Earnings per share for the six months ended
Total assets rose 11.18 per cent to
NBK Capital MENA comments…
Good set of results; lower balance sheet liquidity supports NIM
Lower balance sheet liquidity supports NIM. Net interest income soared 17% YoY, 8% QoQ in 2Q2014, and came higher than our forecast. Balance sheet liquidity decreased in 2Q2014 as deposits decreased around 3%, while investments increased 16%, which we think came at the expense of balances with SAMA. We note that YTD, BSF's investment portfolio jumped 32%. The NIM in 2Q2014 reached a level unseen since the end of 2012.
Non-interest income grew 12% YoY, 1% QoQ, and came in line with our forecast. The breakdown of non-interest income is not disclosed in Saudi banks' preliminary earning releases. Total operating income increased 15% YoY, 5% QoQ, and came 7.3% higher than our forecast driven by the higher-than-expected net interest income.
Loan growth at 2.2% QoQ, resulting in 5.5% YTD growth, in line with our view for FY2014. Provisioning (not disclosed in Saudi banks' preliminary earning releases) appears to have increased YoY. Given robust operating income growth, BSF might have grossed up provisioning during the quarter.
Good set of results with the operating income beat driven by higher-than-expected net interest income. Non-interest income, loan provisioning trends, and loan growth came in line with our view for FY2014. We maintain our "Hold" recommendation on the stock; however, we will issue an update report on BSF after we speak with the bank's management.
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