Banks & Asset Managers (360) | UAE banks: Resilient but not immune

研报英文原文证据摘录

Banks & Asset Managers (360) | UAE banks: Resilient but not immune

company guidance, which we think will be revised down.

Although UAE banks have de-rated since the start of the conflict, we continue to see

downside risk in ADCB, supporting our Reduce rating and AED11.25 target price.

By contrast, the recent share price weakness in ENBD (TP AED27.00) and FAB (TP

AED17.50) leaves both stocks trading close to our estimate of fair value. We

therefore maintain our Hold ratings on both names.

Valuation model

We use a residual income valuation model based on our forecasts through to 2030E.

For ADCB, key assumptions include a cost of equity of 14.3%, normalised ROE of

13.8%, and a 3% terminal growth rate. At our target price of AED11.25, the shares

would trade on 1.1x 2026E book value and 10.4x earnings, with 4.3% dividend yield.

For ENBD, key assumptions include a cost of equity of 15.0%, normalised ROE of

15.1%, and a 3% terminal growth rate. At our target price of AED27.00, the shares

would trade on 1.1x 2026E book value and 8.9x earnings, with a 3.7% dividend yield.

For FAB, key assumptions include a cost of equity of 13.6%, normalised ROE of

15.8%, and a 3% terminal growth rate. At our target price of AED17.50, the shares

would trade on 1.4x 2026E book value and 11.1x earnings, with 4.1% dividend yield.

Risk factors

Key upside risks include a swift and conclusive end to the conflict in Iran. This would

boost investor sentiment but would likely not remove the risk of loan quality

deterioration and guidance downgrades. Other areas of upside include efficiency

and risk management improvements from increased technology adoption.

Downside risks include a prolongation of geopolitical tensions, which could

threaten the long-term UAE population and capital growth stories.