Abu Dhabi Commercial Bank PJSC surged to the highest level in more than four years after the third-biggest United Arab Emirates bank by assets boosted its annual dividend, stoking optimism other lenders will follow.
The stock jumped 3.5 percent to 3.55 dirhams, the strongest level since September 2008, at the close in Abu Dhabi, bringing this month’s gain to 18 percent. ADCB was the second-biggest gainer on the benchmark ADX General Index, which rallied 1.1 percent today. First Gulf Bank PJSC led the increase by index points with an advance of 2.4 percent after full-year net income at the lender controlled by Abu Dhabi’s ruling family rose.
ADCB “reported excellent results with growth in net income and handsome dividends,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. “Investors are searching for high-yielding stocks, mainly banks.”
ADCB said it would pay a 25 percent cash dividend for 2012 compared with 20 percent the year earlier after fourth-quarter net income rose 19 percent, according to data compiled by Bloomberg. Abu Dhabi banks have a dividend yield of 4.2 percent, compared with 3.1 percent for the Bloomberg GCC 200 Financial Index. U.A.E. banks are recovering from the impact of the global credit crisis which slowed lending, hit investment banking and led to a surge in loan-loss charges as defaults rose.
Shares of First Gulf advanced to 12.8 dirhams, the highest close since August 2008. The company recommended a cash dividend of 83 fils per share for 2012.
In Dubai, Emirates NBD PJSC, the biggest U.A.E. bank, raised its cash dividend to 25 fils, after paying 20 fils in each of the previous three years. The stock, which was unchanged at 3.8 dirhams today, rallied 33 percent this month and has a 12-month dividend yield of 5.3 percent.