Bank Albilad's Q1 net profit fell in-line with estimates: Aljazira Capital

Bank Albilad’s net profit of SAR 316.5 million for Q1 2019 came in-line with Aljazira Capital’s estimates, the research firm said in an earnings report.

“We believe that Albilad’s strong performance and higher operating income was a result of solid loans and deposits growth albeit at a slower rate,” the report said.

Revenue from financing and investing activity came at SAR 769.7 million, compared to an estimate of SAR 781.1 million. The variation was due to lower than expected loan growth of 1.6 percent quarter-on-quarter (QoQ) to SAR 51.4 billion, and higher drop in Murabaha rates (1.497 percent compared to projections of 1.500 percent).

Operating income reached SAR 921 million (16.5 percent year-on-year (YoY) and 2.1 percent QoQ), compared to expectations of SAR 904 million, a deviation of 2 percent.

OPEX came at SAR 605 versus estimates of SAR 585 million, a SAR 3.4 percent variance.

“Lending rate contraction as a result of drop in SAIBOR will limit the bank’s topline; growth will be highly dependent on credit growth,” the firm said.

Funding cost will continue to rise as the bank tries to attract higher murabaha deposits. Share of Murabaha deposits in FY18 stood at 46.9 percent, compared to 40.7 percent a year earlier.

Aljazira Capital maintained a “Neutral” rating on the stock with a target price of SAR 23.8 per share.