The VAlue cAse for ABu DhABi BAnK shAres

As­sess­ing the growth po­ten­tial of the cap­i­tal’s lenders.

Gulf Business - - OPINION -

as prop­erty trans­ac­tions have more than halved in this pe­riod.

The post-Crimea/Ukraine bank­ing sanc­tions on Rus­sia and the col­lapse of the rou­ble have had a neg­a­tive im­pact on Rus­sian tourism (400,000 ar­rivals in 2013) and prop­erty own­er­ship in Dubai. While most UAE banks re­ported blowout Q1 earn­ings, softer credit de­mand, slower loan growth, de­clines in se­cu­ri­ties bro­ker­age fees, trade fi­nance, loan guar­an­tees and remit­tances will trim earn­ings growth. How­ever, UAE bank shares peaked last April and now of­fer at­trac­tive risk/re­ward cal­cu­lus. This is fi­nally a sec­tor where value met­rics cre­ate at­trac­tive trad­ing and in­vest­ment op­por­tu­ni­ties in 2015 to 2016. Na­tional Bank of Abu Dhabi (NBAD), thanks to its Abu Dhabi gov­ern­ment own­er­ship pedi­gree, has the low­est fund­ing cost and high­est as­set qual­ity of any UAE bank. How­ever, earn­ings growth in NBAD will be lower than ADCB and UNB. That said, NBAD of­fers value be­low Dhs12 for a Dhs14 tar­get. ADCB could well be the best per­form­ing bank share in 2015 to 2016. The sell off since Oc­to­ber cre­ates an

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