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Investing.com -- Shares of Al Rajhi Bank (TADAWUL:1120) climbed 3.2% following the release of its latest financial results, which showcased a higher-than-expected net profit.
The Saudi Arabian bank reported a net interest income (NII) of SAR 6.9 billion, marking a 9% increase quarter-over-quarter (QoQ) and a substantial 25% growth year-over-year (YoY). This figure slightly exceeded Morgan Stanley (NYSE:MS)’s estimate (MSe) by 1% and was 5% above the consensus.
Despite non-interest income falling short of expectations at SAR 1.8 billion, a decline of 11% QoQ, it still represented a 20% YoY increase. Operating income also grew by 4% QoQ and 24% YoY to SAR 8.7 billion, which was 0.5% below MSe but 3% above the consensus.
Operating expenses were lower than anticipated, decreasing by 1% QoQ and up by only 3% YoY, coming in 7% below MSe and 5% below consensus.
The bank’s provisions for the quarter were significantly lower than expected at SAR 553 million, a 20% decrease QoQ and a 36% increase YoY, which were 34% below MSe and 24% below consensus. The lower provisions suggest a cost of risk (COR) of 0.33%, a decrease from 0.43% in the previous quarter.
Al Rajhi Bank’s net profit for the quarter was SAR 5.5 billion, an 8% increase QoQ and an impressive 32% YoY, surpassing MSe by 7% and consensus by 9%. The bank also reported robust loan growth, with loans up by 6.8% sequentially to SAR 693 billion, driven by mortgages and corporate performance, resulting in a 16.7% YoY loan growth.
Deposit growth for the fourth quarter stood at 0.9% QoQ, totaling SAR 628 billion in deposits. The loan-to-deposit ratio (LDR) was 110.4%, compared to 104.2% in the previous quarter.
Analysts at Morgan Stanley commented on the results, stating, "We expect a positive reaction to results."
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