The VAlue cAse for ABu DhABi BAnK shAres
Assessing the growth potential of the capital’s lenders.
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