GulfBase GCC Cap Indices
Large Cap4,019 -0.10
Med Cap3,848 -0.05
Small Cap4,895 -0.24
Micro Cap8,498 -0.25

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Ticker Price Volume
GFH 0.5 1,361,733
BKSB 0.14 70,617
DANA 0.62 13,288,208
DAMAC 3.85 372,716
DSI 0.39 34,049,322
ALINMA 16.47 22,194,374
SABIC 98.09 2,208,800

Emirates NBD -Equity Report -18-12-2011

Source: HC Securities & Investment

2 more transitional years

We cut our forecasts 20%–30% due to increased loan loss charges

We incorporate the acquisition of Dubai Bank and include the potential negative effects of an Amlak acquisition

We believe the current share price offers decent value and reflects revised guidance but do not see room for the stock to outperform

Substantially reduced forecasts: We reduce our forecasts 30.4% for 2011e, 25.5% for 2012e, 20.7% for 2013e, and 8.5% for 2014e, due mostly to increased impairments. Our forecasts are now below consensus by 50% for 2012e and 38% for 2013e. It should take until 2014e for the bank to cover its cost of cap ital as provisions eat away 53%–76% of its operating profit. We increase our loan loss provisions to AED5.1bn from AED4.1bn for 2011e, to AED4.1bn from AED3.5bn for 2012e, and to AED3.4bn from AED3.1 bn for 2013e. This takes cumulative impairments (4Q11–2013e) to AED8.8bn and brings NPL coverage to 59%.

We reduce our TP to AED3.9/share fr om AED4.9/share to reflect the bank’s relatively poor earnings outlook, a potential increase in the concentration risk of its loan portfolios, the negative impact of the Dubai Bank acquisition, and a potential acquisition of Amlak. We downgrade ENBD to Neutral from Overweight.

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