Earnings Report /
Saudi Arabia

Albilad: Strong earnings but in-line with expectations

  • Revenues increased by 12.9% yoy (5.8% qoq) to SAR1.33bn and were in-line with our estimate of SAR1.31bn

  • NIM remained flat both yoy and qoq at 3.2% and were in-line with our estimate of 3.3%

  • Loan growth remained strong in Q3 22 and grew by 12.8% yoy (+1.2% qoq) to SAR92bn

SNB Capital
25 October 2022
Published bySNB Capital

Bank Albilad reported an in-line set of Q3 22 results, with net income increasing by 20.2% yoy (+5.8% qoq) to SAR541mn. This is in-line with the SNB Capital and consensus estimates of SAR533mn and SAR527mn, respectively. The growth in net income was primarily due to higher NSCI, which grew by 13.2% yoy (+4.9% qoq). Loan book remained strong (+12.8% yoy, +1.2% qoq), which we believe is the key highlight of the result.

  • Revenues increased by 12.9% yoy (5.8% qoq) to SAR1.33bn and were in-line with our estimate of SAR1.31bn. The yoy growth in revenues was driven by 13.2% (+4.9% qoq) increase in NSCI to SAR1.00bn, in-line with our estimate of SAR1.02bn. Fee and other income grew by 11.9% yoy (8.8% qoq) to SAR322mn, marginally higher than our estimate of SAR284mn.

  • NIM remained flat both yoy and qoq at 3.2% and were in-line with our estimate of 3.3%. Asset yields increased by c80bps yoy and c49bps qoq to 4.7% in Q3 22, higher than our estimate of 4.4%. Funding costs increased c97bps yoy to 1.3% and was higher than our estimate of 0.9%. Increase cost of funding is a common theme across the sector in Q3 22.

  • Pre-provision expenses increased to SAR591mn (+11.2% yoy, +4.9% qoq) and were higher than our estimate of SAR579mn. Cost to income ratio declined to 44.6% in Q3 22 vs 45.2% in Q3 21, and was in-line with our estimate of 44.4%.

  • Provisioning expenses declined 7.0% yoy (+10.1% qoq) to SAR132mn, in-line with our estimates. Consequently, cost of risk declined to 0.6% compared to 0.7% in Q3 21.

  • Loan growth remained strong in Q3 22 and grew by 12.8% yoy (+1.2% qoq) to SAR92bn, though lower than our estimate of SAR95bn. Deposits grew 14.0% yoy (+5.4% qoq) to SAR94bn vs our estimate of SAR92bn. Consequently, an improvement in the L/D ratio to 98.3% (vs. 99.3% in Q3 21 and 102.4% in Q2 22).

Outlook

We are Neutral on Albilad with a PT of SAR47.7. Presently, Albilad trades at 2023f PB of 3.3x, higher than the peer average of 2.0x. We believe that strong loan book expansion, lower provisions and improvement in liquidity were the key positives of the result.