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On Tuesday, Jefferies analysts initiated coverage on Arab National Bank (TADAWUL:1080) (TADAWUL:ARNB) stock, assigning a Buy rating and setting a price target of SAR26.00. The analysts noted the potential for over 20% upside in the stock, citing the bank’s healthy capital position and attractive dividend yields as key factors.
Arab National Bank’s stock has historically attracted limited attention from international investors, although foreign ownership has been on the rise. The analysts highlighted the bank’s strong liquidity profile and mid-market presence, which they believe offer a unique exposure at an attractive valuation compared to peers like Riyad Bank and Alinma (TADAWUL:1150) Bank.
The Buy rating is based on a conservative return on tangible equity (ROTE) estimate of 12.5% for 2025-2027. Jefferies analysts mentioned that their recent discussions with the bank’s management revealed confidence in overcoming net interest income pressures through increased fee income generation.
Arab National Bank’s capital adequacy ratio stands at a robust 16.6% CET1, supporting the sustainability of its dividends, which are projected to average over 6% annually from 2025 to 2027.
The analysts believe that the bank’s liquidity and capital position, along with its strategic market presence, make it an appealing investment opportunity, despite the challenges posed by lower interest rates and competition.
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