QNBFS upgrades QIB to ‘outperform’ on strong results

QNB Financial Services (QNBFS) on Wednesday announced that it has upgraded QIB to outperform with a price target (PT) of QR24.176 per share.
“QIB has consistently reported strong results over the past couple of years and 4Q2021 reported results were no exception. We raise our estimates for 2022/23, increase our sustainable RoE from 16.5 percent to 17.3 percent and lower our CoE as FOL increase to 100 percent is expected in the first half of 2022,” QNBFS said in a company report.
“The bank’s financial performance was strong during 2017-2021 despite the blockade and the COVID-19 pandemic. QIBK’s fundamentals continue to remain robust with a strong RoE generation. The bank is cost-efficient, has a strong Tier-1 position and a superior asset quality profile against its peers. As such, we believe the stock warrants a premium,” the report said.
QIB reported strong net operating income and earnings for 2021 as core banking income, cost containment and flat net provisions and impairments drove the bottom-line, it said.
“QIB boasts one of the highest RoEs & RoRWAs among its domestic and regional peers. The bank’s RoE jumped from 15.2 percent in FY2016 to 18.2 percent in FY2021, despite the large amounts of provisions booked during the COVID-19 pandemic. We expect RoEs of 17.9 percent and 17.6 percent in 2022 and 2023, respectively. QIBK also has superior RoRWAs, well above 2 percent. QIB generated RoRWAs of 2.6 percent in 2021 and we expect this metric to increase to 2.9 percent by 2026,” it said.
“QIBK remains cost-efficient and continues to generate positive JAWs. The bank’s C/I ratio dropped from 30.8 percent in 2015 to 18.1 percent in 2021. Moreover, QIB generated robust JAWs of 10.7 percent on average,” it said.