Riyadh-Mubasher: NBK Capital, the investment arm of National Bank of Kuwait (NBK), decreased the fair value of Arab National Bank (ANB) by 22% to SAR 28.4, with upside potential of 29%.
The decrease in fair value is driven by lower net profit in the forecast horizon (mainly on the back of higher loan provisioning and lower non-interest income), an increase in the cost of equity, and lower valuation driven from the peer-based model.
The research firm upgraded its recommendation on the stock from ‘Hold’ to ‘Buy’.
The stock has declined by 19% over the last period, compared with a 10% fall in the Saudi Stock Exchange.
ANB is trading now at an excessively cheap multiple of 2016 P/B of 0.9x (2016F RoAE of 13%).
The research firm cut its forecasts for FY15 earnings from SAR 3015 million to SAR 3003 million.
