Alinma Bank -Equity Report -26-04-2017

Source: AlBilad Investment Co.

Alinma Bank reported March-quarter profit of SAR 421 million, growing 7.7% YoY and 7.9% QoQ. The rise is tied to strong growth in net special commission income, jumping 33% YoY and 12% QoQ, supported by significant loans
growth and higher interest rates, beside an increase in non-interest income, due to gains from equity investments and exchange income.

Impressively, customer deposits surged sharply 18.4% from Q1 2016, beating the banking sector’s overall trend, as the sector’s consolidated deposits declined 1.5% for the same period.

Alinma's first-quarter results showed a sharp swelling in operating expenses (up 70% YoY), due to increase in provisions for impairment for credit losses, depreciation, general and administrative, and salaries expenses. Yet, the bank is still achieving significant growth in profits, which came in-line with our estimate of SAR 430 million.

With the recent positive changes in economy, we believe that liquidity level and consumer spending will increase after King Salman restored allowances, financial benefits, and bonuses for state employees. This would enhance the bank’s
growth in the near future. Accordingly, we maintain our valuation at SAR 15.38 per share with assigning a “Neutral” recommendation.


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