Itqan Capital remains ‘neutral’ on Bank Albilad, reduces TP to SAR 22.90/share

Itqan Capital maintained its “neutral” recommendation for Bank Albilad and reduced its target price (TP) from SAR 23.10 to SAR 22.90 per share.

The brokerage firm said in a report that lower cost of funds and high financing growth supported Bank Albilad's performance during Q2, 2020.

The report noted that the bank's portfolio mix shift towards more retail and treasury activities should help support its capital adequacy ratio and non-performing loans ratios, adding that the bank is currently managing a more favorable deposit mix following the significant drop in time deposits.

Itqan Capital expects slower credit growth in H2 2020 as mortgage grows at a slower pace, SAMA's deposits injection comes to an end, and high loan-to-deposit ratio weighs down on financing growth as liquidity tightens.

Bank Albilad might also witness repricing in its mortgage loans (55% of the retail portfolio) rates as slower demand growth pressures lending rates, the report maintained.

Itqan Capital’s neutral rating means that the target share price will stay in the range of (10% up/down) in a 52-week period.