Bank Albilad reported 2Q16 net income of SAR184mn, 5% higher Q-o-Q, but below our forecast of SAR202mn.   Main positive: Slight improvement in non-interest income (+1% Q-o-Q)   Main negatives: i) Weaker net interest spreads (-4bps Q-o-Q); ii) Provisioning costs remain high, likely on investment impairments (est. cost of risk of 88bps); iii) Decline in loans (-1% Q-o-Q); iv) Decline in deposits (-4% Q-o-Q)   Our take on the results: A relatively weak set of results, in our view. Earnings recovered marginally from low base in the previous quarter, supported by a slight improvement revenues and a marginal decline in provisions. Net interest spreads weakened sequentially, giving up all the gains made in the previous quarter. Provisioning costs remained high, likely on investment impairments, which are driven by the bank’s local equity exposure. Balance sheet contracted after strong growth in the previous quarter, with both net loans and deposits declining sequentially. (Earnings release, Murad Ansari)   Al Bilad Bank: SAR18.23 as of 17 July 2016, Rating: Sell, FV: SAR17.50 per share, MCap: USD2,917mn, ALBI AB / 1140.SE