National Commercial Bank (NCB) reported 4Q16 net income of SAR2,287mn, 17% higher Q-o-Q. Earnings were 5% ahead of Bloomberg consensus of SAR2,178mn.   Main positives: Lower provisions (est. cost of risk of 66bps); Deposit growth (+1.4% Q-o-Q). Main negatives: Decline in net interest spreads (-11bps Q-o-Q); Decline in loans (-2.4% Q-o-Q)   Our take on the results: Normalisation in provisioning costs drove a strong Q-o-Q recovery in earnings. We estimate that credit costs almost halved Q-o-Q to 66bps in 4Q16. However, revenues were relatively weak, driven by an 11bps Q-o-Q decline in net interest spreads, and marginal decline in non-interest income. Loan book contracted, likely on repayments by corporates that had at the start of 2016 utilised credit lines to fund working capital requirements. However, deposits rose 1.4%, which helped regulatory loans to deposit ratio to drop c300bps Q-o-Q to 78%. (Company disclosure, Murad Ansari)   National Commercial Bank: SAR40.67 as of 18 January 2017, No Rating, MCap: USD21,691mn, NCB AB / 1180.SE