Goldman Sachs ups ratings on Abu Dhabi banks

Goldman Sachs raised its investment ratings for two Abu Dhabi-based banks, it said on Thursday.

The investment bank raised to 'buy' First Gulf Bank and National Bank of Abu Dhabi from 'neutral' and 'sell' respectively, upping their 24-month price targets to 27.54 dirhams ($7.50) and 19.19 dirhams.

"Dubai is deleveraging and ironing out the excesses it has accumulated over the years, effectively shifting UAE's growth axis more towards Abu Dhabi," said William Mejia Executive Director for new markets banks at the bank.

The bank downgraded its recommendation for Dubai-based Emirates NBD and Dubai Islamic Bank to 'sell' from 'buy' and 'neutral' ratings. It trimmed both 24-month price targets to 3.31 and 2.20 dirhams.

Abu Dhabi and Dubai are members of the seven-strong UAE federation.

Goldman Sachs said resilient economic growth in the UAE is the main upside risk to its view and price targets.

"On the downside, substantial write offs as a result of the ongoing DW (Dubai World) restructuring process could meaningfully impair capital," it said.

Dubai received a surprise $10 billion bond from neighbouring Abu Dhabi this week to help meet debt obligations of its flagship company, Dubai World and stave off a bond default by a state-linked property firm. ($1=3.673 dirhams) (Reuters)