UBS cuts its price target on First Gulf Bank

GRIM OUTLOOK: Swiss investment bank lowered its First Gulf Bank price target to eight dirhams.

UBS has cut its price target on First Gulf Bank, citing the Abu Dhabi bank’s high exposure to the property sector.

The Swiss investment bank lowered its price target to AED8.00 ($2.18) from AED10.50 ($2.86) due to what it believes will be a fall in earnings of between 80 and 90 percent over the next two years, reflecting slowing volumes and higher arrears.

“First Gulf Bank has amongst the largest exposures to real estate and construction of the big Abu Dhabi based banks, representing we estimate 25 to 30 percent of total assets at year end 2008,” analyst Stephen Andrews wrote.

“Whilst we feel we have factored a significant correction in asset prices and subsequent impairments into our forecasts, sentiment remains fragile. Indeed we believe this situation is unlikely to improve until we see a stabilisation in asset prices in the UAE.”

Still, the bank’s ties to the ruling family of Abu Dhabi will continue to give it access to both capital and deal flow, he added.

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic. Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM