Index falls as earnings results weigh; pound above $1.33, Bodycote soars
On Tuesday, Jefferies analysts initiated coverage on Saudi Awwal Bank (SABB:AB) stock with a Buy rating, setting a price target of SAR44.00. The analysts noted the potential for over 30% upside, alongside an estimated average dividend yield of approximately 6.8% per year from 2025 to 2027.
The analysts highlighted Saudi Awwal Bank’s strategic partnership with HSBC, which holds a 31% stake in the bank. This relationship provides SABB with shared risk, technology, management expertise, and access to a broad client roster. The bank is positioned as a leading financial institution for multinational corporations interested in the Saudi growth market, as well as for Saudi institutions and corporations advancing the nation’s economic agenda.
Saudi Awwal Bank has been focusing on expanding its reach among expatriates, the youth population, and the developing mid-corporate and SME sectors. The analysts noted that the bank’s shares are trading close to one standard deviation below their 10-year average, suggesting they are undervalued.
Despite attempts by SABB management in 2023 and 2024 to reduce the sensitivity of its net interest margin, the analysts expect the bank’s top-line growth to face challenges. These challenges are attributed to competitive pricing and liquidity costs, compounded by limited funding diversification.
Jefferies analysts remain optimistic about Saudi Awwal Bank’s growth prospects, despite the anticipated pressure on its top-line performance. The bank’s strategic initiatives and backing from HSBC are viewed as key factors in its potential to capitalize on Saudi Arabia’s economic expansion.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.