US company begins to rate three UAE banks

Dubai: US-based investment bank Morgan Stanley said it has initiated coverage on three Abu Dhabi banks with price targets suggesting an average potential upside of 21 per cent.

Of the three banks covered, Morgan Stanley's top pick was First Gulf Bank, with a 26 per cent potential upside and an "overweight" rating.

The other two banks, Abu Dhabi Commercial Bank and Union National Bank, both received "equal-weight" ratings with price targets offering 21 per cent and 17 per cent respectively.

Tammam Al Barbir, Morgan Stanley's analyst for the region said the factors influencing the upbeat outlook on the sector are the "robust macro outlook leading to strong loan growth", the potential for merger and acquisition activity in the region and the fact that "Abu Dhabi banks are trading at attractive valuations relative to both GCC peers and historical multiples".