Saudi Hollandi Bank’s (SHB) 4Q2015 headline net income declined 9% Q-o-Q to SAR451 million, 6% below of our estimates of SAR481 million but in line with Bloomberg consensus.   Main positives: i) Growth in loans (+4% Q-o-Q); ii) Strong deposit growth (+7% Q-o-Q)   Main negatives: i) Weaker net interest spread (-12bps Q-o-Q); ii) Higher provisions (est. +23% Q-o-Q)   Our view on the results: Earnings miss to our estimates appears to be mainly on higher-than-expected provisions. We estimate SHB’s annualised cost of risk rose to 71bps in 4Q2015 compared to our estimate of 53bps, and 59bps in 3Q2015. Loan growth was impressive at 4% Q-o-Q, but its impact on net interest income was offset by 12bps Q-o-Q compression in net interest spreads. Strong deposit growth in 4Q2015 is likely to have led to higher funding costs; hence, lower spreads. Non-interest income was broadly flat on Q-o-Q basis.   We have a Buy rating on SHB. Though we expect the bank’s profitability to be challenged by slower growth, spread and asset quality pressures, it is largely reflected in valuations, in our view. SHB trades at 2016e P/BV of 1.1x on 2016e ROE of 15%. (Earnings release, Murad Ansari)   Saudi Hollandi Bank: SAR24.30 as of 17 January 2016, Rating: Buy, FV: SAR33.50 per share, MCap: USD3,704 million, AAAL AB / 1040.SE