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QNB keeps Masraf Al Rayan PT at QAR 34

QNB keeps Masraf Al Rayan PT at QAR 34
Masraf Al Rayan’s net income declined 2.3% year-on-year to QAR 1.98 million
QNB
QNBK
-0.07% 14.20 -0.01
Al Rayan
MARK
0.59% 2.37 0.01

Mubasher: Qatar National Bank (QNB) announced that maintaining Masraf Al Rayan’s price target (PT) at QAR 34 per share and market perform recommendation, in line with declining growth estimates for 2018 and 2019.

Masraf Al Rayan’s net income declined 2.3% year-on-year to QAR 1.98 million, while its net interest margin rose 2.48% year-on-year by 13 bps.

The bank’s net interest margins (NIMs) improved on the back of the rise in asset yields, exceeding the increase in cost of funds. Yield assets levelled up 4.24% year-on-year by 41 bps, QNB said in a note.

“We expect Masraf Al Rayan to generate a NIM of 2.40% in 2018 (lower than 2017 due to expectations of a rise in CoFs as the bank raises deposits), 2.50% for 2019 and 2.51% for 2020,” QNB stated.

Earlier in January, Masraf Al Rayan, Qatar's second-largest bank by market value, reported a 9.5% year-on-year drop in its net profits in the fourth quarter of 2017 to QAR 466 million ($129.2 million) from QAR 515 million in the same period a year earlier.

As for the Qatari bank’s loan growth forecasts, QNB said it has adjusted its assumptions to 6.2% from 8.0% for 2018 and to 9.2% from 10% for 2019.

“We are of the opinion that the bank may increase its borrowing in order to enhance its liquidity profile/lower [loan-deposit-ratio (LDR)],” QNB added.

Masraf Al Rayan is the second largest Islamic bank on the Qatar Stock Exchange (QSE) and is still in talks with Barwa Bank and the International Bank of Qatar (IBQ) over a possible three-way merger.