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IndexLevelChg%
Large Cap3,912 -0.22
Med Cap3,902 0.08
Small Cap5,065 -0.07
Micro Cap8,584 0.50

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BBK

Source: Taib Bank

Quarterly Result Update

Bank of Bahrain and Kuwait (BBK) reported a total operating income of BHD 64.58 million during 1H10, up 38.6% YoY.

Net profit was up 5.0% to BHD 23.42 million from BHD 22.30 million in 1H10.

We have revised our FY2010 total operating income estimate upwards by 10.6% due to higher net fees & commission income and other income. Accordingly, we have increased our FY2010E net profit estimates by 2.6% anticipating higher than expected operating income.

We are reiterating our earlier OVERWEIGHT recommendation on BBK with a revised target price of BHD 0.553, implying an upside of 42.6%.

Net Profit
During 1H10, net profit was up 5.0% YoY to BHD 23.42 million from BHD 22.30 million, due to higher non-interest income owing to the impressive performance of the bank’s investment activities. As a result, the adjusted EPS increased to BHD 0.056 from BHD 0.053 in 1H09.

We had updated BBK on June 17, 2010 with an OVERWEIGHT rating (target price of BHD 0.554 indicating a 38.5% upside). Currently, the bank’s stock is trading at a P/E multiple of 8.76x and 8.16x on 2010E and 2011E earnings, and at a P/BV multiple of 1.39x and 1.30x on 2010E and 2011E BVPS, respectively. The stock has declined 4.9% since the beginning of this year in tandem with a 3.8% decline in Bahrain All Share Index. Considering the above factors, we have arrived at a price target of BHD 0.553, which implies an upside of 42.6% from the current price of BHD 0.388 (as on July 21, 2010). Accordingly, we reiterate our earlier OVERWEIGHT rating on BBK.

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