KEY THEMES
U.S. equities rose yesterday, led by tech names. Such upbeat notion came sparked by the testimony of the Fed’s chair, Jerome Powell, signaling a less hawkish tone. As a result, markets rose in response to expectations that rates could be hiked in a slower-than-expected pace. Moreover, oil prices rose to their best levels since November 2021, with Brent oil price trading above USD83/bbl.
Elsewhere, QNB Alahli [QNBA] has kicked off the earnings season, reporting its Q4 2021 stand-alone and consolidated figures. QNBA’s 2021 consolidated net earnings growth came tepid at 2% y/y to EGP7.6bn, despite bold balance sheet growth, where assets grew by c.24% y/y to EGP360bn. The reasons appear to be lower yields during 2021, coupled with 6% y/y higher credit provisions, despite 2020 being a strong base year for CoR. The bank recorded ROAE of 17.7% vs. 20% a year earlier on a lower ROAA of 2.3%. The bank will most likely have a better year in 2022 in terms of profitability, in light of expectations of lower credit provisions and a more stable NIM. We remind you that our 12M PT for QNBA is EGP19.5/share, with an upside potential of 4%. We note that QNBA rallied c.19% since we published our Banking Core Coverage Note back in December 2021. Meanwhile, QNBA is currently traded at a forward P/E of 4.2x and a forward P/BV of 0.78x.