First Abu Dhabi Bank subsidiary FAB Securities raises Saudi National Bank's target price
FAB Securities, a subsidiary of First Abu Dhabi Bank (FAB), has revised the target price of Saudi National Bank (SNB), the kingdom’s largest lender, to SAR83 ($22.08) and maintained a buy rating on the stock. The Saudi bank is expected to benefit from revenue and cost synergies following its merger with Samba Financial Group, said FAB Securities.
SNB's net profit for the second quarter of the year nearly doubled to SAR4.58 billion primarily due to higher funded income and lower operating expenses, which have been partially offset by a decline in non-funded income.
FGB said SNB is expected to realize a cost synergy of SAR800 million and SAR1.2 billion by 2022 and 2023, respectively. The Saudi lender realized cost synergies worth SAR720 million in the first quarter of the year.
The rising interest rate regime, following Saudi SAMA's move to hike key rates by 75bps, is also expected to benefit SNB's net interest margins.
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