Abu Dhabi Stocks Gain to 3-Year High on Chase for Bank Dividends

Abu Dhabi’s benchmark index rallied to the highest level in more than three years as investors bought banking stocks to take advantage of higher dividends.

First Gulf Bank PJSC, which recommended a cash dividend of 83 fils per share for 2012, rose 4.2 percent. Abu Dhabi Commercial Bank PJSC advanced to the highest level in more than four years after raising $1.5 billion from a bond sale. The ADX General Index gained 1.7 percent to 3,056.39, the strongest close since October 2009.

United Arab Emirates lenders have raised dividends as they recover from the impact of the global credit crisis which slowed lending, hit investment banking and led to a surge in loan-loss charges. Abu Dhabi banks offer an average dividend yield of 4 percent, versus 3.3 percent for the Bloomberg GCC 200 Financial Index of the Gulf Cooperation Council’s most-traded stocks.

“The prospects of the banks profits in 2013 are good in addition to the attractive dividend yield,” said Nabil Farhat, partner at Abu Dhabi-based Al Fajer Securities.

The Abu Dhabi measure was the biggest gainer in the six-nation GCC today and about 316 million shares were traded, compared with a 12-month daily average of 82 million, according to data compiled by Bloomberg.

Higher Dividends

Abu Dhabi Commercial, the third-biggest U.A.E. lender by assets, said in January it would pay a 25 percent cash dividend for 2012, up from 20 percent a year earlier. The lender’s fourth-quarter profit rose 19 percent, beating estimates. The shares surged 3.3 percent today to 4.03 dirhams, the highest level since September 2008.

Abu Dhabi Commercial “has a steady and progressive growth rate,” Hakim Azaiez, the head of investments at GCA Asset Management in London, who bid for the bonds, said in an e-mail yesterday. “The diversification between the commercial and investment banking give the bank a balanced revenue stream.”

First Gulf, whose 2012 profit grew 12 percent, advanced to 13.7 dirhams, the highest since July 2008. The bank will probably post the fastest loan growth in the U.A.E. in 2013, EFG-Hermes Holding SAE said in December.

Aldar Properties PJSC and Sorouh Real Estate Co., Abu Dhabi’s biggest property developers, rallied 1.3 percent and 2.7 percent. Shareholders of both companies will meet March 3 to vote on a potential merger after failing to reach quorum at an extraordinary general meeting on Feb. 21.