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RIYADH: Al Rajhi Bank's second-quarter profit of 2.6 trillion riyals was 11.1% lower than expected, Al Jazeera Capital said.
In a report released Thursday, the research firm revised its recommendation for Al Rajhi Bank to the "neutral" position, unchanged at the target price of 62.8 SAR.
And lowered its profit forecast for Al Rajhi Bank during the year 2019 to 4.1 riyals instead of the previous forecast of 4.35 riyals.
The Al-Jazira Capital report attributed the difference to its projected earnings as a result of recognizing Zakat's expenses in the income statement in accordance with International Financial Reporting Standards (IFRS), after inclusion in the income statement. 39, statement of changes in equity. .
"The changes to the mortgage law are in favor of Al Rajhi Bank because of its large client base and the high rate of zero interest deposits," he said. "This reduces the cost of financing if the US Federal Reserve lowers its key rates, has a negative impact on revenues and net profit.
Al-Jazeera Capital pointed out that Zakat's ranking in the income statement would result in a drop in net profit that could have a negative impact on the badessment of the banking sector as a whole.
Preliminary financial results showed Al Rajhi Bank's net profits increase in the second quarter of this year 4.3% year-on-year at 2.58 billion rupees, compared to 2.5 billion rupees in the same quarter of the previous year.
The bank's net profit dropped 0.65 percent, after posting a net profit of 2.597 billion riyals in the first quarter of this year.
The Bank has attributed the increase in net income in the second quarter to a 13.4% increase in operating income resulting from the increase in net income from special fees from banking fees, foreign currency translation and other operating products.
Bank Al Rajhi yielded 1.74 percent to 67.6 riyals on Thursday at 2:27 pm in Saudi Arabia.
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