Albilad Capital has stated in a report on Al-Rajhi Bank that the preliminary financial results showed lower-than-expected earnings, as well as robust growth in the balance sheet.
The implementation of the new regulations related to consumption finance mid-September 2014 is expected to have a negative impact on the bank’s income especially over a long term horizon given that retail banking is a main driver of profitability in the bank, Albilad said.
The research firm maintained the stock’s fair value at SAR 68, with upside potential of 20% over market price, assigning the stock an “Overweight’ rating.
Al-Rajhi reported SAR 1,520 million net earnings for the fourth quarter of 2014, falling 1.75% year-on-year from SAR 1,547 million and 8.54% quarter-on-quarter from SAR 1,662 million.
The full-year net earnings also decreased by 8.09% to SAR 6,836 million, compared with SAR 7,438 million in 2013.
The bank ascribed the profit decline in Q4 the decrease in total operating income.
The profit decline in FY14 was due to increase in total operating expenses, Al-Rajhi said.
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