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Alinma Bank’s Q1 2021 net income of SAR 642 million is above Aljazira Capital and consensus estimates of SAR 512.7 million and SAR 509.4 million respectively, the brokerage firm said in an earnings review.
It added that the deviation was mainly due to lower-than-expected credit provision.
The brokerage firm expects an increase in provisions during the second half of 2021, as the deferred payments program has been extended until June 30, 2021. This could lead to higher operating expenses, which will be strongly reflected on the net profit.
High exposure to corporate loans is projected to lead to re-pricing of loans. Accordingly, the net interest margin (NIMs) will be negatively affected.
Aljazira Capital expects Alinma Bank to achieve a net profit of about SAR 2.1 billion in 2021, indicating that it will review its estimates after the bank disclosed its detailed financial statements.
The firm maintained its ‘Overweight’ recommendation on the stock with a target price of SAR 19.0 per share.
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