Pharos changes recommendations to Egyptian Gulf Bank by cutting weights to "neutral"

Economy and stock exchange

The investment bank Pharos raised its recommendations to the Egyptian Gulf Bank to reduce the weights to neutral at a fair value of $ 0.66 per share, as the stock trades at a profit multiplier of 4.8 times, a book value multiplier of 0.6 times for 2019 and a return on average equity The average of the Egyptian sector is 4.4 times as a profit multiplier and 0.9 times as a book value multiplier for 2019.

In a research report, Faros attributed the rise in the net profit of the Egyptian Gulf Bank, before minority interests and provisions, to 146 million pounds in the first quarter of 2019, down 6% quarter-on-quarter and 7% year on year, Although treasury investments to total assets fell by 537 basis points in the first quarter of 2019 to 24 percent, net interest income rose slightly by 7 basis points to 3.3 percent, as a result of lower financing costs backed by higher interest-free deposits.

Non-interest income increased to 519 basis points to 22%, due to higher net fees and commissions (+ 18% quarter-on-quarter). Operating expenses increased by 8% in the first quarter of 2019 at a slower pace than operating income , Reducing the cost to income ratio by 2.6 percentage points to 45 percent in the first quarter of 2019.

The reserved provisions of the Egyptian Gulf Bank increased by 172%, which led to the cost of risk reaching 1.2% in the first quarter of 2019, down from 0.4% in the previous quarter. The rate of coverage decreased by 33 percentage points to 246%. The assets were stable, with a slight decrease in the rate of non-performing loans by 11 basis points to 1.6 percent in the first quarter of 2019. The actual tax rate fell by 190 basis points to 40.1 percent in the first quarter of 2019, down from 41.9 percent in the fourth quarter 2018.

The balance sheet witnessed weak growth. Total loans increased by 5 percentage points quarter-on-quarter, against an average of 2% over the last four quarters. Customer deposits increased by 15%, compared with an average of 3% over the last four quarters, The rate of loans to deposits to 44% in the first quarter 2019 down from 54% in the previous quarter.

(t tags) Economy (t) Economy (t) Stock Exchange (t) Stock Exchange (t) Egyptian Gulf Bank (t) Pharos