Bank Aljazira to benefit from continued drop in cost of funds, says Itqan Cap

Logo of Bank Aljazira

Bank Aljazira should benefit from continued drop in cost of funds and improved asset quality over the coming period, yet slowing financing growth is a concern, Itqan Capital said in a recent report.

Lower loan-to-deposit ratio and SAIBOR, along with healthy deposits growth and a more favorable deposit mix, should reflect positively on the bank’s cost of funds going forward, which is expected to support its net financing income and profitability during 2021, the brokerage noted.

However, slower financing growth and continued market share losses might pressure lending rates. The bank is currently in a stronger position to withstand possible credit losses due to higher provisioning levels.

Itqan Capital maintained its “Neutral” recommendation on the stock, setting the target price at SAR 21 per share.