financials - Bank Audi

More documents

Recommendations

Info

August 24, 2012 FAVORABLE LIQUIDITY ADDS SUPPORT TO LENDING MOMENTUM EQUITY RESEARCH SAUDI BANKS Sector loan to deposit ratios (LDRs) remain low in a global context, leaving large room for Saudi banks to increase lending, with minimal need to access the wholesale markets or securitisation. LDRs in Saudi Arabia are lower than average LDRs in the UAE and Europe and well below the levels attained in the UK and Qatar. Chart 11: MENA and DM LDRs Source: Financial Reports, ASIB Estimates LOAN GROWTH PROJECTIONS We forecast a loan growth of 16.7% in 2012 declining to 10.0% by 2016. While new loans are expected to remain solid, we expect the percentage Y-o-Y growth to decline gradually as we do not factor sharp rises in new loans at this stage. Further deleveraging from the global banks and strong intake of mortgage lending are upside risks to our loan projections. On the other side, a deterioration in asset quality on any single name exposure would cause a drag on lending. Chart 12: Loan Growth Projection Source: Financial Reports, ASIB Estimates 14
August 24, 2012 EQUITY RESEARCH SAUDI BANKS THE EFFECT OF BROKERAGE AND PROPRIETARY TRADING Rising volumes and rallying equity prices in Q1-12 raised the question of the impact of brokerage and proprietary trading on KSA banks profitability. Saudi banks dominate the local brokerage market, offering low commission rates in return for strong banking relationships. The biggest players are Al Rajhi Capital, NCB Capital and AL Jazira Capital. Chart 13: Brokerage Market Shares Source: SAMA, Tadawul , ASIB Estimates As at 31 December 2011, brokerage contributed to 2.75% of total operating income on average for the KSA banks , however for Al Jazira the contribution is substantially higher at 11.89%. We note that we expect the contribution of brokerage income to be higher going forward, given the volumes that we have witnessed so far in 2012. Table 8: Brokerage Income % of Total Operating Income <strong>Bank</strong> % Al Jazira 11.89% Samba 5.89% BSF 4.25% SHB 2.59% SABB 2.37% ANB 2.24% NCB 2.14% Al Rajhi 2.01% Al Bilad 1.68% Riyad 0.23% System 2.75% Source: Financial Reports Besides brokerage, the banks hold equity positions under their available-for-sale and held for trading portfolios. Changes in available-for-sale investments are recorded under equity unless realised, where they hit the income statement. Changes in held for trading investments feed directly into the P&L. 15
Page 1 and 2: COVERED BANKS Samba Financial Group
Page 3 and 4: August 24, 2012 INVESTMENT CASE IMP
Page 5 and 6: August 24, 2012 EQUITY RESEARCH SAU
Page 13: August 24, 2012 RETAIL LENDING STIL
Page 17 and 18: August 24, 2012 NET INTEREST MARGIN
Page 19 and 20: CURRENT PRICE SAR 47.6 FAIR VALUE S
Page 21 and 22: August 24, 2012 FINANCIALS EQUITY R
Page 49 and 50: FAIR VALUE DEFINITION August 24, 20

financials - Bank Audi

Create successful ePaper yourself

Delete template?

Save as template?