Samba Financial Group's (Samba) fourth-quarter net profit of SAR 1.2 billion was almost in line with Riyad Capital's estimates while it matched consensus forecast, the research firm said in an earnings review.
"At (the) first look, spreads have widened year-on-year (YoY) as funding cost dropped considerably," the report said. "On the other hand, non-core income surprised with a steep decline putting pressure on the bottom-line."
Samba did not book substantial provisions, which helped lower operating expenses. Meanwhile, contrary to Riyad Capital's expectations loans declined during the quarter amid a slowdown in lending activity during the year.
However, deposits improved, leading to a decline in loan-to-deposit ratio to 70 percent.
The improvement in earnings per share (EPS) YoY was due to widening spreads and declining operating expenses despite a significant drop in non-core income, the report said.
Riyad Capital has maintained its "neutral" outlook on the stock, with a target price of SAR 29.
"Better use of its balance sheet could trigger stock upside," it added.
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