Riyadh-Mubasher: Saudi Fransi Capital (SFC) stated that Q4-15 net profits of the National Commercial Bank (NCB) reaching SAR 2,127 million were in line with consensus of SAR 2,160 million but below its expectations of SAR 2,245 million.
At the net interest income level, the bank outperformed SFC's expectations by 4.7%, however the expected rebound in other operating income did not come through.
Net interest income performance in Q4 and 2014 was strong, driven by credit growth and a surge in interest rates in Q4-15.
The bank expanded its loan book by 14% year-on-year in 2015, and also managed to record strong lending growth (6% quarter-on-quarter) in Q4-15 despite macro data suggesting a sharp lending slowdown.
"We believe that NCB’s relatively liquid balance sheet assisted its strong interest income growth as inter-bank lending picked up in the quarter. We are however concerned by the sharp fall q/q in deposits for NCB, where deposits fell by 11% (SAR 40.4 billion), "the research firm said.
SFC recommended 'Hold' on the stock, setting the target price at SAR 55, with upside potential of 32%.
