Qatar National Bank (QNB) has initiated coverage of Samba Financial Group with a “outperform” rating and set the share’s target price at SAR 27.
QNB expects a positive performance for the Saudi bank in 2015 with net income estimated to grow by 4.1 percent to SAR 5.2 billion mainly due to a 55.1 percent surge in investment income.
The bank’s performance is seen to decline in 2016, but is expected to rebound in 2017.
“Equipped with one of the lowest LDRs (loan-to-deposit ratio) and short-term repriceable loans, Samba is in a position to benefit from tight liquidity conditions and/or a rising interest rate environment,” QNB said.
The key risk to the rating assumptions is oil prices remaining depressed, which in turn would further weaken the Saudi economy, resulting in having more projects being put on hold or suspended. This would put further pressure on the banking sector, the report added.
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