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Financials
ADCB is AlphaMena’s top pick in UAE banks, supported by superior asset quality, best-in-class efficiency and a more domestic balance sheet, which provides a natural hedge against the FX and rate volatility affecting more internationally exposed peers such as Emirates NBD and QNB (Turkey). Compared with First Abu Dhabi Bank, ADCB has less reliance on market-related revenues, supporting better earnings visibility, while its exposure to stressed sectors is significantly lower than Dubai Islamic Bank, particularly in aviation. 2Q26 results are the key near-term catalyst, with potential upside from a strong quarter and a NIM guidance upgrade in a higher-for-longer rate environment. AlphaMena sees attractive risk/reward, with geopolitical risk largely priced in and de-escalation a potential re-rating trigger.
Financials
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
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).
