Riyadh – Mubasher: The Saudi banking sector continues its move forward with steady deposit and loan growth, according to a recent report by Al Jazira Capital.

Mortgage loans growth has exceeded expectation in recent years, showing a growth of 41 in 2017 and 65% in 2018, with a total of value of SAR 27 billion worth of loans being signed.

Furthermore, loans have grown at a much higher pace since the beginning of 2019, surging by 273% year-on-year (YoY) in the first nine months of 2019, during which total loans grew by 174% YoY, according to Al Jazira’s capital report.

Shariah Banks continue to outperform, with a deposit growth of 7.9% YoY, compared with 7.1% in conventional banks.

Stock Evaluations

The research firm included their recommendations on three major banking stocks in its “Saudi Banking Sector Quarterly Report” for the third quarter (Q3) of 2019.

he research firm believes that changes in the mortgage law place Al Rajhi Bank in a favourable position, given its retail heavy portfolio. Therefore, it has revised their estimates for the bank stock’s earning per share (EPS) for 2019 to SAR 4.3 and maintained its “Neutral” recommendation with a target price (TP) of SAR 62.8 per share.

As for Bank Albilad, which is currently trading at a PE of 16.8x, as compared to estimated forward PE of 15.6x, with an expected dividend yield of 2.5%, the research firm maintained its “Neutral “recommendation, with a revised TP of SAR 24.1/share.

Moreover, Al Jazira Capital expects Alinma Bank to achieve higher earnings in 2019, compared with last year. Thus, it has reiterated its “Overweight” recommendation on Alinma with a TP of SAR 26.80/share.