Weaker net interest spreads (-7bps Q-o-Q) Jump in provisioning costs (est. annualised cost of risk of 78bps) Decline in loans  (-2% Q-o-Q) Decline in deposits (-1% Q-o-Q) Weaker non-interest income (-4% Q-o-Q)   Arab National Bank (ANB) reported 3Q16 net income of SAR721mn, 12% lower Q-o-Q, and 14% below our forecast of SAR836mn.   Our take on the results: A weak set of results. The jump in provisioning was the biggest negative surprise. Though ANB’s NPL coverage is one of the highest in the sector, the bank continues to build provisions, likely anticipating weaker economic environment to weigh on credit quality. We were expecting provision costs to remain stable after the bank’s NPL coverage jumped to 287% in 2Q16. The bank also took investment impairments on its domestic equity market exposure, which we estimate was cSAR30-35mn. Revenues declined by 2% Q-o-Q as net interest spreads eased after a strong improvement in the previous quarter. Non-interest income declined, which was largely due to seasonality in our view. After 12 consecutive quarters of steady expansion, net loans declined in 3Q16. Deposits declined for the third consecutive quarter as the bank looks to optimize balance sheet liquidity in the current high funding cost environment. (Earnings release, Murad Ansari)   Arab National Bank: SAR15.36 as of 12 October 2016, Rating: Neutral, FV: SAR22.00 per share, MCap: USD4,096mn, ARNB AB / 1080.SE