined 3 percent YoY on lower provisions, but rose 9 percent QoQ to SAR 2.2 billion due to a 79 percent QoQ increase in provisions.

Riyad Capital maintained a “Neutral” rating on the stock with a target price of SAR 48 per share.