Arqaam recommends buying ABK shares

KUWAIT CITY, March 27: Arqaam Capital recently released a report on Al Ahli Bank of Kuwait, suggesting investors buy its shares with a target price of 0.280 fils per share, reflecting a 6.9% increase from its current trading price as of March 13, 2024, reports Al-Qabas daily.

The report anticipates an improvement in the return on shareholders’ equity at Al Ahli Bank of Kuwait, projected to reach 7.4% compared to 7% in fiscal year 2023 and 5.2% in fiscal year 2022. This increase is attributed to the bank’s sustained expansion of profitability margins and positive credit trends following a $100 million capital increase.

Arqaam Capital underscores the importance of Al Ahli Bank of Kuwait’s transformation strategy, emphasizing a focus on high returns. The bank’s efforts in managing retail and corporate banking operations are expected to contribute to enhanced returns on shareholders’ equity.

Furthermore, the report highlights the bank’s emphasis on cost efficiency as part of its transformation strategy. Operating expenses grew by 8.5% annually in fiscal year 2023, aligning closely with revenue growth of 8.2%. Arqaam Capital anticipates a 5% to 7% improvement in the cost-toincome ratio by the next fiscal year, with further improvements expected by fiscal year 2028.

Arqaam Capital forecasts an increase in the bank’s net interest margin from 2.27% to 2.33% by the end of 2024, leading to a rise in return on assets to 6.63%. Total operating revenues are expected to increase by 4.39% to 190 million dinars by the end of 2024, with a corresponding improvement in the return on average assets to 0.7%.

Additionally, the report projects an increase in total allocations to 44 million dinars by the end of the year, with total loans and advances reaching 4.85 billion dinars and total liabilities increasing to 5.96 billion dinars in the same period.