Bank Albilad has limited bottom line growth in Q2 2019: Falcom

Bank Albilad’s net income after zakat increased 14.7 percent year-on-year (YoY) to SAR 304.9 million in Q2 2019 owing to a rise in income from investment and financing activities, Falcom Financial Services said in a note.

However, a decrease in fee and commission income, dividend income, net exchange income, and the gains of investments partially limited bottom line growth, Falcom added.

The bank recorded 13.3 percent YoY growth in net loans to SAR 53.7 billion, lower than the growth in deposits at 13.7 percent YoY to SAR 59.3 billion.

In July, the Saudi Arabian Monetary Authority (SAMA) announced a cut in repo rates to 275 basis points (bps) from 300 bps, following the Fed’s stance of a softer monetary policy in the US. The drop in repo rates is expected to boost credit demand in the country, which had come under pressure due to higher interest rates, according to Falcom.

“Given the countervailing factors, we revised our target price with a fair value of SAR 27.1 per share and retain our ‘Neutral’,” Falcom noted.

Assets grew 12.5 percent YoY to SAR 77.0 billion, while investments surged 70.3 percent YoY to SAR 9.2 billion in Q2 2019.

In July 2019, the bank’s board recommended a 4 percent cash dividend for H1 2019, amounting to SAR 300.0 million for 750.0mn of its outstanding shares.

During the quarter, the bank signed an agreement to join the e-finance portal launched by the Small & Medium Enterprises General Authority (Monshaat) with the aim of streamlining procedures for entrepreneurs and the owners of small- and medium-sized enterprises (SMEs) to benefit from the bank’s finance services.