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Arab National Bank Q2 net profit up 9.39 per cent to SAR 785.4 million

July 9, 2014

Arab National Bank's Q2 profit was up 10.17 per cent quarter-on-quarter. H1 profit was up 7.27 per cent at SAR 1,498.3 million.

Earnings per share rose from SAR 1.4 to SAR 1.5. Net earnings per share for the six months period ended 30 June 2013 was recalculated to reflect the increase in the bank's capital from 850 million shares to 1000 million shares as approved by the Extraordinary General Shareholders meeting held at 17 March 2014.

Total assets were up 4.81 per cent at SAR 142.669 billion. Investments were up 15.23 per cent at SAR 33.095 billion. Arab National Bank reported loans and advances up 7.25 per cent at SAR 91.737 billion and customer deposits up 5.99 per cent at SAR 109.188 billion.

NBK Capital MENA comments...

Recovering loan growth; lower balance sheet liquidity supports NIM

Arab National Bank (ANB) reported 9% YoY net profit growth in 2Q2014, driven by a similar increase in operating income. Net profit reached SAR 785 million in 2Q2014, up 10% QoQ. 

Operating income in line with our forecast. Total operating income increased around 10% YoY, 6% QoQ, and came slightly higher (3.3%) than our forecast.

NIM in line with our view, increasing QoQ. Net interest income increased 8% YoY, 6% QoQ, and came in line with our forecast. One reason for the higher NIM was lower balance sheet as deposits dipped 7%, and we estimate that balances with SAMA decreased substantially compared with March 2014. Provisioning (not disclosed in Saudi banks' preliminary earning releases) appears to have remained similar to 1Q2014 levels.

Non-interest income rises 13% YoY, 7% QoQ, and came slightly higher than our forecast. The breakdown of non-interest income is not disclosed in Saudi banks' preliminary earning releases.

Loan growth at the highest level in two years. The bank's loan book expanded 5% in 2Q2014 following a contraction in 1Q2014, resulting in 3.7% YTD growth, in line with our view for FY2014. The drop in deposits allowed the loans-to-deposits ratio to return to a normalized level of 84% by the end of June 2014, compared with 74% in March 2014.

Good set of results which came in line with our expectations. The bank's NIM, operating income, and loan growth came in line with our view for FY2014. For now, we maintain our fair value and our "Hold" recommendation on the stock (10% upside potential); however, we will issue an update report on ANB after we speak with the bank's management. 

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Source: CPI Financial

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