Arqaam Capital recommended investors to buy Gulf Bank’s stock and set a target price of 375 fils.

The report expected a 61% growth in the bank’s profitability for the entire year 2022 and attributed this to factors, most notably the improvement in the net interest margin supported by the interest hike, the low cost of credit and the expected growth in assets at a rate ranging around an average value in the single digits, as well as work to reduce expenses. Revenue growth supported by revenue diversification, loan growth and a decrease in credit provisions. It is expected that revenues will rise from 170 million Kuwaiti dinars in 2021 to 187 million Kuwaiti dinars by 2022, until revenues will reach 211 million dinars by 2023.

The report indicated that the return on equity of the bank’s shareholders reached 6.9% in 2021, according to Arqaam Capital’s estimates, at a rate that exceeds the average return on equity of the Kuwaiti banking sector, and may reach 10.7% in 2022 and 12.5% ​​by 2023.

The report confirmed the strong levels of the bank’s asset quality, expecting to maintain the non-performing loans ratio of the total credit portfolio at low levels of only 1%.

Arqaam Capital expected an improvement in the earnings multiple of the bank’s share, as it confirmed that the stock is trading in acceptable multiples with an expected earnings multiple of 28.3 times in 2021, and by 2022 the expected earnings multiple will be 17.6 times, until the expected earnings multiple will reach 14.2 times by 2023.

It is noteworthy that Gulf Bank announced quarterly profits at the end of last March, amounting to 15.05 million dinars, a growth rate of 25.7% compared to the same period in 2021, which amounted to 11.97 million dinars, and earnings per share amounted to 4.76 fils per share.

By Editor

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