ADCB Raised at JPMorgan on Cutting Low-Quality Assets Exposure
“ADCB management has commendably turned around the franchise over the last two-three years by cleaning up the asset book, prudently managing liquidity while conserving spreads better versus regional peers and strengthening the capital base by disposal of non-core assets,” analysts including Naresh Bilandani wrote in a research report. This has made “the business model much simpler -– simplicity receives a plus from bank investors in the current regulatory scenario.”
ADCB said last week it settled lawsuits against Morgan Stanley, Standard & Poor’s, Moody’s Investors Service Inc. and others over its purchase of Cheyne SIV notes. The bank reported a 4 percent increase in first-quarter profit to 830 million dirhams ($226 million), beating analysts’ estimates.
JPMorgan raised the recommendation from neutral and increased the price estimate to 5.50 dirhams from 5 dirhams. The stock closed at 4.61 dirhams last week. It has surged 55 percent this year, outpacing the 30 percent climb for Abu Dhabi’s ADX Banks Index.
JPMorgan also raised the price estimate of First Gulf Bank, (FGB) its top pick among banks in the Middle East and North Africa, to 18 dirhams from 13.50 dirhams. The overweight recommendation was maintained. The stock has risen 25 percent this year to 14.55 dirhams last week.
National Bank of Abu Dhabi, the U.A.E.’s biggest bank by assets, was cut to neutral from overweight at JPMorgan, saying the shares are “trading close to their June 2014 fair value and the relative valuation of NBAD looking stretched versus peer regional names.” The stock gained 31 percent this year to 12.25 dirhams last week.
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