Itqan Capital upgrades Al Rajhi Bank’s recommendation to ‘Overweight’

Itqan Capital upgraded Al Rajhi Bank recommendation to “Overweight”, and reduced the target price from SAR 69.5 to SAR 66 per share.

The brokerage firm expected the profitability of the bank to decline during the second half of 2019 as a result of a lower interest rate in the Kingdom, which remained one of the main reasons that supported Al Rajhi’s increase in profits during previous periods.

Al Rajhi continued its growth story in H1 2019, with its gross financing & investment income increasing by 14.4 percent in H1 2019.

“However, we expect that the decrease in interest rates and deducting zakat from net income will affect Al Rajhi’s profitability to slow down in H2 2019,” Itqan said.

It also said that key growth catalysts of the bank include digital leadership, and strong financial performance; while risk factors are a decrease in interest rates in the Kingdom, along with deflation in corporate segment.