Al Rajhi Bank's profit exceeds estimates in Q1 2019: Falcom

Al Rajhi Bank posted robust Q1 2019 earnings, as net income grew 21.2 percent year-on-year (YoY) to SAR 2.9 billion, marginally beating consensus estimates, Falcom Financial Services said in a note.

The profit beat was led by higher operating income and controlled expenses.

"We retain our ‘Neutral’ rating on the stock," Falcom said.

Customer deposits increased 3.4 percent YoY to SAR 293.5 billion and net financing 3.2 percent YoY to SAR 236.4 billion. Consequently, the loan-to-deposit ratio edged down to 80.6 percent in Q1 2019 from 80.7 percent in Q1 2018.

Investments rose 12.0 percent YoY to SAR 45.6 billion during the year. The bank’s asset quality remained strong, with a gross NPL ratio of 0.9 percent in Q1 2019, compared with 0.7 percent in 2018.

Al Rajhi’s shareholders approved a 53.8 percent capital hike to SAR 25 billion, from SAR 16.25 billion, during an extraordinary general assembly meeting held on April 3. The number of shares was increased to 2.5 billion from 1.625 billion. The move is expected to boost the bank’s resources and drive growth.