MENA Banks: Feedback from investor meetings

Research evidence excerpt

MENA Banks: Feedback from investor meetings

m rising competition in UAE, protracted downturn in UAE’s real estate

market and further M&A activity in ENBD’s core markets which could strain capital ratios. Key upside risks include better loan growth especially from

sovereign and retail segments, better margins in Turkey, better delivery in India and lower hyperinflation charges.

First Abu Dhabi Bank PJSC

Our price target for FAB is derived using a weighted average of fair values based on two valuation techniques. First is the Gordon growth model with

following assumptions: 10.0% COE, 4.0% growth rate and 16.6% 28E ROTE. These inputs imply a fair P/t.B multiple of 2.1x which is applied to the

bank’s projected FY28 tangible equity and the resulting valuation is discounted back to Jun-2027. This approach is assigned a 70% weight in the overall

valuation. We also incorporate a multiples-based valuation method, assigning it a 30% weight in our overall price target. This approach involves applying

a target P/E multiple, derived from the stock’s historical trading average, to our 12M ending June-27E EPS forecast. Downside risks can come from

worsening geopolitical conditions, slowdown in economy and property market due to global macroeconomic weakness, higher than expected pressure

on capital from growth / regulatory measures, challenges in sustaining existing levels of non-interest revenues and any surprises on the M&A front.

Saudi Awwal Bank

We value Saudi Awwal Bank shares using a Gordon Growth Model with following assumptions: 10.60% COE, 4.0% growth rate, and 14.1% 28E ROTE.

These inputs imply a fair P/t.B multiple of 1.5x. This multiple is applied to the bank’s projected FY28 tangible equity, and the resulting valuation is