Arab National Bank’s Q3 profit in line with estimates, says Riyad Cap

Arab National Bank’s (ANB) net profit of SAR 890 million in Q3 2018 came in line with Riyad Capital’s estimates of SAR 906 million and consensus forecasts of 893 million.

Net special commission income improved as the special commission income rose to the highest level amid higher interest rates and lending growth, Riyad Capital said in an earnings review.

Loans maintained their growth from the previous quarter and grew by SAR 3 billion to SAR 120 billion, close to the brokerage firm’s estimate of SAR 118.8 billion.

Deposits reversed their downward trend, increasing SAR 1.6 billion to SAR 131 billion.

The loan-to-deposit rose to 91 percent from 90 percent making further loan growth difficult, unless the bank vastly increases deposits.

Operating expenses fell 12 percent year-on-year to reach SAR 796 million, due to lower rent and premises related expenses.

“We believe provisioning has been the determining factor for opex this quarter, accruing at SAR 242 million as compared to SAR 328 million in Q3 2017 and SAR 174 million in Q2 2018,” Riyad Capital added.

Investments increased 2 percent YoY to SAR 27 billion as banks become more attracted to government paper.

The bank is likely to generate net profit of SAR 5.18 billion and pay a cash dividend of SAR 1.35 per share for the current fiscal year.

Riyad Capital maintained ANB’s target price at SAR 26.00 with a Neutral recommendation on the stock.