Financials

Report by AlphaMena

The bank is improving in all of its core businesses - NII (+7% Y/Y in Q1), Islamic financing (+49%) and investment income more than doubled. FAB’s capital ratios are also in a good position with a Tier 1 ratio and ROTE of 15.40% and 17.40%, respectively. In addition, it is benefiting from a healthy asset quality given its cautious loans’ granting policy despite high exposure to the corporate / private sector. The share price has fallen YTD on geopolitical concerns, but AlphaMena believes the stock deserves more attention given its sound fundamentals and its intent to implement a value-added expansion into one of the largest economies like India (FAB is interested in buying SBI’s 25% stake in Yes Bank).

Financials

Report by AlphaMena

FAB reported significant net profit growth in 9M 2023 (+58% y/y underlying) to AED 12.4bn. Strong investment and corporate & commercial banking businesses (68% of total revenues and 82% of net profit) are the main drivers of FAB’s performance. The bank maintains a strong capital position with RoTE of 18.3% and CET1 at 14.2%, leading to a significant potential for AlphaMena’s intrinsic methods (+48% for the NAV and 52% for the intrinsic value). They expect slower revenue growth pace over 2024-2025 due to stable rates but with no impact on the bank’s equity generation capacity. FAB is shrinking the gap between its GCC peers from a P/B standpoint at 1.26x (vs. 1.16x for its peers).