Alinma Bank’s Q2 2019 net profits miss consensus estimates: Falcom

Alinma Bank’s net profit grew 11.5 percent year-on-year (YoY) and 5.9 percent quarter-on-quarter (QoQ) to SAR 675.7 billion in Q2 2019. However, its net profits miss consensus estimates, Falcom Financial Services noted in its earnings review, setting the target price of the stock at SAR 24 per share.

Net financing income grew 14.6 percent YoY and 8.7 percent QoQ to SAR 1.1 billion, crossing the billion riyal mark for the first time, the report added. 

“The company benefitted from higher interest rates and solid growth in net financing assets. The customer's deposits for the period grew 4.4% YoY to SAR 92.8bn, taking the loan-to-deposit ratio (LDR) to 94.5 percent from 92.1 percent a year ago,” Falcom added. 

On the other hand, lower fee from banking services and dividend income offset gains from net exchange income and FVSI financial instruments.

Though the bank’s net interest margin continued to improve, the trend may change as repo rates fall or the company’s loan portfolio mix changes, it added. 

“Thus, in view of these countervailing factors, we maintain our “Neutral” rating,” Falcom maintained.