Bank Albilad Q3 earnings miss estimates: Riyad Cap

Bank Albilad’s third-quarter net profit of SAR 248 million met consensus estimates, but fell below Riyad Capital’s expectations of SAR 275 million, the brokerage said in an earnings review.

Q3 net income rose 9 percent year-on-year (YoY) and 4 percent quarter-on-quarter (QoQ), driven by improvement in both core and non-core income, despite a rise in operating expenses.

Non-core income beat Riyad Capital’s estimates, rising 13 percent YoY to SAR 314 million.

“On the other hand, operating expenses witnessed significant uptick contrary to expectations with a 25 percent YoY growth. We believe that the deviation was due to higher provisioning that exceeded Q2 levels,” the brokerage said.

Bank Albilad was able to continue growing its deposits base, adding SAR 1.4 billion QoQ, while continuing to take advantage of higher capital adequacy ratio (CAR) and increase net financing by SAR 1.2 billion, the report said.

The significant jump in investment of SAR 1.4 billion reflects how “Islamic sovereign instruments provide an attractive alternative amid the lackluster growth in demand for credit across the sector,” the brokerage said.

Net financing and investment income went up 24 percent YoY to SAR 449 million, matching Riyad Capital’s forecast of SAR 448 million.

“We believe that spreads have slightly widened as growth in financing and investing income has outpaced funding costs,” the report said.

Riyad Capital maintained its target price on the stock at SAR 19, with “neutral” recommendation.