Alinma Bank
Fundamental — what it's worthbottom-up fair value
Built up from a dividend model, an FCFE cash-flow valuation, relative multiples and the value of retained capital — what is it worth?
Is it cheap or expensive right now?
Latest price vs our fair value. A comparison, not a recommendation.
What it's worth — five lenses
Five independent valuation methods, blended into one weighted central fair value.
| Valuation lens | Per share (SAR) | Weight |
|---|---|---|
| Dividend discount model — primary | 31.23 | 35% |
| Residual income (multi-period build) | 28.41 | 20% |
| FCFE (equity DCF) | 23.79 | 15% |
| Relative multiples | 25.68 | 20% |
| Normalized earnings power | 19.90 | 10% |
| Weighted central fair value | 27.32 | +13.8% vs spot |
The five lenses span SAR 19.9 (the normalized floor, cautious) to SAR 31.2 (the dividend model with a consistent terminal payout, the ceiling). The whole gap to spot is a cost-of-equity argument: at the regressed beta the stock is cheap, at beta = 1.0 it is roughly fairly priced — and the NIM glide through the SAMA easing cycle is the second swing factor. Full detail is in the study and the open model.
Technical & price structuretrend, momentum, key levels
Trend, momentum and key levels — what is the price doing now?
What the chart says
In plain terms: Alinma Bank trades below our weighted central fair value of SAR 27.32 — the gap is what its retained capital is worth, and it is conditional on the cost of equity. On the distributable cash of the growth years alone (FCFE) the shares are worth about SAR 23.8; crediting the ~18–19% return on equity that retained capital keeps compounding, the dividend and residual-income lenses land at SAR 28.4–31.2. Alinma is the fastest-growing large Saudi Islamic bank — FY25 net income SAR 6.4bn (+10%), financing +14%, ROE 18.7%, cost-to-income ~31% — and the market pays ~2.1× common book for it, which implies a ~9.2% cost of equity that sits inside our own published 8.5–10.5% band. The bull case (~SAR 31) is the ROE gliding no lower than ~16% through the SAMA easing cycle; the cautious case (~SAR 20) is a beta-1.0 discount rate and a sub-3.4% NIM together. What moves it near-term is the SAMA/Fed rate path and the quarterly NIM print — and roughly 1% a quarter arrives as dividend while you wait.
Key levels
Volatility & where the case breaks
| Typical daily moveRoughly how far the price swings in an average day (based on a measure called ATR). Bigger means choppier. | ~1.0% |
Monte Carlo — where could the price go?near-term price paths
50,000 simulated futures — near-term price paths, independent of the fundamental value.
The 5th–95th and 25th–75th percentile bands from the 50,000-path simulation. Static and pre-computed — independent of the fundamental levers above.
The exact percentiles
The 5th / 25th / middle / 75th / 95th outcomesLine up all 50,000 outcomes low to high — these are the values at the 5%, 25%, 50%, 75% and 95% marks., from 50,000 paths.
| Timeframe | Rare low (5%) | 25% | Middle | 75% | Rare high (95%) |
|---|
What drives the odds
50,000 paths, 16 forces: the SAMA/Fed rate path (the NIM driver), non-oil GDP & Vision 2030 credit demand, oil price & fiscal impulse, sector credit growth, dividend/payout signal, foreign (TASI-inclusion) flows, and momentum/mean-reversion tilt — plus event forces: a quarterly earnings surprise, a SAMA policy surprise, a dividend declaration surprise, a sovereign rating action, a regulatory fee/levy change, a large corporate credit event, an index rebalance, an oil shock, and a geopolitical/regional event. Details in the methodology.
Peer set & risks
Where Alinma Bank sits in its markets
Alinma Bank is the fastest-growing of Saudi Arabia’s four largest banks by market value — a pure-play Islamic franchise compounding an ~18.7% return on equity at a ~31% cost-to-income ratio. The market pays ~2.1× common book: a growth premium to the sector, a discount to what that ROE justifies at our base cost of equity. This is a competitive map, not a price table.
| Arena | Alinma Bank's position | Main rivals |
|---|---|---|
| Total assets (Saudi banks) | #4 (~SAR 311bn) | Al Rajhi · SNB · Riyad |
| Return on equity | ~18.7% (2nd of the majors) | vs Al Rajhi ~23%, sector ~12–16% |
| Price to book (spot) | ~2.1× common book (18.7% ROE) | Al Rajhi ~3.5×, Al Bilad ~2.0×, sector ~1.0–1.4× |
| Cost-to-income | ~31% (solid) | Al Rajhi ~23% (best-in-class) |
| Net interest margin | ~3.55% (retail Islamic funding) | sector ~2.7–3.2% |
| Capital adequacy (CAR) | ~18.0% (strong) | sector well-capitalised |
The debate is whether ~2.1× book already pays fully for the growth, or whether an 18.7% ROE fading only to ~16% justifies more — which the excess-return lenses answer yes and the normalized floor more cautiously. Competitive map, not advice.
About this series & how we build these
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Edition: 09 Jul 2026. Older editions stay in the Library.