National Commercial Bank

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Pages 61
table
Tables 24
Chart
Charts 32
Price $100

National Commercial Bank (NCB), a Saudi Listed Joint Stock Company was established in 1953 following a royal decree, and is currently headquartered.....

Summary

  • National Commercial Bank (NCB), a Saudi Listed Joint Stock Company was established in 1953 following a royal decree, and is currently headquartered in Jeddah.
  • NCB is the second largest bank in the GCC region (after QNB), in terms of net assets. Close to two thirds of the bank’s shares are owned by Public Investment Fund, General Organization for Social Insurance (GOSI) and Public Pension Agency.
  • In 2014, Corporate Banking (42%) contributed the most to net income, followed by Treasury (36%), and Retail Banking (14%).
  • Despite the continued growth in assets NCB remains well capitalized with Capital Adequacy Ratio (CAR – 17.2%) above the required BASEL III (10.5%) and SAMA norm (12.5%).
  • NCB’s net-profit for 2014 stood at USD 2.3 billion representing a rise of 10.2% over the last year, driven by 15% growth in interest income, due to 18% increase in net loans.
  • Net Loans rose by 17.6% in 2014 to reach a value of USD 58.8bn. Asset quality as determined by a low NPL ratio of 1.3% signifies presence of quality assets.
  • The Earnings Quality score for NCB has declined in the last two quarters, from a high of 74 in Sep’14 dropping to 35 in Mar’15, due to significant drop in cash flow component score during the same period.
  • In the last quarter of 2014, NCB went public in what was billed as the “Mother of all IPOs” in the region. The bank raised USD 6bn with the sale of 300mn shares at SAR 45 each, and placed an additional 200mn shares to the state pension fund. The shares were oversubscribed 23x, in what was the largest ever IPO in the Arab world.
  • Since listing in Nov 2014, NCB has outperformed the Saudi Tadawul and BFSI indices consistently, registering a holding period return of 32%, compared to the latter indices, which posted negative returns.

TOC

  1. Executive Summary
  2. Business Overview
    • Overview
    • Porter Five Force Analysis
    • STEEPLED analysis
  3. Financial Overview
    • 2014 Results
    • Loans & Assets
    • Non-Interest Income
    • Non-Interest Expense
    • Net Interest Income & Net Income
    • Earnings Quality (EQ)
  4. Projections
  5. Peer Analysis
    • Domestic Peers
    • Regional Peers
    • Recent Developments
  6. Share Market Overview
    • Liquidity
    • Analyst Calls
    • Credit Rating
  7. Appendix
    • Sector Overview
    • Growth Drivers
    • Corporate Governance

Tables & Charts

Tables
1.1: NCB Summary, 2014
1.2: NCB Business Review
1.3: NCB Financial Review
2.1: Top Banks in the Region, 2014
2.2: NCB Subsidiaries Ownership
2.3: NCB International Footprint
2.4: Financial Ratios 
2.5: Summary of Porter’s Five Forces analysis
2.6: Summary of STEEPLED analysis
2.7: SWOT analysis, NCB
3.1: Earnings Quality across time periods 
3.2: Earnings Quality Components, Mar’15
4.1: Projections for Income Statement, Balance Sheet 
4.2: Largest Current/Planned Projects in KSA (USD bn)
4.3: NCB Key Ratios
5.1: NCB Peers, 2014
5.2: Profitability Ratios, 2014
5.3: Asset Quality Metrics, 2014
5.4: Capital & Liquidity Ratios, 2014
5.5: Rankings of Regional Peers based on Market Cap (Values in USD bn)
6.1: Returns of NCB vs. TASI Index and Saudi BFSI Index, 2014-Present
6.2: NCB Liquidity Metrics
6.3: NCB Credit Rating
7.1: Board of Directors and Designation

Charts
2.1: Ownership structure of NCB, Feb 2015
2.2: NCB: Business lines
2.3: Key Milestones
2.4: Business Mix – Net Profit Contribution, 2010-14
2.5: Business Mix – Operating Expenses Breakup, 2010-14
2.6: GDP per capita (in ‘000s), Purchasing Power Parity (2014 in Current International Dollar)
2.7: GDP growth, constant prices (average 2010-15)
2.8: Saudi Arabia Gross domestic product Y-O-Y, constant prices (2010-15)
3.1: Net Loans (USD billion)
3.2: Assets by Segments, 2010 and 2014
3.3: Assets 2010-14 (USD bn)
3.4: Assets by Type 
3.5: Total Deposits (USD billion) and Number of Branches
3.6: Liabilities by Sector, 2010 and 2014 
3.7: Deposits by type, 2010 and 2014
3.8: Non-Interest Income (USD mn)
3.9: Non-Interest Expense (USD mn)
3.10: Net-Interest Income and Net Income (USD mn)
5.1: Al Rajhi Bank Net Income Segmental Contribution, 2010-14
5.2: Al Rajhi Bank Operating Expense Segmental Contribution, 2010-14
5.3: Samba Bank Net Income Segmental Contribution, 2010-14
5.4: Samba Bank Operating Expense Segmental Contribution, 2010-14
5.5: NCB Net Income Segmental Contribution, 2010-14
5.6: NCB Operating Expense Segmental Contribution, 2010-14
6.1: NCB vs. Saudi Tadawul Index, Rebased (2014-15)   
6.2: NCB Volume Traded (in mn) vs. Stock Price
6.3: NCB Analyst recommendation across time periods
7.1: Sector wise breakup of Saudi Arabia Economy
7.2: Gross domestic product, constant prices, (2010-15 CAGR)
7.3: KSA Banking Sector (2010-2014) in USD billion
7.4: Percentage change in GDP (2010-14)
7.5: Gross Domestic Product break-up (in %)

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