Alawwal Bank reported a net loss of SAR249mn in 4Q16, below our estimate of SAR438mn and Bloomberg consensus of SAR373mn.  Main positives: i) Strong non-interest income growth (+10% Q-o-Q); ii) Deposit growth (+1.4% Q-o-Q)  Main negatives: i) Increase in credit costs (est. annualized cost of risk of 464bps in 4Q16); ii) Weaker net interest spreads (-11bps Q-o-Q); iii) Decline in loans (-5.9% Q-o-Q)   Our take on the results: A weak set of results, with a sharp jump in provisions driving a net loss in 4Q16. We estimate that annualised credit costs jumped to 464bps in 4Q16, likely driven on strong asset quality deterioration. The NPL classification is also likely to have weighed on net interest spreads due to reversal of accrued interest income in 4Q16. We estimate that net interest spreads had declined 11bps Q-o-Q. Funding costs also moved up 26bps Q-o-Q, as the impact of higher cost of deposits raised in 3Q16, likely spilled over into 4Q16. Non-interest income was, however, strong, with results disclosures attributing growth to higher investment gains, while fee income was weak sequentially. Net loans declined 5.9%, driven by repayment by corporates, and partly on NPL classification. (Company disclosure, Murad Ansari)   Alawwal Bank: SAR11.70 as of 19 January 2017, Rating: Neutral, TP: SAR14.50 per share, MCap: USD3,566mn, ALAWWAL AB / 1040.SE