Riyadh – Mubasher: AlJazira Capital raised its target price (TP) for Al Rajhi Bank’s stock to SAR 57.80 from SAR 51.90 and maintained its “neutral” rating on the stock.

“Even though the impact of COVID-19 has not entirely played out, the easing of restrictions improved the overall economic scenario, which has led to the banking retail sector growing at levels close to pre-COVID levels,” the brokerage firm said in a report on Thursday.

Aljazira Capital updated its earnings per share (EPS) expectation for 2020 to SAR 3.79 from SAR 3.67 on the back of the improved economic activity.

“The changes in mortgage law places Al Rajhi Bank in a favorable position, given its retail-heavy portfolio. However, SAMA’s [the Saudi Arabian Monetary Authority] discount rate cut would hit the bank’s top and bottom lines.”

It is noteworthy to mention that during the second quarter of 2020, the lender achieved net profit of SAR 2.436 billion, down from SAR 2.53 billion in the year-ago period.