Logo of Al Rajhi Bank
In this report, Argaam highlights the opinions of 11 research firms on the financial results of Al Rajhi Bank, the second-largest Saudi bank in terms of assets, as earnings rose to SAR 5.10 billion in Q3 2024.
Six research firms assigned a “Neutral” rating, while five issued a “Buy”, based on their respective valuation criteria.
Morgan Stanley set the highest target price (TP) at SAR 116.00 per share, while Riyad Capital set the lowest at SAR 82.00. The average TP was SAR 99.44/share.
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Research Firms’ TP for Al Rajhi Bank After Q3 2024 Results (SAR) |
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|
Date |
Research Firm |
Rating |
Price (SAR) |
Change |
||
|
Previous |
Current |
Current* |
Target |
|||
|
7/11/2024 |
CI Capital |
Neutral |
Neutral |
92.20 |
93.50 |
+1.4% |
|
18/11/2024 |
Arqaam Capital |
Hold |
Hold |
92.20 |
86.00 |
(6.7%) |
|
14/11/2024 |
HSBC |
Hold |
Hold |
92.20 |
90.10 |
(2.3%) |
|
14/11/2024 |
Yaqeen Capital |
Buy |
Buy |
92.20 |
107.00 |
+16% |
|
11/12/2024 |
FAB Securities |
Hold |
Hold |
92.20 |
95.00 |
+3% |
|
11/12/2024 |
Bank of America |
Buy |
Buy |
92.20 |
115.20 |
+25% |
|
11/12/2024 |
Citibank Group |
Neutral |
Neutral |
92.20 |
102.00 |
+10.6% |
|
11/12/2024 |
Morgan Stanley |
Overweight |
Overweight |
92.20 |
116.00 |
+26% |
|
29/10/2024 |
EFG Herms |
Buy |
Buy |
92.20 |
105.00 |
+13.9% |
|
28/10/2024 |
Riyad Capital |
Neutral |
Neutral |
92.20 |
82.00 |
(11%) |
|
27/10/2024 |
AlJazira Capital |
Overweight |
Overweight |
92.20 |
102.00 |
+10.6% |
|
1/12/2024 |
Average TP |
SAR 99.44 |
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*Closing Price (Dec. 1)
For more details on analyst views on the saudi market
AlJazira Capital said that the bank’s net profit was in line with its estimates, noting that the lender’s net interest margin (NIM) fell by 124 basis points (bps) since the start of interest rate hikes in 2022 due to the large exposure to fixed-rate mortgage loans.
Al Rajhi Bank will likely achieve a net profit compound annual growth rate (CAGR) of 12% in the medium term (2023-2027), with the best average return on shareholders’ equity at 20. Dividends per share are expected to rise to SAR 2.5 and SAR 3.0 in 2024 and 2025, respectively, the brokerage added.
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Forecasts vs. Actual Results in Q3 2024 (SAR mln) |
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|
Company |
Q3 2024 (Projected) |
Q3 2024 (Actual) |
Deviation |
|
Osool & Bakheet |
4938.16 |
5103.43 |
3.3% |
|
Riyad Capital |
4851.00 |
5.2% |
|
|
SNB Capital |
4820.00 |
5.9% |
|
|
AlJazira Capital |
4818.00 |
5.9% |
|
|
SICO Bank |
4803.00 |
6.3% |
|
|
EFG Hermes |
4801.00 |
6.3% |
|
|
Yaqeen Capital |
4758.00 |
7.3% |
|
|
Value Capital |
4735.62 |
7.8% |
|
|
Ubhar Capital |
4508.60 |
13.2% |
|
|
Arqaam Capital |
4502.00 |
13.4% |
|
|
Citigroup |
4480.00 |
13.9% |
|
|
United Securities |
4440.00 |
14.9% |
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Elsewhere, Al Rajhi Bank’s Q3 2024 earnings matched Riyad Capital’s estimates. The brokerage firm explained that the growth in the bank’s net income was driven by strong growth in net financing and investment income. Additionally, non-interest revenues contributed positively.
Riyad Capital indicated that the cost-to-operating income ratio improved, as it fell to 25%, reflecting higher operational efficiency.
Furthermore, Yaqeen Capital believes that the bank’s strong position in the sector will allow it to benefit from the expected credit growth, which will be driven by the increase in government spending, private sector spending and the expected change in interest rates. The bank's good net interest margin position will allow it to achieve intense competition.
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Research Firms’ Projections for Al Rajhi Bank’s Profit in 2024 |
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|
Research Firm |
Projected Profit for 2024 (SAR mln) |
Actual Profit for 2023 (SAR mln) |
|
AlJazira Capital |
18527.00 |
16621.16 |
|
HSBC |
17624.00 |
|
|
EFG Hermes |
18865.00 |
|
|
SNB Capital |
17011.00 |
|
|
Yaqeen Capital |
19596.00 |
|
|
Itqan Capital |
15258.00 |
|
|
Arqaam Capital |
18055.00 |
|
|
United Securities |
17699.00 |
|
|
JP Morgan |
17541.00 |
|
|
SICO Bank |
18644.00 |
|
|
Goldman Sachs |
18139.00 |
|
|
Ubhar Capital |
18325.00 |
|
|
FAB Securities |
19328.00 |
|
|
Beltone Financial |
19211.00 |
|
|
CI Capital |
19451.00 |
|
|
UBS Saudi Arabia |
17948.00 |
|
|
Citibank |
17753.00 |
|
|
BofA |
17657.18 |
|
|
Morgan Stanley |
17908.00 |
|
|
Jefferies |
19075.00 |
|
First Abu Dhabi Securities said that the bank's repricing under the interest rate cut scenario will be slow, given that most of its financing portfolio consists of retail loans.
The brokerage also indicated that the bank plans to attract new customer segments by investing in digitization and automation.
AlJazira Capital noted that Al Rajhi Bank recorded the highest growth rate in net profit among banks in the Kingdom during the third quarter of 2024.
The brokerage expected the US Federal Reserve to cut interest rates by 25 bps at its meeting on Dec. 18.
Currently, Al Rajhi Bank’s stock is trading at around SAR 92 per share, as shown in the following table:
|
Key Financial Indicators |
|
|
Closing Price (Dec. 1) |
SAR 92.20 |
|
52-Week High |
SAR 96.00 |
|
P/E Ratio (TTM) |
20.05 |
|
P/B Ratio (x) |
3.88 |
|
Dividend Yield (Last year) (%) |
2.50 |
Al Rajhi Bank’s board of directors decided, in August, to distribute a 12.50% cash dividend to shareholders (SAR 1.25 per share) for H1 2024, data compiled with Argaam showed.
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