Dubai: Arqaam Capital is overweight on the UAE index among the GCC countries, and expects a 30 per cent upside in the next 12 months, a top official said on Monday.

“We still think UAE as a whole is cheaper than other Middle East countries,” said Jaap Meijer, executive director at Arqaam Capital, adding that the UAE index will jump by more than 30 per cent in another 12 months.

The investment bank’s hot picks are the banks, whose revenues may jump by 10 per cent. “Banking sector looks very exciting and the quality of earnings is excellent,” Meijer said.

The reduced cost of risk, the double digit loan and asset growth, and lower funding costs and higher income from property investments and stronger income from equity investments are the main drivers of the strong performance.

The investment bank expects Emirates NBD to jump to Dh13.5, an upside of about 35.9 per cent from current levels driven by strong profitability and resilient margins. The bank also expects Emirates NBD profits to double in another 12 months.

“ENBD reported an encouraging net profit growth driven by enhanced earnings and higher F&C income generation, the strong operating profits were ploughed back into further business expansion and continued conservative loan loss charges,” Arqaam Capital said in a report on UAE banks.

The cheapest UAE bank:

Mashreq Bank is the cheapest bank in the UAE, Arqaam Capital said in the report, and has reiterated its core buy recommendation.

“We forecast revenue growth of 13.5 per cent from now until financial year (FY) 2018 on improved margins driven by less pressured assets yields,” as per the report.

The investment bank has a target of Dh197.8 on Mashreq, an upside of 49 per cent from the current market price.

The bank has 54 branches in the UAE, 11 in Egypt and 4 in Qatar, in addition to presence in Bahrain, Kuwait, Hong Kong and India.