Q3 figures of Alawwal Bank exceed estimates; says Riyad Capital

Alawwal Bank posted a net profit of SAR 281 million in Q3 2018, in-line with market expectations of SAR 284 million but higher than Riyad Capital’s forecasts of SAR 240 million, Riyad Capital said in an earnings review.

The deviation versus estimates stems primarily from higher than expected net special commission income (NSCI) and lower than expected provisions.

Net profit, down by 23 percent YoY but up 11 percent QoQ, was driven by lower NSCI and non-core income, in addition to higher opex; whereas the quarterly growth comes on the back of better NSCI and lower opex.

As the bank prepares for its merger with SABB, it is normal to witness some contraction in balance sheet, which is evident by the sequential drop in loans, deposits and investments that fell by SAR 132 million, SAR 866 million and SAR 182 million respectively in Q3 2018.

“We maintain our SAR 14.00 target price and Neutral rating,” the brokerage noted.

Alawwal’s loans and deposits went against the general sector trend, which have grown by SAR 16.2 billion and SAR 22.2 billion respectively.