Bank Aljazira - Bank Profile

Transcription

1. BJAZ Banking and Financial Services Sector BJAZ AB - 1020 .SE October 16, 2016 Bank Aljazira Recommendation Fair Value (SAR) Q3 2016 Overweight 06.21 Price as of October 13, 2016 01.01 Expected Return %60.2 Tadawul Symbol 1020.SE Company Data 52 Week High (SAR) 21.00 52 Week Low (SAR) 9.45 YTD Change %36.1- 3-Month Average Volume (Thousand Shares) 2,143 Market Cap. (SAR Million) 4,140 Market Cap. (USD Million) 1,104 Outstanding Shares (Million Shares) 400 Major Shareholders ( > 5% ) Consolidated Brothers Company %6.59 National Bank of Pakistan %5.83 Saleh Abdullah Mohammed Kamel %5.00 52-week Stock Price Movement BJAZ Banking Sector Tadawul Index 110 Bank AlJazira reported its interim financial results of Q3 2016, wherein net profits declined 3% YoY and slumped 9.5% QoQ to SAR 161 million , well below our expectation of SAR 183 million. The bank posted net profit of SAR 720 million for the 9M period of 2016, a 36% decline compared with same period last year. The decline in profits were largely driven by an increase in operating expenses by 14% as a result of an increase in the credit loss provisions, in addition to a decrease in other operating income and net special commission income. Net special commission income fell 1% YoY, to reach SAR 407 million versus SAR 411 million in Q3 2015, while total operating income inched up 8% YoY, recording SAR 575 million compared to SAR 532 million in Q3 2015, due to an increase in net trading income, net banking fees and commission income, and net foreign exchange income. In the first 9M of 2016, loans climbed by 2.3% YoY reaching SAR 43.2 billion versus SAR 42.2 billion. Investments also jumped up 44.6% recording SAR 16.4 billion compared with SAR 11.4 billion in the comparable period of last year. While, total assets dropped 3.3% YoY reaching SAR 66 billion. However, customer deposits tumbled 10.1% YoY to reach SAR 50.3 billion versus SAR 55.9 billion in the comparable period of last year. As a result, loans-to-deposits ratio increased to 83% in Q3 2016 hiking from 74% in Q3 2015, due mainly to deposits decreased at a faster pace than loans grew. By neutralizing extraordinary gains from the sale of two lands in this and last years, the bank’s normalized net profit dropped by only 8% during the first 9M of this year compared with the same period of last year. In general, this is due to a decrease in net special commission income on the back of an increase in special commission expenses, and it seems that the bank attracts an expensive deposits as result of the sharp decline in its deposit, in addition to a decrease in net banking fees, commission income, and other operating income. 100 90 80 70 60 50 40 Source: Tadawul Quarterly Operating Income (SAR mn) and Profit Margin Operating Income Profit M argin 1,400 70% 1,200 60% 1,000 50% 800 40% 600 30% 400 20% 200 10% 0 0% Source: Company Filings, Albilad Capital Research Estimates Turki Fadaak Research & Advisory Manager tfadaak@albilad-capital.com Mohammed Alghalbi Financial Analyst Malghalbi@albilad-capital.com By reviewing the future performance of Bank Aljazira, we estimate revenues of SAR 2,405 million and net profit of SAR 876 million at the end of 2016, thus, our fair value is SAR 12.60 per share and assigning a “Overweight” recommendation. FY - Ending December 6102A 6102E 6101F 6102F Total Assets (SAR million) 63,264 220100 210,12 230013 Total Deposit (SAR million) 54,569 ,3021, ,30260 210060 Net Loans (SAR million) 41,863 ,60,30 ,00063 ,00112 Investment (SAR million) 11,202 020103 020013 0200,0 Net Interest Margin 2.80% %6.21 %6.22 %6.22 Net Loans/Deposits 84.3% %22.0 %22.1 %22.0 Coverage Ratio 173% %030 %032 %610 NPL / Total Loans 0.8% %1.2 %1.2 %1.2 PE 4.06 ,.1, 2.30 2.23 P / BV 0.70 1.,1 1.02 1.02 10.8% %,.2- %6.0 %0., Net Special Commission Growth Source: Company Filings, Albilad Capital Research Estimates 1
2. BJAZ Banking and Financial Services Sector BJAZ AB - 1020 .SE October 16, 2016 Summary of 9M results Income Statement (SAR mn) M9 2015 M9 2016 % Special commission income 1,424 1,716 20% Special commission expense 214 554 (158.8%) Net special commission income 1,210 1,162 (3.9%) Operating income 2,341 1,928 (17.6%) NAI 1,128 720 (36.2%) M9 2015 M9 2016 % Investments 11,391 16,474 44.6% Loans and advances, net 42,206 43,195 2.3% Total Assets 68,308 66,041 (3.3%) Customer deposits 55,997 50,335 (10.1%) Total equity 7,215 7,909 10% Balance Sheet (SAR mn) Source: Company Filings, Albilad Capital Research Estimates Presentation of financial statements may differ from the company’s presentation. However, there is no impact on the final results. 2
3. BJAZ Banking and Financial Services Sector BJAZ AB - 1020 .SE October 16, 2016 Income Statement (SAR mn) 610,A 6102A 6102E 6101F 6102F Special commission income 00322 60002 60621 6006, 60022 Special commission expense 201 202 12, 123 113 Net special commission income 54,,1 546,5 541,1 54111 54111 Fees and commission income, net 2,2 201 223 223 160 Foreign exchange income, net 21 31 062 001 0,, Trading income, net 01 00 26 22 22 Other ,2 01 60 62 61 ,4,,6 ,41,2 ,4,,1 ,4,15 ,4112 Salaries and employee-related expenses 166 313 311 313 361 Rent and premises-related expenses 000 002 001 002 0,0 Depreciation 13 13 11 20 2, Other general and administrative expenses 020 ,21 ,22 ,22 ,1, Net Income before Impairment 21, 16, 3,1 335 255 Impairment charge for credit losses, net 020 20 011 021 026 Net Income before Unusual Items 162 155 661 1,5 1,3 - 210 600 1 1 Net Income After Unusual Items 162 54,3, 316 1,5 1,3 Share of Gain (Loss) of an associate , 0 1 1 1 11, 54,31 316 1,5 1,3 Balance Sheet (SAR mn) 610,A 6102A 6102E 6101F 6102F Cash & balances with SAMA & other financial institutions 000,20 20,61 20000 20121 20,0, Investments 000002 000616 020103 020013 0200,0 Loans and advances, net ,006,2 ,00220 ,60,30 ,00063 ,00112 062 062 000 00, 002 00623 160 00166 00000 00611 Operating income Gain on sale of land NAI Investment in an associate Property and equipment, net Other Assets 00063 362 00103 000,0 00660 Total Assets 66411, 614,6, 664,51 614,11 6245,2 Due to banks & other financial institutions 00102 ,0122 00201 0011, ,0122 Customer deposits 2,0223 ,3021, ,30260 210060 21026, Other liabilities 00131 00060 00621 00020 00,3, Subordinated Sukuk 00111 00111 00111 00111 00111 Total Liabilities 6,4126 114315 114151 164,13 11413, Total equity 20022 10,00 010632 010331 000162 Total Liabilities & Shareholders' Equity 66411, 614,6, 664,51 614,11 6245,2 Source: Company Filings, Albilad Capital Research Estimates Presentation of financial statements may differ from the company’s presentation. However, there is no impact on the final results. 3
4. BJAZ Banking and Financial Services Sector BJAZ AB - 1020 .SE October 16, 2016 Albilad Capital Rating Methodology Al-Bilad Capital uses its own evaluation structure, and its recommendations are based on quantitative and qualitative data collected by the analysts. Moreover, the evaluation system places covered shares under one of the next recommendation areas based on the closing price of the market, the fair value that we set and the possibility of ascent/descent. Overweight: The Target share price exceeds the current share price by ≥ 10%. Neutral: The Target share price is either more or less than the current share price by < 10%. Underweight: The Target share price is less than the current share price by ≥ 10%. To be Revised: No target price had been set for one or more of the following reasons: waiting for more analysis, waiting for detailed financials , waiting for more data to be updated, major change in company`s performance, change in market conditions or any other reason from Albilad Capital Research. Albilad Capital Client Services E-mail: Tel: clientservices@albilad-capital.com +966-11-203-9888 Toll-free: 800-116-0001 Research & Advisory E-mail: research@albilad-capital.com Tel: +966-11-290-6250 Website: www.albilad-capital.com/en/research Asset Management Brokerage Custody Investment Banking E-mail: Tel: E-mail: Tel: abicasset@albilad-capital.com +966-11-290-6280 custody@albilad-capital.com +966-11-290-6259 E-mail: Tel: E-mail: Tel: abicctu@albilad-capital.com +966-11-290-6230 investmentbanking@albilad-capital.com +966-11-290-6256 Disclaimer AlBilad Capital exerted utmost efforts to ensure that the information included in this report is accurate and correct. However, AlBilad Capital Co., its managers, and staff bear no liability whether explicitly or implicitly for the content of the report and no legal responsibility, whether directly or indirectly, for any results based on it. This report should not be reproduced, redistributed, or sent directly or indirectly to any other party or published in full or in part for any purpose whatsoever without a prior written permission from AlBilad Capital. We would also like to note that this information in no way constitutes a recommendation to buy or sell banknotes or make any investment decisions. Any investment act taken by an investor based fully or partially on this report is the complete responsibility of the investor. This report is not meant to be used or seen as advice or an option or any other measure to be taken in the future. We recommend consulting a qualified investment advisor before investing in these investment tools. AlBilad Capital preserves all rights associated with this report. 4