Saudi Banking Sector update from NCBC Research
In a note published on 25 December, NCBC Research said, “We believe the opportunities we expected for 2014E, namely better NIMs, improving asset quality and high total returns from consumer financing will turn into challenges. Given the higher book values for 2014E, which offset the lower forecasts, our price targets have increased. We remain cautious on the sector as labour market pressures and restrictions on consumer financing may impact profitability. Overall we reduce our net income estimate by 0.9 per cent and expect a 7.1 per cent growth for 2014E. We prefer SHB, SABB and Riyad due to good profit growth at attractive valuations.