JP Morgan maintains 'Overweight' on Al Rajhi Bank, raises TP to SAR 100

Al Rajhi Bank headquarters

JP Morgan maintained its "Overweight" rating on Al Rajhi Bank, but revised the target price (TP) higher to SAR 100 from SAR 81 per share.

Al Rajhi Bank's medium-term outlook is now better than ever, the investment bank said, noting the stock is worth it due to the high growth vision, although the valuation may seem high.

Besides, it does not expect ratings downgrades and sees growth in the estimated book value.

Stable deposits, large customer base, public sector relations and a wide network across the Kingdom - all these factors - put Al Rajhi Bank in a significantly advanced position compared to its counterparts in terms of liquidity, JP Morgan highlighted.

Retail loans, which account for 80% of the bank's total loans, indicate that Al Rajhi Bank will perform better than its competitors in terms of net interest margin.

JP Morgan pointed out that the Saudi bank remains in the best position to benefit from both the strong growth of mortgage loans and the ongoing transition from cash to electronic payments.

Al Rajhi Bank is estimated to report a net profit of SAR 12.01 billion in 2021, SAR 13.01 billion in 2022, and SAR 14.02 billion in 2023.