Earnings decline 35% Q-o-Q; misses estimates. SAIB’s 4Q2015 headline net income declined 35% Q-o-Q to SAR228 million, 34% below our estimates of SAR344 million.   Main positives: i) loan growth (+4% Q-o-Q); ii) non-interest income growth (+16% Q-o-Q); and iii) deposit growth (+6% Q-o-Q) Main negatives: i) spike in provisioning costs (c5x higher Q-o-Q); and ii) decline in net interest spreads (-8bps Q-o-Q)   Our view on the results: We estimate that provisioning costs rose sharply, rising c5x Q-o-Q, likely on a combination of higher investment and credit provisions. Investment provisions were likely on the bank’s equity holdings in the domestic market. SAIB’s net interest spreads eased, giving up the gains made over the past four quarters. While funding costs are likely to have risen on strong deposit growth, lower yields accruing from loan expansion are also likely to have weighed on spreads. Loan book grew after remaining stagnant in the past four quarters.   We have a Neutral rating on SAIB. The bank has a relatively weaker deposit franchise reflected in the lowest CASA deposit mix (c29%) in the sector. This is likely to weigh on spreads as market liquidity conditions remain tight. (Earnings release, Murad Ansari)