Bloomberg News

First Gulf Gains Most in Year Bank Loan Outlook: Abu Dhabi Mover

March 26, 2013

First Gulf Bank PJSC (FGB) rose the most in more than a year on bets the Abu Dhabi-based lender will report improved first-quarter earnings as credit growth picks up amid an economic recovery.

Shares of the bank, which is controlled by Abu Dhabi’s ruling family, increased 4.6 percent, the largest advance since March 2012, to 13.75 dirhams at the close in Abu Dhabi. The stock was the biggest gainer and most traded by value on the benchmark ADX General Index (ADSMI), which added 0.5 percent. First Gulf, which was the second-best performing bank on the bourse last year, has increased 19 percent this quarter.

United Arab Emirates lenders are benefiting from an economic recovery in the second-largest Arab economy, with Abu Dhabi’s government restarts stalled projects as it pursues investments to diversify the economy away from oil. First Gulf will probably post the U.A.E.’s fastest loan growth in 2013, helping to boost profit, according to EFG-Hermes Holding SAE.

“First Gulf Bank offers strong upside driven by double- digit growth in loans, high net interest margins” and a strong dividend yield and earnings outlook, said Jaap Meijer, a director of equity research at Dubai-based Arqaam Capital Ltd.

First Gulf, whose 2012 profit grew 12 percent, may this year post a 7 percent gain in net income, according to the mean estimate of 10 analysts on Bloomberg. The lender, which is scheduled to report results on April 23, has a 12-month dividend yield of 6.1 percent, compared with 5.3 percent for the ADX Banks Index (ADBF), data compiled by Bloomberg show.

The stock’s rally in 2013 compares with a gain of 15 percent for the ADX General Index. Fourteen analysts recommend investors buy the shares of First Gulf, while two say hold the stock and one says sell, according data compiled by Bloomberg.

“Banks in general are doing great,” said Saad al Chalabi, senior institutional trader at Al Ramz Securities in Abu Dhabi. “First Gulf Bank in particular has always been the favorite for foreign funds.”

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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