Core portfolio changes€¦ · Loubna ElHassan Michael Malkoun Nisreen Assi Jonathan Milan...

S e c t o r C o v e r a g e

O c t o b e r 2 2 0 1 2 Jaap Meijer, MBA, CFA [email protected] +97145071744

Loubna ElHassan Michael Malkoun Nisreen Assi Jonathan Milan Christine Kalindjian Zeina Nasreddine Arqaam Capital Research offshore s.a.l. . .

Core portfolio changes

Reducing our net short on Kuwait We close our Avoid position in Kuwait Finance House. We could expect the market-talk about the bail-out or equity fund to continue moving Kuwaiti bank shares higher. KFIN is the cheapest from our current Avoids in Kuwait in terms of P/tNAV12e of 1.8x vs. pre provisioning RoE of 22%. We continue to be net underweight on Kuwait due to the poor credit outlook and relatively high valuations. Burgan bank remains firmly in our Core portfolio (as the only attractively valued Kuwait bank, with a very solid profit growth helped by its recent Turkish acquisition), while we maintain Boubyan and Gulf Bank in our Avoid portfolio, as both remain strongly overvalued. Only 25% of the Kuwaiti fund that was established after the fall of Lehman of KWD1.5bn appears to have been deployed in the equity markets. Next to that, a KWD1bn real estate fund has been approved. There has been market talk about a new potential fund of KWD2bn that could be used to either buy publicly listed equities, buy out distressed assets or provide collateralized loans to distressed borrowers. The potential size is impressive as the total NPLs of the banks under our coverage is approximately the same amount, and equals to 7% of the market value of Kuwait stock market. We do not expect a quick fix and remain underweight on Kuwait: 1) The fund may only buy listed equities and as a consequence may only lift the Kuwait stock market for a limited period of time (7% of market cap). 2) The fund may direct lending to troubled borrowers, but we do not expect the fund to be used to buy out bad loans without a sharp discount, and we expect the fund to be run on commercial terms. 3) We expect this potential fund to be relatively slow moving. 4) We see room for further NPL formation, particularly relating to investment companies, such as Kharafi group, which represents an estimated c10% of NBK’s loan book. 5) We continue to see very limited fundamental upside in Kuwaiti banks, considering the average valuation of P/tNAV 12e of 2.0x vs. an average ROTE of 13.9% in FY13e and pre-provisioning ROTE of 21.6%. Within UAE we remain very comfortable with our long positions in FGB and UNB, as we expect both banks to receive waivers with respect to most of their single party exposures. The UAE CB should not postpone the deadline, but instead would look at banks case by case. We continue to recommend NBAD, but we are unwilling to put it in our Core Portfolio: it is still unclear how NBAD's growth strategy would be impacted by the new rules. We see the recent weakness in CIB and CAE as attractive entry points, and we see room for the valuation gaps to further narrow vs. the sector, particularly if interest rates fall further, and we expect a very strong Q3

Company Ticker UNB UH

Price Target AED 4.7 Upside (%) 55.1

Company Ticker BKMB OM Price Target OMR 0.89

Upside (%) 60.9

Company Ticker CBD UH

Price Target AED 4.2 Upside (%) 42.3

Company Ticker QNBK QD

Price Target QAR 193.0 Upside (%) 42.1

Company Ticker FGB UH Price Target AED 13.9

Upside (%) 39.1

Company Ticker AAAL AB

Price Target SAR 37.3 Upside (%) 41.7

Company Ticker SAMBA AB Price Target SAR 64.7

Upside (%) 46.0

Company Ticker COMI EY Price Target EGP 44.2

Upside (%) 27.6

Company Ticker BURG KK

Price Target KWD 0.6 Upside (%) 17.0

Company Ticker CIEB EY Price Target EGP 15.5

Upside (%) 9.7

© Copyright 2012, Arqaam Capital Limited. All Rights Reserved.

See Important Notice.

October 2 2012

Banks

Banks © Copyright 2012, Arqaam Capital Limited. All Rights Reserved. See Important Notice. 2

We see however downside in NSGB, and we see a downside risk in the stock as we expect if QNB reaches an agreement with SocGen, its 77% majority owner, it would do so below the current market cap (41% increase since the talks were announced). QNB has until the end of the month to submit an offer. If the offer is not made or QNB withdraws interest, the law stipulates preventing QNB from making further bids for six months. ENBD has bid for BNP's Egypt unit, implying a P/tNAV11 of 1.34-1.67x & P/E11 of 17-20x. We expect a negative effect on CET1 of 0.5-0.7%. We would expect a positive effect on EPS of 1.3-2.1% & an ROI of 6.5%. We are becoming slightly more cautious on KSA banks. We expect 8.7% y/y net earnings growth, a marked slowdown vs. 10.9%, however the first two months of the Q3 profits rose only 0.3%, suggesting room to underperform our Q3 12 forecasts.

Exhibit 1: Core Portfolio

Source: Bloomberg, Arqaam Capital Research

Core BUYS

Bank Curr TP Upside FY 13e P/E FY 12e P/tNAV YTD Initiation Investment case

CBD AED 4.2 42.3% 7.3x 0.9x 7.2% 5.7% Share buy-back of potentially 35% of market cap

FGB AED 13.9 39.1% 6.8x 1.2x 29.3% 12.1% Good entry point after pull back due to impatience on buy back

UNB AED 4.7 55.1% 5.3x 0.7x 5.2% 4.8% Offers deepest value, higher NIMs absorbing higher loan losses

QNB QAR 193.0 42.1% 9.7x 2.0x (1.7%) 1.8% Best LT growth, strong RORWA & capital, acquisitions unlocking value

CAE EGP 15.5 9.7% 8.5x 1.8x 77.6% 56.8% Take-over target, positive outlook FY12 after transitional FY11

CIB EGP 44.2 27.6% 7.6x 1.9x 85.3% 35.5% Growing when others do not, helped by higher NIMs, and very low valuation

Samba* SAR 64.7 46.0% 8.2x 1.3x (4.9%) (5.3%) Bank re-leveraging while NIM compression halted

SHB SAR 37.3 41.7% 8.7x 1.2x 5.9% (3.3%) Very cheap, potential to cut C/I, new potential core shareholder a positive catalyst

Muscat OMR 0.8 45.7% 7.4x 1.2x (15.0%) (4.0%) Two capital increases should bolster its growth outlook, cheap entry point

Burgan KWD 0.6 17.0% 10.8x 2.4x 12.7% 22.9% Best Kuwait growth story. Tekfen could add 12% to EPS and 3% to loan growth CAGR

RAKBank AED 6.4 44.9% 5.7x 1.2x (3.2%) 6.5% Retail regulation less stricty than expected, sector highest RORWA

Exited positions:

Salama** AED 0.8 15.8% 8.0x 0.6x 23.9% (0.3%) Thai floods should impact Q3 12, growth in Family takaful disappointing

Al Rajhi** SAR 94.9 33.1% 11.1x 3.0x 2.5% 0.7% NIM compression due to increased competition in retail banking space

Total return 37.4% 7.8x 1.4x 18.0% 11.6%

S&P Arabia 4.1% (0.9%)

Outperformance 13.9% 12.5%

Core SELLS

Bank Curr TP Upside FY 13e P/E FY 12e P/tNAV YTD Initiation Investment case

Khaliji QAR 13.9 (19.1%) 16.2x 1.2x 0.2% (0.3%) Low quality of earnings

EGB USD 1.2 (31.8%) 15.8x 1.8x 11.8% 13.3% Unjustified M&A premium

BOB USD 10.5 (44.8%) 11.7x 1.8x (2.1%) --% Weakest capital base of sector due to high reliance on preference shares

BJAZ SAR 22.8 (12.8%) 13.5x 1.4x 54.0% 4.4% Tight capital base, capital increase to be EPS dilutive

HBMO OMR 0.2 (0.2%) 11.5x 1.3x (21.9%) (7.3%) Merger synergies fully factored in its valuation

Boubyan KWD 0.3 (53.8%) 42.2x 4.2x 5.1% 1.6% Valuation artificially high

Gulf Bank KWD 0.3 (22.9%) 21.6x 2.4x (9.4%) 7.3% Valuation fully reflects earnings recovery

MedGulf SAR 19.3 (20.7%) 13.3x 2.6x (13.2%) (17.9%) Exposed to higher claims in medical, expensive and high capitalized goodwill

DFM AED 0.7 (24.5%) 45.7x 3.7x 16.1% --% Only option value

Exited positions:

KFH** KWD 0.6 (22.8%) 15.6x 1.8x (7.6%) 5.5% Capital gains should come down, bail-out fund could support shares

MASQ** AED 62.4 19% 8.9x 0.7x (45.8%) (21.4%) Beats estimates on the back of improved margins, driven by better funding management

Shuaa** AED 0.6 2% -47.1x 0.6x 9.1% (9.4%) Break-up more likely & new targets to be unveiled at investors meeting on 3 October

DIB** AED 1.8 (11.6%) 8.2x 0.8x 2.1% 4.2% Substantial hidden losses on associates, real estate, provisions and fair value reserves

Total return (26%) 21.3x 2.3x (0.3%) (1.2%)

S&P Arabia 4.1% (0.9%)

Outperformance 4.5% 0.3%

Total alpha (Core Buy & Core Sells) 18.3% 12.8%

*Added positions

**Exited positions

July 4 2012

Region – Banks

October 2 2012

Banks


Exhibit 2: MENA banks valuation screen


Ticker Company Rating Mkt. Cap. Currency Mkt Cap. Share Target Upside Target P/E(x) CAGR PEG

USDm (m) Price* Price % FY 12e FY 13e FY 14e FY 13e FY 12-15E FY 12e FY 12e FY 13e FY 14e FY 12e FY 13e FY 14e FY 12e FY 13e FY 14e FY 12e FY 13e FY 14e

ADCB UH ADCB HOLD 4,951 AED 18,186 3.3 3.7 13.6 6.7 6.4 5.9 6.7 11.7 0.5 0.9 0.8 0.8 12.0 12.0 12.1 4.7 4.9 5.4 3.6 3.5 3.3

ADIB UH ADIB SELL 2,099 AED 7,709 3.3 2.9 (12.0) 6.9 7.1 6.4 5.6 9.7 0.7 1.1 1.0 1.0 15.0 13.6 14.0 5.2 5.3 5.6 3.9 3.9 3.7

CBD UH CBD BUY 1,643 AED 6,034 3.0 4.2 42.3 7.7 7.3 6.2 8.8 15.0 0.5 0.9 0.8 0.8 16.2 16.5 18.2 7.1 7.6 8.1 4.5 4.2 4.0

DIB UH DIB SELL 2,047 AED 7,518 2.0 1.8 (11.6) 8.8 8.2 6.7 6.0 21.7 0.4 0.8 0.8 0.7 9.2 9.5 10.8 6.4 5.9 5.8 3.6 3.2 3.1

EMIRATES UHENBD HOLD 4,509 AED 16,562 3.0 3.4 13.0 8.8 9.3 7.4 8.4 38.4 0.2 0.6 0.6 0.6 6.4 5.8 7.2 4.9 4.6 4.7 2.6 2.6 2.5

FGB UH FGB BUY 8,160 AED 29,970 10.0 13.9 39.1 7.5 6.8 6.1 8.4 13.6 0.5 1.2 1.1 1.0 15.5 15.7 16.4 7.5 8.4 9.4 5.4 5.0 4.6

NBAD UH NBAD BUY 9,599 AED 35,258 9.1 13.2 45.5 8.4 6.7 5.8 8.5 19.6 0.3 1.4 1.2 1.0 16.6 18.2 18.2 2.8 3.3 3.9 6.1 5.1 4.6

UNB UH UNB BUY 2,066 AED 7,587 3.0 4.7 55.1 5.4 5.3 4.7 7.3 14.0 0.4 0.7 0.6 0.6 11.4 11.0 11.6 6.7 8.7 8.6 3.3 3.3 3.1

TAMWEEL UHTamweel BUY 348 AED 1,280 1.3 1.7 30.8 15.6 12.6 12.3 16.1 12.6 1.0 0.5 0.5 0.5 3.6 4.4 4.4 3.9 3.9 4.7 8.0 6.5 5.9

MASQ UH Mashreq HOLD 2,424 AED 8,902 52.7 62.4 18.6 10.1 8.9 7.8 9.2 23.3 0.4 0.7 0.6 0.6 6.9 7.4 8.1 4.3 4.1 4.0 4.6 4.3 4.0

RAKBANK UHRakbank BUY 1,825 AED 6,705 4.4 6.4 44.9 5.6 5.7 5.9 8.5 2.3 2.5 1.2 1.1 1.0 23.7 20.4 17.9 8.1 7.9 7.7 4.3 4.3 4.4

UAE banks 39,671 145,711 29.1 8.3 7.6 6.6 9.8 1.0 0.9 0.8 11.8 12.0 12.6 5.2 5.6 6.0 4.3 4.1 3.8

CBQK QD CBQ HOLD 5,063 QAR 18,435 74.5 80.1 7.5 9.5 9.2 8.4 9.0 7.9 1.2 1.3 1.2 1.2 13.1 13.1 13.8 8.1 8.1 5.8 9.6 8.8 8.1

DHBK QD Doha HOLD 3,139 QAR 11,430 55.3 53.3 (3.7) 8.9 13.3 11.8 11.4 (6.2) (2.2) 1.5 1.5 1.4 17.2 13.2 12.1 9.0 6.3 6.3 7.5 11.2 9.8

QIBK QD QIB HOLD 4,997 QAR 18,195 77.0 85.7 11.3 12.4 10.6 10.0 11.1 9.0 1.2 1.6 1.5 1.4 12.8 14.2 14.4 5.2 7.0 7.4 10.0 8.9 8.0

QNBK QD QNB BUY 26,098 QAR 95,023 135.8 193.0 42.1 11.0 9.7 8.6 12.2 13.5 0.7 2.0 1.8 1.6 18.8 18.9 18.8 3.5 4.0 4.6 9.7 8.6 7.6

MARK QD MARK HOLD 5,572 QAR 20,288 27.1 27.8 2.8 14.4 13.2 11.2 11.5 15.7 0.8 2.1 2.0 1.8 15.2 15.2 16.5 3.7 3.7 3.7 13.4 11.1 9.3

KCBK QD Khaliji SELL 1,701 QAR 6,192 17.2 13.9 (19.1) 12.9 16.2 14.1 11.4 3.1 5.2 1.2 1.2 1.2 9.0 7.1 8.1 5.8 5.8 5.8 11.7 12.9 10.6

QIIK QD QIIB Hold 2,170 QAR 7,901 52.2 53.2 1.8 12.0 12.0 11.6 11.8 5.5 2.2 1.6 1.6 1.5 12.9 12.7 13.0 7.2 7.5 7.8 11.0 10.9 10.0

Qatar banks 48,741 177,464 24.0 11.5 10.5 9.3 13.0 1.8 1.6 1.4 15.3 15.0 15.5 4.8 5.3 5.4 10.0 9.0 7.9

CIEB EY CAE BUY 664 EGP 4,047 14.1 15.5 9.7 8.8 8.5 7.3 8.0 14.1 0.6 1.8 1.6 1.4 20.0 18.4 19.0 4.6 5.0 5.3 5.4 5.3 4.6

COMI EY CIB BUY 3,395 EGP 20,694 34.7 44.2 27.6 9.1 7.6 6.7 8.6 18.5 0.4 1.9 1.6 1.4 23.7 23.3 22.5 3.2 3.5 3.6 6.0 5.4 4.7

HDBK EY HDB HOLD 281 EGP 1,712 14.9 14.2 (4.6) 12.3 8.4 6.7 6.4 33.6 0.2 0.7 0.7 0.6 5.8 8.1 9.6 3.3 4.8 5.9 7.0 5.1 4.1

NSGB EY NSGB HOLD 3,203 EGP 19,524 44.0 39.9 (9.3) 12.4 11.4 9.8 8.9 13.3 0.9 2.3 2.1 1.8 20.3 19.3 19.7 2.8 3.1 3.6 8.2 7.6 6.7

EGBE EY EGB SELL 340 USD 2,042 1.7 1.16 (31.8) 16.3 15.8 14.8 60.9 9.3 1.7 1.8 1.7 1.5 11.5 10.8 10.8 1.8 1.9 2.0 1.8 1.7 1.6

Egypt banks 7,884 48,019 7.4 10.6 9.3 8.1 10.0 1.9 1.7 1.5 18.2 18.3 18.4 3.1 3.4 3.7 6.9 6.2 5.4

AUDI LB Audi BUY 1,917 USD 1,917 5.5 7.3 32.3 4.9 5.4 4.8 6.4 6.3 0.9 0.9 0.8 0.8 19.9 16.1 16.4 7.7 7.0 7.9 3.3 3.5 3.1

BLOM LB BLOM BUY 1,591 USD 1,591 7.4 10.5 41.4 5.0 4.9 4.3 6.0 12.7 0.4 0.8 0.8 0.7 17.8 16.3 16.7 6.0 6.8 8.2 3.4 3.3 2.9

BYB LB Byblos HOLD 848 USD 848 1.5 1.4 (4.1) 6.0 5.7 5.0 4.8 12.2 0.5 0.6 0.6 0.6 11.1 10.7 11.4 6.6 6.8 7.8 3.2 3.0 2.6

BOB LB BOB SELL 959 USD 959 19.0 10.5 (44.8) 13.3 11.7 10.0 5.5 16.9 0.7 1.8 1.7 1.5 14.3 15.1 16.1 3.0 3.9 4.5 7.0 6.1 5.3

Lebanon banks 5,315 5,315 15.3 5.8 5.9 5.2 6.8 0.6 0.6 0.5 15.8 14.2 14.7 6.1 6.3 7.3 2.5 2.4 2.1

ARNB AB ANB BUY 6,039 SAR 22,650 26.6 38.5 44.8 9.5 8.2 6.9 10.0 18.6 0.4 1.3 1.2 1.0 12.8 13.6 14.8 4.1 4.7 5.3 7.5 6.6 5.7

RJHI AB Al Rajhi BUY 28,498 SAR 106,875 71.3 94.9 33.1 12.5 11.1 10.0 13.4 13.1 0.8 3.0 2.7 2.4 23.1 23.8 23.8 4.6 5.0 5.4 10.8 9.6 8.6

BSFR AB BSFR HOLD 7,497 SAR 28,115 31.1 37.1 19.1 9.4 8.6 8.2 9.8 7.3 1.2 1.1 1.0 0.9 13.3 12.3 11.7 2.3 2.6 2.9 8.2 7.5 6.9

RIBL AB Riyad BUY 9,079 SAR 34,050 22.7 32.4 42.9 9.9 9.3 8.1 11.6 13.2 0.7 1.1 1.0 1.0 10.9 11.1 12.0 5.9 6.4 6.8 8.3 7.7 6.8

SAMBA AB Samba BUY 10,631 SAR 39,870 44.3 64.7 46.0 8.9 8.2 7.4 10.8 13.4 0.6 1.3 1.2 1.1 14.7 14.5 14.6 4.0 4.3 4.7 8.2 7.4 6.6

SABB AB SABB HOLD 8,106 SAR 30,399 30.4 37.0 21.8 12.1 7.9 7.3 8.9 13.4 0.6 1.4 1.2 1.1 14.5 13.5 13.6 2.1 2.3 2.5 8.5 7.5 6.7

AAAL AB SHB BUY 2,783 SAR 10,438 26.3 37.3 41.7 9.1 8.7 7.7 10.9 11.2 0.8 1.2 1.1 1.0 13.7 12.7 13.2 3.8 4.2 4.6 7.8 7.1 6.3

ALBI AB Albilad BUY 2,256 SAR 8,460 28.2 36.0 27.5 8.6 10.8 9.4 12.0 2.7 4.0 1.9 1.6 1.4 24.5 16.0 15.8 -- 0.9 0.9 9.9 8.9 7.9

BJAZ AB Aljazeera SELL 2,088 SAR 7,830 26.1 22.8 (12.8) 16.3 13.5 11.5 10.0 22.1 0.6 1.4 1.3 1.2 9.6 10.0 10.9 2.1 2.1 2.3 12.6 10.6 8.9

SIBC AB SIB HOLD 2,346 SAR 8,800 16.0 19.6 22.4 11.4 9.6 8.3 10.2 18.2 0.5 1.0 0.9 0.9 8.6 9.6 10.3 3.4 3.8 4.1 8.3 7.9 7.1

ALINMA AB Alinma HOLD 5,180 SAR 19,425 13.0 15.4 19.2 29.9 19.3 13.8 16.4 44.3 0.4 1.2 1.1 1.0 3.8 5.6 7.3 -- -- 3.1 23.5 15.7 11.4

KSA banks 84,503 316,912 32.1 11.5 10.4 9.2 13.7 1.5 1.4 1.3 13.3 13.5 13.9 2.7 2.9 3.2 9.4 8.4 7.4

P/PPP (x)P/E (x) P/tNAV (x) ROTE(%) Dividend yield (%)

July 4 2012

Region – Banks

October 2 2012

Banks


Exhibit 3: MENA banks valuation screen (continued)


Exhibit 4: MENA diversified financials valuation screen




NBK KK NBK HOLD 15,335 KWD 4,310 1.0 1.1 10.4 13.4 13.0 13.2 14.5 2.4 5.3 2.3 2.2 2.1 16.1 17.6 16.8 3.7 3.8 3.8 10.7 10.4 10.4

KFIN KK KFH SELL 7,957 KWD 2,236 0.8 0.59 (22.8) 20.3 15.6 9.8 7.5 34.3 0.5 1.8 1.6 1.3 9.1 11.0 14.6 1.3 1.2 2.6 7.2 6.9 5.6

GBK KK Gulf Bank SELL 4,122 KWD 1,159 0.4 0.34 (22.9) 34.0 21.6 18.8 14.5 40.1 0.5 2.4 2.2 2.0 9.1 10.7 11.1 -- -- 1.1 9.8 9.2 8.6

BURG KK Burgan BUY 2,804 KWD 788 0.5 0.60 17.0 13.3 10.8 9.4 11.0 20.7 0.5 2.4 2.1 1.8 19.5 20.5 20.8 1.9 1.9 3.9 6.8 6.1 5.4

BOUBYAN KKBoubyan SELL 3,857 KWD 1,084 0.6 0.29 (53.8) 82.6 42.2 31.7 14.7 44.0 1.0 4.2 3.8 3.4 5.2 9.5 11.4 -- 0.3 0.3 38.5 28.6 23.3

Kuwait banks 34,074 9,577 (8.1) 17.6 14.8 12.5 13.6 2.3 2.1 1.8 13.0 13.9 14.7 2.1 2.1 2.7 9.9 9.1 8.2

BKMB OM Muscat BUY 2,912 OMR 1,121 0.55 0.89 60.9 7.8 7.4 6.5 10.5 14.6 0.5 1.2 1.0 0.9 15.6 14.8 15.1 3.8 4.1 4.5 5.9 5.2 4.7

BKSB OM Sohar HOLD 400 OMR 154 0.14 0.16 13.0 7.9 7.3 6.2 7.0 14.2 0.5 1.0 0.9 0.8 13.0 12.4 13.5 4.3 4.3 4.3 5.5 4.9 4.1

HBMO OM HBMO SELL 1,122 OMR 432 0.22 0.22 (0.2) 13.0 11.5 9.9 9.9 13.2 0.9 1.3 1.2 1.2 9.8 11.1 12.1 4.6 4.6 4.6 13.8 9.0 7.6

Oman banks 4,434 1,707 41.1 9.4 7.9 6.9 11.1 1.1 1.0 0.9 12.1 13.1 13.6 3.0 3.2 3.5 6.6 5.6 4.9

AUB BI Ahli United HOLD 3,092 BHD 3,092 0.5 0.63 16.3 8.0 7.2 6.4 8.4 12.3 0.6 1.5 1.3 1.2 19.6 19.4 19.3 5.5 5.5 5.5 5.1 4.7 4.3

Bahrain banks 3,092 3,092 16.3 8.6 7.8 6.9 9.1 5.0 4.4 3.9 19.6 19.4 19.3 1.6 1.6 1.6 5.1 4.7 4.3

MENA banks' avg. 227,715 22.5 10.6 9.6 8.4 11.7 1.4 1.3 1.2 14.1 14.4 14.9 3.5 3.8 4.0 8.2 7.5 6.9




MENA financials

SHUAA UH Shuaa HOLD 174 AED 639 0.6 0.63 4.6 (20.6) (47.1) 216.0 (49.2) na na 0.6 0.6 0.6 (2.7) (1.2) 0.3 -- -- -- (26.0) (57.9) 841

HRHO EY EFG BUY 935 EGP 5,701 11.9 16.6 39.6 13.7 11.9 10.7 16.6 12.2 1.0 1.6 1.4 1.3 5.5 6.7 7.1 33.6 2.4 4.0 7.3 6.2 5.4

DFM UH DFM SELL 2,124 AED 7,800 1.0 0.74 (24.5) 164.8 45.7 34.3 34.5 83.1 0.6 3.7 3.4 3.2 0.6 2.2 2.9 -- -- -- 163.9 45.5 34.1

SALAMA UHSalama BUY 232 AED 853 0.7 0.8 15.8 16.7 8.0 8.6 9.3 28.9 0.3 0.6 0.5 0.5 3.5 6.9 6.0 -- -- -- na na na

QATI QD Qatar Insurance BUY 1,715 QAR 6,243 70.0 85.3 21.9 11.2 9.6 9.4 11.8 6.7 1.4 1.7 1.7 1.6 15.7 17.9 17.9 8.5 8.8 9.1 na na na

TAWUNIYA ABTawuniya BUY 818 SAR 3,068 40.9 52.8 29.1 10.5 8.8 6.6 11.4 21.8 0.4 1.5 1.4 1.2 14.8 16.2 19.4 3.3 4.0 5.3 na na na

MEDGULF ABMedGulf SELL 518 SAR 1,944 24.3 19.3 (20.7) 26.6 13.3 9.0 10.6 NA NA 2.6 2.4 2.1 10.3 18.8 24.8 1.7 3.4 5.0 na na na

MENA financials' avg. 234,232 22.1 10.9 9.8 8.6 12.0 1.5 1.3 1.2 13.9 14.2 14.7 3.5 4.0 4.0 8.5 7.7 7.0


July 4 2012

Region – Banks

October 2 2012

Banks


Exhibit 5: MENA financials: Earnings estimates (LCY)


Company Currency

FY 11A FY 12e FY 13e FY 14e FY 11A FY 12e FY 13e FY 14e FY 11A FY 12e FY 13e FY 14e FY 12e FY 13e FY 14e FY 12e FY 13e FY 14e FY 12e FY 13e FY 14e

ADCB HOLD AED 0.54 0.48 0.51 0.55 3.21 3.67 3.97 4.31 0.20 0.15 0.16 0.18 0.41 0.47 0.54 32% 3% (5%) 7.9 7.0 6.1

ADIB SELL AED 0.49 0.47 0.46 0.51 2.78 2.88 3.12 3.42 0.24 0.17 0.17 0.18 0.46 0.51 0.58 7% (8%) (21%) 7.2 6.4 5.6

CBD BUY AED 0.42 0.38 0.41 0.48 3.26 3.44 3.64 3.89 0.20 0.21 0.22 0.24 0.42 0.46 na 2% (17%) na 7.1 6.4 na

DIB SELL AED 0.27 0.23 0.24 0.29 2.41 2.51 2.62 2.80 0.13 0.13 0.12 0.12 0.25 0.31 0.35 6% (26%) (31%) 7.9 6.5 5.6

ENBD HOLD AED 0.46 0.34 0.32 0.40 4.52 4.62 4.77 5.00 0.20 0.15 0.14 0.14 0.41 0.53 0.70 10% (36%) (54%) 7.2 5.6 4.2

FGB BUY AED 1.24 1.32 1.47 1.65 7.55 8.54 9.18 9.92 0.50 0.75 0.83 0.94 1.29 1.49 1.73 (5%) (11%) (15%) 7.7 6.7 5.8

NBAD BUY AED 0.96 1.09 1.35 1.56 5.77 6.57 7.60 8.80 0.22 0.26 0.30 0.35 1.01 1.16 1.38 (6%) (6%) (2%) 9.0 7.9 6.6

UNB BUY AED 0.60 0.56 0.58 0.64 4.28 4.64 4.97 5.30 0.15 0.20 0.27 0.26 0.58 0.65 0.73 4% (13%) (21%) 5.2 4.7 4.2

Tamweel BUY AED 0.10 0.08 0.10 0.10 2.32 2.34 2.39 2.43 0.05 0.05 0.05 0.06 0.07 0.10 0.13 58% (18%) (22%) 19.7 12.8 9.8

Mashreq HOLD AED 4.85 5.21 5.89 6.78 72.53 77.74 81.38 86.02 2.00 2.25 2.14 2.08 na na na na na na na na na

Rakbank BUY AED 0.79 0.79 0.77 0.75 3.08 3.58 3.99 4.40 0.30 0.35 0.35 0.34 na na na na na na na na na

CBQ HOLD QAR 7.61 7.85 8.06 8.85 57.51 59.14 60.99 63.60 6.00 6.00 6.00 4.31 8.04 8.93 10.07 (5%) (10%) (12%) 9.3 8.3 7.4

Doha HOLD QAR 6.00 6.19 4.15 4.69 34.26 35.79 37.27 38.34 5.00 5.00 3.50 3.50 6.45 6.93 7.92 (7%) (40%) (41%) 8.6 8.0 7.0

QIB HOLD QAR 5.78 6.23 7.24 7.71 46.49 48.07 51.15 53.30 4.50 3.98 5.36 5.71 6.25 7.20 8.39 (8%) 1% (8%) 12.3 10.7 9.2

QNB BUY QAR 10.73 12.32 14.07 15.86 59.85 68.23 77.14 87.12 3.64 4.80 5.49 6.19 12.28 14.19 16.22 (13%) (1%) (2%) 11.1 9.6 8.4

MARK HOLD QAR 1.88 1.87 2.05 2.42 11.34 12.66 13.67 15.03 0.00 1.00 1.00 1.00 1.91 2.14 2.19 (1%) (4%) 11% 14.2 12.7 12.4

Khaliji SELL QAR 1.35 1.33 1.06 1.22 14.22 14.52 14.55 14.74 1.00 1.00 1.00 1.00 na na na na na na na na na

QIIB Hold QAR 4.31 4.33 4.34 4.50 32.32 33.05 33.53 33.99 3.50 3.74 3.93 4.07 na na na na na na na na na

CAE BUY EGP 1.07 1.60 1.66 1.93 6.76 7.72 8.73 9.96 0.64 0.65 0.70 0.75 1.50 1.65 1.96 (29%) 1% (1%) 9.4 8.5 7.2

CIB BUY EGP 2.72 3.79 4.55 5.16 14.00 18.00 21.07 24.70 1.00 1.10 1.20 1.25 3.26 3.98 4.64 (16%) 14% 11% 10.6 8.7 7.5

HDB HOLD EGP 1.30 1.22 1.77 2.21 20.65 21.37 22.44 23.76 0.52 0.49 0.71 0.88 1.82 2.05 2.21 (28%) (14%) (0%) 8.2 7.3 6.7

NSGB HOLD EGP 3.36 3.56 3.86 4.48 16.42 18.74 21.25 24.16 1.25 1.25 1.35 1.57 3.41 3.82 4.51 (2%) 1% (1%) 12.9 11.5 9.8

EGB SELL EGP 0.04 0.10 0.11 0.11 0.86 0.96 1.03 1.10 0.03 0.03 0.03 0.03 na na na na na na na na na

Audi BUY USD 0.99 1.12 1.01 1.14 5.28 5.97 6.60 7.31 0.38 0.43 0.38 0.43 1.06 1.03 1.07 (7%) (2%) 7% 5.2 5.3 5.2

BLOM BUY USD 1.44 1.47 1.52 1.74 7.77 8.80 9.82 10.94 0.43 0.44 0.50 0.61 1.44 1.54 na (0%) (1%) na 5.1 4.8 na

Byblos HOLD USD 0.26 0.25 0.26 0.30 2.12 2.36 2.53 2.72 0.10 0.10 0.10 0.12 0.23 0.25 0.29 11% 6% 5% 6.4 6.1 5.2

BOB 1.49 1.42 1.63 1.90 9.51 10.37 11.26 12.31 0.59 0.57 0.73 0.85 1.85 2.04 2.29 (23%) (20%) (17%) 1025% 929% 831%

ANB BUY SAR 2.55 2.79 3.24 3.84 19.52 21.12 23.03 25.35 1.00 1.10 1.25 1.40 2.81 3.23 3.69 (9%) 0% 4% 9.5 8.2 7.2

Al Rajhi BUY SAR 4.92 5.69 6.43 7.09 21.88 23.92 26.35 29.10 3.25 3.25 3.55 3.85 5.36 6.24 7.07 (8%) 3% 0% 13.3 11.4 10.1

BSFR HOLD SAR 3.22 3.32 3.60 3.78 21.74 27.07 29.97 32.94 0.56 0.70 0.80 0.90 3.41 3.89 4.34 (6%) (8%) (13%) 9.1 8.0 7.2

Riyad BUY SAR 2.10 2.29 2.45 2.79 20.11 20.86 21.94 23.25 1.30 1.35 1.45 1.55 2.22 2.51 2.91 (5%) (2%) (4%) 10.2 9.1 7.8

Samba BUY SAR 4.78 4.99 5.42 6.01 31.23 34.35 37.93 41.97 1.65 1.75 1.90 2.10 5.09 5.76 6.54 (6%) (6%) (8%) 8.7 7.7 6.8

SABB HOLD SAR 2.71 2.51 3.85 4.18 17.17 21.93 24.41 27.22 0.56 0.65 0.70 0.75 3.13 3.67 4.15 (13%) 5% 1% 9.7 8.3 7.3

SHB BUY SAR 2.60 2.88 3.03 3.42 18.67 22.17 24.11 26.33 0.95 1.00 1.10 1.20 2.83 3.16 3.53 (8%) (4%) (3%) 9.3 8.3 7.5

Albilad BUY SAR 1.10 3.28 2.60 3.00 11.39 14.57 17.09 19.76 0.00 0.00 0.25 0.25 2.20 2.38 2.81 (50%) 9% 7% 12.8 11.8 10.0

Aljazeera SELL SAR 1.01 1.61 1.94 2.28 15.78 18.07 19.39 21.10 0.53 0.55 0.55 0.60 1.65 2.14 2.67 (39%) (10%) (15%) 15.8 12.2 9.8

SIB HOLD SAR 1.29 1.41 1.67 1.93 15.56 16.36 17.44 18.72 0.59 0.55 0.60 0.65 1.53 1.74 1.98 (16%) (4%) (3%) 10.4 9.2 8.1

Alinma HOLD SAR 0.29 0.43 0.67 0.94 10.60 11.01 11.64 12.74 0.00 0.00 0.00 0.40 0.46 0.70 1.08 (37%) (3%) (13%) 28.2 18.6 12.0

Rating BBG consensus PEEPS tNAV DPS BBG EPS consensus Deviation vs consensus

July 4 2012

Region – Banks

October 2 2012

Banks


Exhibit 6: MENA financials: Earnings estimates (LCY)


Exhibit 7: MENA diversified financials: Earnings estimates (LCY)


Company Currency


NBK HOLD KWD 0.07 0.07 0.08 0.08 0.49 0.44 0.46 0.47 0.04 0.04 0.04 0.04 0.07 0.09 0.09 (4%) (13%) (20%) 13.6 11.4 10.5

KFH SELL KWD 0.03 0.04 0.05 0.08 0.41 0.43 0.47 0.58 0.01 0.01 0.01 0.02 0.04 0.06 0.07 (29%) (14%) 8% 19.3 13.5 10.5

Gulf Bank SELL KWD 0.01 0.01 0.02 0.02 0.17 0.18 0.20 0.22 0.00 0.00 0.00 0.01 na na na na na na na na na

Burgan BUY KWD 0.03 0.04 0.05 0.05 0.18 0.22 0.24 0.28 0.01 0.01 0.01 0.02 0.04 0.05 0.06 (24%) (7%) (9%) 11.9 10.0 8.5

Boubyan SELL KWD 0.00 0.01 0.01 0.02 0.14 0.15 0.16 0.18 0.00 0.00 0.00 0.00 na na na na na na na na na

Muscat BUY OMR 0.1 0.1 0.1 0.1 0.43 0.48 0.53 0.58 0.02 0.02 0.02 0.02 0.07 0.07 0.08 (3%) 0% 4% 8.1 7.4 6.8

Sohar HOLD OMR 0.0 0.0 0.0 0.0 0.13 0.15 0.16 0.18 0.01 0.01 0.01 0.01 0.02 0.02 na (26%) (5%) na 7.4 7.0 na

HBMO SELL OMR 0.0 0.0 0.0 0.0 0.18 0.17 0.17 0.19 0.01 0.01 0.01 0.01 0.02 0.02 0.02 (7%) (6%) 9% 10.8 10.8 10.8

AUB HOLD BHD 0.06 0.07 0.08 0.09 0.33 0.37 0.41 0.47 0.03 0.03 0.03 0.03 na na na na na na na na na


Company Currency


Shuaa HOLD AED (0.28) (0.03) (0.01) 0.00 1.07 1.04 1.03 1.03 -- -- -- -- (0.10) (0.01) na 177% 27% na (6.0) (60.0) na

EFG BUY EGP 0.28 0.87 1.00 1.11 8.60 7.57 8.29 8.93 1.00 4.00 0.29 0.48 0.76 1.03 0.89 (64%) (3%) 26% 15.6 11.6 13.5

DFM SELL AED (0.00) 0.01 0.02 0.03 0.25 0.27 0.28 0.31 -- -- -- -- 0.01 0.03 0.04 (109%) (18%) (31%) 97.5 37.5 23.8

Salama BUY AED 0.05 0.04 0.09 0.08 1.19 1.23 1.33 1.41 -- -- -- -- na na na na na na na na na

Qatar InsuranceBUY QAR 6.64 6.26 7.26 7.47 39.57 40.01 41.23 42.49 5.66 5.95 6.17 6.35 na na na na na na na na na

Tawuniya BUY SAR 5.76 3.88 4.64 6.23 25.14 27.29 30.14 33.95 2.00 1.36 1.63 2.18 na na na na na na na na na

MedGulf SELL SAR 2.56 0.91 1.82 2.71 8.67 9.17 10.17 11.66 1.25 0.41 0.82 1.22 na na na na na na na na na


July 4 2012

Region – Banks

October 2 2012

Banks


Exhibit 8: MENA banks: Assets and returns


Company Arqaam Currency CET1

Rating FY 11A FY 12e FY 13e FY 11A FY 12e FY 13e FY 11A FY 12e FY 13e FY 11A FY 12e FY 13e FY 11A FY 11A FY 12e FY 13e

ADCB HOLD AED 137.6 154.3 164.0 1.6% 12.1% 6.3% 2.0% 1.4% 1.4% 15.9% 14.5% 14.6% 11.5% 16.7% 12.0% 12.0%

ADIB SELL AED 60.6 69.5 72.8 (2.0%) 14.6% 4.8% 1.7% 1.4% 1.3% 14.2% 12.7% 12.9% 8.0% 16.3% 15.0% 13.6%

CBD BUY AED 35.2 36.6 38.4 1.1% 4.0% 4.8% 2.3% 2.0% 2.1% 16.6% 17.0% 17.1% 16.6% 18.8% 16.2% 16.5%

DIB SELL AED 75.3 97.2 99.4 (4.9%) 29.1% 2.3% 1.3% 0.9% 0.9% 13.6% 11.0% 10.3% 12.1% 11.0% 9.2% 9.5%

ENBD HOLD AED 222.1 238.9 246.2 0.7% 7.6% 3.1% 1.0% 0.7% 0.6% 13.0% 12.4% 12.3% 10.5% 9.3% 6.4% 5.8%

FGB BUY AED 136.0 157.8 172.5 12.7% 16.0% 9.3% 2.6% 2.4% 2.4% 18.5% 17.9% 17.5% 13.3% 16.6% 15.5% 15.7%

NBAD BUY AED 174.8 206.8 228.5 15.3% 18.3% 10.5% 2.0% 1.9% 2.2% 15.6% 14.7% 15.0% 11.9% 16.3% 16.6% 18.2%

UNB BUY AED 76.7 81.9 86.0 0.4% 6.9% 4.9% 1.8% 1.6% 1.5% 16.7% 18.0% 18.2% 13.1% 13.7% 11.4% 11.0%

Tamweel BUY AED 10.0 10.2 10.5 (7.5%) 1.4% 2.8% 1.0% 0.8% 1.0% 22.9% 23.0% 22.9% 22.4% 4.8% 3.6% 4.4%

MASQ HOLD AED 77.9 84.4 89.7 2.1% 8.4% 6.3% 1.1% 1.0% 1.1% 16.2% 16.1% 15.8% 15.5% 6.8% 6.9% 7.4%

RAKBANK BUY AED 15.8 19.1 20.7 9.1% 20.7% 8.1% 7.6% 6.3% 5.7% 22.0% 21.8% 23.3% 19.1% 28.6% 23.7% 20.4%

CBQ HOLD QAR 61.3 70.5 79.8 23.0% 15.1% 13.2% 3.0% 2.7% 2.4% 16.4% 14.6% 13.3% 12.5% 13.7% 13.1% 13.1%

Doha HOLD QAR 49.9 52.6 59.9 18.7% 5.4% 13.8% 2.4% 2.4% 2.1% 10.7% 10.6% 16.1% 10.1% 18.5% 17.2% 13.2%

QIB HOLD QAR 34.0 43.2 47.3 (9.4%) 27.1% 9.5% 3.9% 3.3% 3.5% 23.0% 19.9% 19.4% 21.8% 13.3% 12.8% 14.2%

QNB BUY QAR 156.4 179.8 205.3 39.6% 15.0% 14.2% 4.7% 4.7% 4.7% 22.0% 21.9% 22.2% 21.2% 22.3% 18.8% 18.9%

MAR HOLD QAR 35.2 46.4 54.0 5.2% 31.8% 16.4% 3.9% 3.0% 2.8% 21.8% 17.6% 16.2% 20.1% 17.6% 15.2% 15.2%

Khaliji SELL QAR 20.8 28.0 31.3 16.4% 34.7% 11.5% 2.3% 1.7% 1.2% 22.0% 17.7% 15.9% 16.3% 9.5% 9.0% 7.1%

QIIB Hold QAR 16.5 19.3 22.2 27.3% 17.2% 14.9% 3.9% 3.3% 2.9% 24.3% 22.0% 19.2% 22.6% 14.6% 12.9% 12.7%

CAE BUY EGP 14.6 18.0 20.5 9.9% 22.9% 13.8% 1.9% 2.3% 2.1% 11.6% 10.2% 10.3% 12.0% 13.6% 20.0% 18.4%

CIB BUY EGP 55.4 64.2 72.5 13.9% 15.9% 13.0% 2.6% 3.2% 3.4% 12.5% 13.5% 13.9% 13.4% 19.8% 23.7% 23.3%

HDB HOLD EGP 8.0 20.7 22.7 1.4% 157.2% 9.9% 1.9% 0.7% 0.9% 23.0% 9.2% 8.5% 20.8% 6.3% 5.8% 8.1%

NSGB HOLD EGP 42.7 51.2 58.2 11.6% 20.0% 13.6% 3.2% 2.8% 2.7% 12.8% 12.5% 12.7% 13.4% 21.6% 20.3% 19.3%

EGB SELL EGP 4.5 5.2 5.8 (6.2%) 17.0% 11.9% 1.2% 2.2% 2.0% 21.4% 19.1% 18.4% 17.4% 5.0% 11.5% 10.8%

Audi BUY USD trn 27.3 28.9 30.3 7.6% 5.7% 4.9% 1.9% 2.0% 1.7% 10.4% 11.2% 11.9% 8.5% 18.7% 19.9% 16.1%

BLOM BUY USD trn 20.1 23.6 25.7 12.9% 17.6% 8.6% 2.3% 2.0% 1.9% 12.8% 12.8% 13.0% 11.2% 18.9% 17.8% 16.3%

Byblos HOLD USD trn 16.2 16.9 18.7 11.7% 4.6% 10.6% 1.3% 1.2% 1.1% 13.3% 14.5% 13.9% 10.3% 12.3% 11.1% 10.7%

BOB SELL USD trn 9.4 10.7 11.4 15.8% 14.1% 6.8% 1.2% 1.0% 1.1% 14.5% 13.7% 13.4% 6.1% 14.5% 14.3% 15.1%

ANB BUY SAR 104.4 124.2 140.6 8.3% 19.0% 13.2% 1.7% 1.8% 1.8% 15.0% 13.8% 13.4% 14.0% 10.9% 12.8% 13.6%

Al Rajhi BUY SAR 173.0 206.0 235.1 11.9% 19.1% 14.1% 3.8% 3.9% 3.8% 14.7% 14.1% 14.2% 14.6% 21.0% 23.1% 23.8%

BSFR HOLD SAR 138.5 158.2 173.7 10.2% 14.2% 9.8% 2.1% 1.9% 1.8% 13.9% 13.7% 13.9% 13.0% 15.2% 13.3% 12.3%

Riyad BUY SAR 181.1 194.0 208.8 10.5% 7.2% 7.6% 1.7% 1.7% 1.7% 14.8% 14.6% 14.3% 15.3% 10.1% 10.9% 11.1%

Samba BUY SAR 156.1 196.4 217.6 8.8% 25.8% 10.8% 2.7% 2.2% 2.2% 18.1% 15.9% 15.8% 14.8% 15.5% 14.7% 14.5%

SABB HOLD SAR 120.0 138.5 162.1 10.0% 15.4% 17.0% 2.2% 2.0% 1.9% 11.8% 13.5% 12.8% 13.4% 16.2% 14.5% 13.5%

SHB BUY SAR 53.1 62.7 69.4 5.8% 18.1% 10.7% 1.6% 1.8% 1.7% 12.7% 12.4% 12.3% 12.9% 12.5% 13.7% 12.7%

Albilad BUY SAR 20.0 26.3 29.7 10.0% 31.5% 12.9% 1.6% 3.6% 2.6% 15.4% 13.2% 14.6% 15.6% 10.1% 24.5% 16.0%

Aljazeera SELL SAR 34.7 43.2 50.5 16.1% 24.5% 16.8% 0.8% 1.2% 1.2% 13.6% 13.8% 12.7% 11.7% 6.3% 9.6% 10.0%

SIB HOLD SAR 42.5 48.0 54.1 (5.3%) 13.0% 12.6% 1.6% 1.6% 1.6% 17.2% 17.8% 16.7% 16.1% 8.2% 8.6% 9.6%

Alinma HOLD SAR 36.3 54.2 70.5 74.6% 49.3% 30.1% 0.7% 1.1% 1.4% 43.8% 30.5% 24.8% 39.0% 1.6% 3.8% 5.6%

RORWARWA GrowthRWA (bn) Tier I Ratio RotE

July 4 2012

Region – Banks

October 2 2012

Banks


Exhibit 9: MENA banks: Assets and returns (continued)


Company Arqaam Currency CET1

Rating FY 11A FY 12e FY 13e FY 11A FY 12e FY 13e FY 11A FY 12e FY 13e FY 11A FY 12e FY 13e FY 11A FY 11A FY 12e FY 13e

NBK HOLD KWD 8.6 10.6 11.3 6.1% 23.6% 6.7% 3.5% 3.0% 3.1% 18.3% 16.5% 17.5% 15.9% 14.8% 16.1% 17.6%

KFH SELL KWD 10.4 12.4 13.6 4.0% 19.2% 9.3% 0.8% 0.9% 1.0% 13.5% 11.9% 11.7% 11.0% 6.8% 9.1% 11.0%

Gulf Bank SELL KWD 3.0 3.1 3.3 6.2% 5.0% 6.4% 1.0% 1.1% 1.6% 13.6% 14.1% 14.8% 13.6% 7.3% 9.1% 10.7%

Burgan BUY KWD 3.0 3.7 3.7 12.3% 23.4% 0.7% 1.7% 1.6% 2.0% 14.7% 14.6% 15.6% 14.3% 19.7% 19.5% 20.5%

Boubyan SELL KWD 0.9 1.0 1.3 12.2% 13.7% 24.3% 0.9% 1.3% 2.0% 25.5% 24.3% 21.5% 22.2% 3.3% 5.2% 9.5%

Muscat BUY OMR 6.6 8.0 9.2 16.6% 20.6% 14.9% 1.8% 1.7% 1.7% 11.9% 11.4% 12.7% 9.1% 15.9% 15.6% 14.8%

Sohar HOLD OMR 1.3 1.5 1.7 15.0% 16.2% 12.2% 1.1% 1.2% 1.2% 9.3% 9.6% 9.4% 9.3% 11.5% 13.0% 12.4%

HBMO SELL OMR 1.0 1.9 2.1 7.2% 101.4% 7.5% 1.9% 1.7% 1.8% 13.6% 13.4% 13.3% 12.1% 10.5% 9.8% 11.1%

AUB HOLD BHD 19.9 21.9 23.6 1.7% 9.9% 7.8% 1.5% 1.6% 1.7% 11.5% 11.2% 11.3% 10.3% 18.2% 19.6% 19.4%

RORWARWA GrowthRWA (bn) Tier I Ratio RotE

July 4 2012

Region – Banks

October 2 2012

Banks


Exhibit 10: MENA banks: Key performance indicators


Company Ticker Arqaam Currency

Rating FY 10A FY 11A FY 12e FY 13e FY 10A FY 11A FY 12e FY 13e FY 10A FY 11A FY 12e FY 13e FY 10A FY 11A FY 12e FY 13e FY 10A FY 11A FY 10A FY 11A

ADCB ADCB UH HOLD AED 9.6% 21.4% 10.8% 4.4% 7.1% 25.1% 6.3% 5.4% 2.5% (3.7%) 4.5% (1.0%) 33.0% 34.0% 32.6% 32.9% 80.3% 150.9% 110.6% 92.0%

ADIB ADIB UH SELL AED 21.2% 11.4% 1.9% 2.2% 31.0% 11.4% 3.3% 4.9% (9.8%) 0.0% (1.5%) (2.7%) 42.5% 42.5% 43.1% 44.3% 358.4% 216.7% 127.4% 102.3%

CBD CBD UH BUY AED 6.9% (1.7%) 0.7% 4.9% 1.4% 4.0% 2.8% 3.9% 5.5% (5.7%) (2.1%) 1.0% 28.7% 30.4% 31.1% 30.8% 46.3% 100.0% 155.6% 101.7%

DIB DIB UH SELL AED (3.1%) 10.5% (0.1%) 7.4% 2.0% 8.2% 0.0% 1.4% (5.0%) 2.4% (0.2%) 6.0% 42.3% 41.4% 41.4% 39.1% 201.8% 269.8% 108.7% 116.5%

ENBD EMIRATES UHHOLD AED (9.9%) 2.1% 0.5% (2.0%) (13.7%) 14.4% 0.3% (2.6%) 3.7% (12.3%) 0.2% 0.6% 32.4% 36.3% 36.2% 36.0% 100.3% 80.8% 91.6% 94.2%

FGB FGB UH BUY AED 3.4% 2.3% 7.0% 8.5% 3.8% 9.1% 13.2% 13.8% (0.4%) (6.8%) (6.1%) (5.3%) 17.7% 18.9% 19.9% 20.9% 144.2% 134.5% 83.7% 87.2%

NBAD NBAD UH BUY AED 12.2% 9.8% 9.5% 18.3% 15.2% 17.3% 12.5% 13.3% (3.0%) (7.5%) (3.0%) 5.0% 30.5% 32.5% 33.4% 32.0% 76.8% 68.9% 74.5% 81.1%

UNB UNB UH BUY AED 20.6% 11.1% 7.4% 2.5% 10.2% 1.9% 3.5% 7.6% 10.4% 9.2% 4.0% (5.0%) 28.0% 25.7% 24.7% 25.9% 139.2% 143.9% 91.8% 100.4%

Tamweel TAMWEEL UHBUY AED (10.6%) (4.1%) (3.3%) 14.8% (23.4%) 2.6% 1.6% 3.8% 12.8% (6.7%) (4.9%) 11.0% 34.8% 37.3% 39.2% 35.4% na 29.4% 309.8% 100.5%

Mashreq MASQ UH HOLD AED (11.6%) (11.7%) (1.9%) 5.8% (0.4%) 1.7% 2.9% 5.3% (11.2%) (13.4%) (4.7%) 0.4% 40.2% 46.3% 48.6% 48.4% 218.1% 162.8% 127.4% 113.3%

Rakbank RAKBANK UH BUY AED 28.4% 19.2% 5.0% 1.7% 26.1% 20.4% 6.6% 4.2% 2.3% (1.2%) (1.6%) (2.6%) 42.5% 43.0% 43.6% 44.7% 79.9% 81.9% 210.8% 95.9%

CBQ CBQK QD HOLD QAR (7.8%) 11.8% 0.6% 9.8% 3.7% 11.2% 10.9% 10.2% (11.4%) 0.6% (10.3%) (0.4%) 30.7% 30.6% 33.7% 33.8% 191.1% 167.2% 93.9% 71.2%

Doha DHBK QD HOLD QAR 4.6% 9.1% 2.8% 4.5% 9.8% 10.0% 10.5% 11.4% (5.2%) (0.9%) (7.7%) (6.9%) 33.8% 34.1% 36.6% 39.1% 119.9% 123.2% 128.4% 91.6%

QIB QIBK QD HOLD QAR (4.3%) 19.7% 23.4% 11.4% 0.5% 57.1% 12.5% 9.0% (4.9%) (37.4%) 10.9% 2.4% 26.5% 34.8% 31.7% 31.0% 157.5% 187.1% 111.0% 74.4%

QNB QNBK QD BUY QAR 37.5% 35.5% 17.9% 13.6% 16.7% 24.1% 25.3% 17.7% 20.7% 11.4% (7.4%) (4.1%) 17.5% 16.0% 17.0% 17.6% 198.8% 162.5% 53.7% 88.7%

MAR MARK QD HOLD QAR 21.0% 31.2% 3.8% 19.9% 15.3% 33.0% 10.9% 17.3% 5.7% (1.7%) (7.1%) 2.6% 17.3% 17.5% 18.7% 18.3% 129.7% 126.0% 131.2% 107.3%

Khaliji KCBK QD SELL QAR 45.6% 23.7% 0.6% (2.0%) 290.5% (1.0%) 7.0% 6.8% (244.9%) 24.6% (6.4%) (8.8%) 51.7% 41.4% 44.1% 48.0% 154.2% 159.1% 291.5% 66.7%

QIIB QIIK QD Hold QAR 8.1% 18.8% 6.3% 2.8% (12.1%) 39.3% 3.7% 10.0% 20.2% (20.4%) 2.5% (7.2%) 19.1% 22.4% 21.9% 23.4% 460.9% 965.9% 340.6% 137.7%

CAE CIEB EY BUY EGP 15.1% 8.5% 17.2% 4.5% 9.2% 17.6% 8.3% 7.0% 5.9% (9.1%) 8.9% (2.5%) 48.0% 52.0% 48.1% 49.2% 72.1% 117.2% 201.8% 127.0%

CIB COMI EY BUY EGP 21.6% 1.2% 25.3% 11.6% 54.7% (0.1%) (3.9%) 10.5% (33.1%) 1.3% 29.2% 1.1% 42.6% 42.1% 32.3% 32.0% 47.2% 249.9% 104.6% 110.2%

HDB HDBK EY HOLD EGP 13.1% (5.4%) 3.5% 17.0% 24.1% 3.6% 5.8% 5.9% (11.0%) (9.0%) (2.3%) 11.1% 58.3% 63.8% 65.3% 59.1% 14.0% 84.1% 233.7% 126.7%

NSGB NSGB EY HOLD EGP 17.8% 7.8% 14.1% 7.8% 6.8% (18.2%) 8.9% 9.1% 11.0% 26.0% 5.2% (1.3%) 44.7% 33.9% 32.4% 32.8% 87.2% 135.4% 102.8% 113.3%

EGB EGBE EY SELL EGP 21.5% (20.8%) 51.2% 7.7% (0.8%) 6.4% 7.0% 8.0% 22.4% (27.1%) 44.2% (0.3%) 46.9% 63.0% 44.6% 44.7% 75.2% 97.2% 453.4% 94.4%

Audi AUDI LB BUY USD 20.1% 14.1% 5.4% (0.2%) 17.2% 9.8% 4.7% 7.3% 2.9% 4.2% 0.7% (7.5%) 47.4% 45.7% 45.3% 48.7% 440.6% 854.5% 245.3% 199.4%

BLOM BLOM LB BUY USD 19.6% 7.3% 5.1% 4.9% 12.8% 8.1% 7.1% 8.0% 6.8% (0.9%) (2.0%) (3.1%) 38.4% 38.7% 39.4% 40.6% 594.4% 426.0% 132.3% 168.6%

Byblos BYB LB HOLD USD 19.6% 4.0% 1.4% 7.9% 20.4% (3.4%) 9.1% 8.6% (0.8%) 7.4% (7.8%) (0.7%) 46.6% 43.3% 46.6% 46.9% 321.5% na 104.8% na

BOB BOB LB SELL USD 24.8% 11.5% 7.8% 11.1% 15.3% 21.0% 6.7% 7.6% 9.4% (9.5%) 1.1% 3.6% 46.3% 50.3% 49.7% 48.1% 346.7% na 64.5% na

ANB ARNB AB BUY SAR (0.4%) 0.8% 6.7% 11.6% 2.7% 7.9% 3.8% 7.2% (3.1%) (7.1%) 2.9% 4.3% 36.5% 39.1% 38.0% 36.5% 172.2% 169.2% 133.0% 130.1%

Al Rajhi RJHI AB BUY SAR 0.2% 7.2% 10.6% 11.9% 0.1% 16.7% 7.9% 8.7% 0.1% (9.5%) 2.6% 3.2% 25.9% 28.2% 27.5% 26.7% 202.6% 200.0% 88.2% 118.0%

BSFR BSFR AB HOLD SAR 2.3% 4.3% 9.0% 9.5% 8.7% 19.2% 5.7% 7.3% (6.3%) (14.8%) 3.3% 2.2% 28.6% 32.7% 31.7% 31.1% 177.2% 180.6% 100.3% 131.2%

Riyad RIBL AB BUY SAR 0.3% 5.7% 6.0% 7.1% 5.1% 8.9% 2.6% 6.5% (4.8%) (3.2%) 3.3% 0.6% 38.6% 39.7% 38.5% 38.2% 160.6% 139.2% 69.4% 119.2%

Samba SAMBA AB BUY SAR (2.9%) (4.9%) 4.6% 8.8% (2.1%) 2.4% 1.4% 5.3% (0.8%) (7.3%) 3.2% 3.5% 27.7% 29.8% 28.9% 28.0% 242.2% 193.1% 142.6% 157.9%

SABB SABB AB HOLD SAR (6.2%) 1.2% 6.2% 11.7% 4.6% (8.5%) 1.8% 8.1% (10.8%) 9.7% 4.3% 3.6% 36.2% 32.8% 31.4% 30.4% 221.8% 194.8% 108.7% 137.9%

SHB AAAL AB BUY SAR (9.0%) 2.6% 9.0% 8.8% (4.9%) 3.9% 5.3% 6.7% (4.0%) (1.2%) 3.8% 2.1% 39.5% 40.0% 38.6% 37.9% 224.9% 185.0% 157.1% 150.6%

Albilad ALBI AB BUY SAR 20.9% 25.0% 26.4% 10.0% (9.7%) 10.4% 11.4% 9.2% 30.6% 14.6% 15.1% 0.7% 65.3% 57.6% 50.8% 50.4% 280.8% 349.3% 253.8% 119.7%

Aljazeera BJAZ AB SELL SAR (1.4%) 4.6% 33.1% 14.1% 5.3% 9.2% 11.0% 10.6% (6.6%) (4.6%) 22.1% 3.5% 66.2% 69.1% 57.6% 55.8% 309.2% 242.8% 153.7% 238.5%

SIB SIBC AB HOLD SAR 15.3% (7.6%) 5.7% 5.8% 3.7% 11.6% 2.8% 8.7% 11.6% (19.2%) 2.9% (3.0%) 32.0% 38.6% 37.6% 38.6% 164.7% 89.7% 127.2% 132.1%

Alinma ALINMA AB HOLD SAR (30.6%) 109.6% 27.3% 34.0% 0.9% 29.2% 13.2% 20.3% (31.5%) 80.4% 14.1% 13.7% 97.3% 59.9% 53.3% 47.9% 238.3% 136.1% 159.1% 109.7%

NSFRLCRRev Growth Cost Growth Jaws Cost / Income Ratio

July 4 2012

Region – Banks

October 2 2012

Banks


Exhibit 11: MENA banks: Key performance indicators (Continued)


Company Ticker Arqaam Currency

Rating FY 10A FY 11A FY 12e FY 13e FY 10A FY 11A FY 12e FY 13e FY 10A FY 11A FY 12e FY 13e FY 10A FY 11A FY 12e FY 13e FY 10A FY 11A FY 10A FY 11A

NBK NBK KK HOLD KWD (7.0%) 7.5% 14.4% 8.7% (11.6%) 1.8% 20.6% 5.7% 4.6% 5.6% (6.2%) 3.0% 32.7% 31.0% 32.7% 31.8% 83.7% 78.5% 347.1% 100.5%

KFH KFIN KK SELL KWD 6.9% 14.0% (8.4%) 4.0% 6.3% 20.4% 0.3% 4.0% 0.6% (6.5%) (8.7%) (0.1%) 43.3% 45.7% 50.1% 50.1% 104.6% 103.2% 365.3% 93.4%

Gulf Bank GBK KK SELL KWD 38.3% (16.1%) 8.7% 6.0% (1.6%) 10.0% (4.7%) 4.8% 39.8% (26.1%) 13.4% 1.3% 25.9% 34.0% 29.8% 29.5% 141.0% 126.9% 946.9% 89.9%

Burgan BURG KK BUY KWD 7.1% (0.9%) 13.6% 9.5% 49.9% (5.9%) 13.1% 5.5% (42.8%) 5.0% 0.5% 4.1% 39.6% 37.6% 37.4% 36.0% 131.7% 116.0% 1066.6% 114.2%

Boubyan BOUBYAN KK SELL KWD 498.1% 7.1% 33.5% 22.7% 13.0% 14.4% 11.7% 10.8% 485.1% (7.3%) 21.7% 11.9% 56.2% 60.0% 50.2% 45.3% 223.5% 242.6% 3828.0% 135.0%

Muscat BKMB OM BUY OMR (8.8%) 10.8% 13.1% 12.9% 25.3% 17.5% 10.5% 11.5% (34.1%) (6.7%) 2.6% 1.4% 38.8% 41.1% 40.1% 39.7% 315.3% 220.8% 631.0% 101.4%

Sohar BKSB OM HOLD OMR 20.9% 22.6% 18.0% 10.9% 13.8% 18.3% 6.5% 9.8% 7.2% 4.2% 11.4% 1.1% 55.6% 53.7% 48.5% 48.0% 145.5% 139.0% 2733.0% 104.8%

HBMO HBMO OM SELL OMR (6.9%) 5.1% 62.9% 36.8% 7.3% 18.5% 50.9% 23.2% (14.2%) (13.4%) 12.0% 13.6% 51.9% 58.5% 54.2% 48.8% 533.1% 172.2% 2511.8% 108.2%

AUB AUB BI HOLD BHD 7.2% 11.7% 5.0% 8.1% 7.6% 7.8% (1.7%) 6.3% (0.4%) 3.9% 6.8% 1.8% 36.0% 34.8% 32.5% 32.0% 76.1% 99.5% 66.9% 67.6%

NSFRLCRRev Growth Cost Growth Jaws Cost / Income Ratio

July 4 2012

Region – Banks

October 2 2012

Banks




Company Ticker Arqaam Currency NPL Ratio Coverage

Rating FY 09 FY 10 FY 11 FY 12e FY 13e FY 09 FY 10 FY 11 FY 12e FY 13e FY 09a FY 10 FY 11 FY 12e FY 13e FY 09a FY 10 FY 11 FY 12e FY 13e

ADCB ADCB UH HOLD AED 2.4% 2.47% 2.91% 3.10% 3.03% 2.6% 2.3% 1.6% 1.5% 1.4% 5.2% 11.1% 4.6% 5.9% 6.6% 67.8% 44.1% 94.8% 86.0% 86.5%

ADIB ADIB UH SELL AED 4.0% 4.02% 4.08% 4.14% 4.08% 2.5% 0.9% 1.1% 1.2% 1.3% 6.0% 7.1% 8.7% 8.8% 9.0% 69.3% 63.6% 66.8% 78.3% 88.4%

CBD CBD UH BUY AED 3.9% 3.91% 3.75% 3.69% 3.64% 1.3% 1.8% 1.6% 1.8% 1.8% 2.6% 5.8% 13.1% 13.2% 13.3% 96.2% 76.7% 47.4% 52.2% 53.4%

DIB DIB UH SELL AED 3.2% 2.87% 3.33% 3.23% 3.21% 1.2% 1.1% 1.6% 2.0% 2.2% 6.0% 8.3% 14.5% 15.0% 15.0% 62.7% 59.0% 48.8% 48.4% 62.7%

ENBD EMIRATES UHHOLD AED 2.9% 2.62% 2.79% 2.65% 2.66% 1.4% 1.4% 2.2% 2.0% 2.0% 3.0% 10.0% 13.8% 15.5% 16.5% 89.9% 40.7% 43.4% 50.7% 58.5%

FGB FGB UH BUY AED 3.6% 3.51% 3.71% 3.58% 3.57% 1.9% 1.7% 1.5% 1.4% 1.2% 1.6% 4.6% 4.0% 4.5% 4.8% 174.4% 72.1% 84.2% 65.1% 49.8%

NBAD NBAD UH BUY AED 2.6% 2.69% 2.70% 2.47% 2.54% 1.1% 0.8% 0.9% 0.8% 0.8% 1.7% 2.6% 3.3% 3.6% 3.9% 114.2% 101.6% 89.9% 84.0% 95.1%

UNB UNB UH BUY AED 2.5% 2.60% 3.05% 3.16% 3.13% 0.5% 0.8% 1.0% 1.4% 1.3% 1.5% 4.3% 3.7% 4.0% 4.3% 102.3% 47.5% 74.7% 71.8% 66.9%

Tamweel TAMWEEL UHBUY AED 2.4% 1.86% 2.41% 2.27% 2.53% 1.3% 1.1% 0.2% 0.4% 0.6% 0.8% 6.7% 10.0% 11.0% 12.3% 245.5% 51.7% 35.4% 33.6% 33.7%

Mashreq MASQ UH HOLD AED 2.5% 2.81% 2.63% 2.48% 2.53% 2.8% 3.2% 2.3% 2.3% 2.2% 7.3% 11.9% 12.6% 12.8% 12.9% 55.3% 61.0% 52.1% 59.9% 68.5%

Rakbank RAKBANK UH BUY AED 8.3% 8.75% 9.07% 8.90% 8.31% 2.0% 1.8% 1.7% 1.8% 1.8% 2.5% 2.5% 2.5% 2.8% 3.2% 98.9% 74.8% 71.3% 66.6% 61.7%

CBQ CBQK QD HOLD QAR 3.1% 3.32% 3.22% 2.80% 2.79% 1.4% 0.5% 0.6% 0.4% 0.7% 2.2% 3.2% 1.2% 0.9% 1.4% 99.7% 89.7% 107.8% 141.5% 119.7%

Doha DHBK QD HOLD QAR 3.0% 3.39% 3.63% 3.17% 3.12% 0.5% 1.1% 0.9% 0.6% 0.6% 3.8% 4.9% 3.4% 3.5% 3.6% 70.5% 73.8% 73.1% 75.9% 75.8%

QIB QIBK QD HOLD QAR 4.3% 3.21% 2.88% 3.48% 3.25% 0.1% 0.2% 0.0% 0.2% 0.7% 1.3% 1.5% 1.2% 1.6% 1.9% 89.6% 83.2% 97.7% 65.3% 83.9%

QNB QNBK QD BUY QAR 2.4% 2.95% 3.08% 2.95% 2.86% 0.3% 0.4% 0.6% 0.6% 0.5% 0.8% 1.0% 1.1% 1.2% 1.3% 108.8% 117.7% 118.9% 124.0% 128.7%

MAR MARK QD HOLD QAR 3.4% 3.73% 1.64% 1.75% 1.87% 0.1% 0.0% 0.2% 0.3% 0.6% 0.1% 0.0% 0.3% 0.5% 0.9% 75.6% 100.5% 82.2% 159.1% 179.4%

Khaliji KCBK QD SELL QAR 2.5% 3.23% 2.70% 2.01% 2.14% 3.1% (0.9%) 0.4% 0.2% 0.6% 3.5% 1.4% 0.5% 0.9% 1.3% 76.8% 161.1% 296.5% 183.6% 154.0%

QIIB QIIK QD Hold QAR 4.5% 3.86% 3.72% 2.85% 2.88% 0.2% 0.1% 0.2% 0.2% 0.6% 1.7% 3.9% 1.8% 2.0% 2.4% 58.5% 30.6% 84.3% 68.6% 70.0%

CAE CIEB EY BUY EGP 3.1% 3.32% 3.54% 3.92% 3.77% 0.3% 0.3% 1.2% 1.1% 0.9% 3.6% 2.6% 1.9% 3.0% 2.9% 88.2% 107.6% 163.9% 110.4% 116.3%

CIB COMI EY BUY EGP 3.5% 3.38% 3.48% 4.22% 4.02% 0.0% 0.0% 0.8% 0.8% 0.7% 3.0% 2.8% 2.8% 3.1% 3.1% 151.3% 125.4% 120.6% 121.0% 125.4%

HDB HDBK EY HOLD EGP 3.5% 3.48% 3.37% 3.48% 3.49% 0.3% 0.9% 0.7% 1.0% 1.0% 5.3% 5.6% 6.0% 6.0% 5.0% 105.1% 97.2% 91.1% 103.0% 131.2%

NSGB NSGB EY HOLD EGP 3.5% 3.43% 3.56% 4.02% 3.79% (1.0%) (0.2%) 0.4% 1.0% 0.8% 4.8% 3.4% 3.0% 3.5% 3.3% 91.7% 93.8% 101.3% 94.8% 100.6%

EGB EGBE EY SELL EGP 3.0% 3.41% 3.40% 3.89% 3.67% (0.6%) 0.5% 0.8% 0.8% 18.3% 12.4% 11.2% 14.1% 14.1% 113.1% 122.6% 126.3% 70.3% 70.7%

Audi AUDI LB BUY USD 1.9% 1.72% 1.94% 1.99% 2.03% 0.4% 0.4% 1.0% 1.3% 0.9% 3.5% 3.3% 3.9% 3.8% 3.5% 64.2% 55.0% 70.5% 83.3% 92.2%

BLOM BLOM LB BUY USD 2.2% 2.36% 2.33% 2.28% 2.29% (0.1%) 0.3% 0.7% 1.0% 0.9% 3.1% 2.2% 2.2% 2.7% 3.3% 72.3% 70.4% 73.5% 121.6% 138.9%

Byblos BYB LB HOLD USD 2.2% 1.98% 1.85% 1.61% 1.73% 0.6% 0.5% 0.7% 0.8% 0.9% 3.7% 3.2% 3.3% 3.8% 4.0% 115.6% 142.6% 140.5% 151.7% 163.2%

BOB BOB LB SELL USD 2.01% 1.47% 1.64% 1.62% (0.0%) 0.1% 0.5% 0.6% 0.8% 0.6% 0.5% 0.8% 0.8% 210.4% 160.8% 231.9% 191.6% 232.7%

ANB ARNB AB BUY SAR 3.1% 2.88% 2.81% 2.75% 2.72% 0.7% 1.4% 0.9% 0.8% 0.8% 2.8% 3.0% 2.4% 2.4% 2.4% 75.9% 108.1% 146.0% 150.0% 154.0%

Al Rajhi RJHI AB BUY SAR 5.8% 5.30% 4.61% 4.12% 4.00% 1.5% 1.5% 1.1% 0.9% 0.8% 3.3% 2.2% 1.7% 1.8% 1.8% 108.4% 135.8% 148.4% 150.3% 152.6%

BSFR BSFR AB HOLD SAR 2.6% 2.64% 2.50% 2.41% 2.43% 0.7% 0.4% 0.2% 0.4% 0.5% 1.3% 1.2% 1.2% 1.3% 1.4% 126.6% 147.0% 136.4% 131.3% 134.3%

Riyad RIBL AB BUY SAR 2.7% 2.45% 2.46% 2.44% 2.41% 0.6% 0.9% 0.6% 0.7% 0.6% 1.2% 1.7% 1.6% 1.6% 1.5% 140.9% 126.2% 106.3% 112.5% 123.9%

Samba SAMBA AB BUY SAR 2.9% 2.53% 2.39% 2.29% 2.29% 0.6% 0.7% 0.3% 0.4% 0.5% 3.3% 3.7% 3.0% 3.0% 3.1% 116.1% 118.1% 124.4% 133.3% 129.0%

SABB SABB AB HOLD SAR 2.7% 2.66% 2.37% 2.29% 2.25% 1.9% 1.6% 0.6% 0.6% 0.6% 4.5% 3.4% 1.9% 2.1% 2.1% 50.3% 100.0% 124.0% 120.7% 119.4%

SHB AAAL AB BUY SAR 2.7% 2.35% 2.39% 2.27% 2.20% 3.0% 1.0% 0.4% 0.5% 0.6% 5.9% 2.6% 1.9% 2.0% 2.0% 100.2% 124.4% 145.4% 150.0% 155.0%

Albilad ALBI AB BUY SAR 3.4% 3.37% 2.96% 2.88% 2.83% 3.1% 2.0% 1.8% 1.5% 0.8% 5.5% 5.5% 4.7% 4.2% 4.2% 62.1% 89.4% 129.0% 145.2% 151.2%

Aljazeera BJAZ AB SELL SAR 2.4% 2.40% 2.27% 2.32% 2.23% 2.6% 2.0% 0.3% 0.6% 0.5% 7.5% 9.1% 7.7% 7.5% 7.2% 65.2% 62.0% 64.4% 96.0% 113.0%

SIB SIBC AB HOLD SAR 2.1% 2.74% 2.52% 2.32% 2.26% 1.7% 2.3% 0.9% 1.1% 0.8% 5.8% 5.4% 6.1% 5.8% 5.7% 70.1% 110.4% 124.6% 129.8% 128.4%

Alinma ALINMA AB HOLD SAR 5.8% 2.56% 3.78% 3.45% 3.43% --% 0.0% 0.6% 0.6% 0.6% --% --% 0.0% 0.4% 0.7% --% --% 1260.1% 125.0% 71.4%

CoverageNPL RatioLoan Loss Charge / Avg LoansNet Interest Margin

July 4 2012

Region – Banks

October 2 2012

Banks




Company Ticker Arqaam Currency NPL Ratio Coverage

Rating FY 09 FY 10 FY 11 FY 12e FY 13e FY 09 FY 10 FY 11 FY 12e FY 13e FY 09a FY 10 FY 11 FY 12e FY 13e FY 09a FY 10 FY 11 FY 12e FY 13e

NBK NBK KK HOLD KWD 3.2% 3.00% 3.11% 3.16% 3.00% 0.5% 0.1% 0.6% 0.5% 0.5% 1.8% 1.6% 1.5% 1.8% 1.5% 207.8% 208.7% 243.0% 194.6% 257.6%

KFH KFIN KK SELL KWD 3.3% 3.41% 3.24% 3.05% 3.10% 1.6% 2.0% 2.4% 2.0% 1.5% 11.0% 13.3% 10.0% 12.0% 12.0% 57.7% 59.4% 77.3% 129.9% 135.7%

Gulf Bank GBK KK SELL KWD 1.9% 2.25% 2.30% 2.40% 2.41% 2.9% 3.3% 1.9% 2.0% 1.7% 30.3% 18.7% 14.4% 14.0% 14.0% 45.4% 36.1% 38.1% 51.2% 60.4%

Burgan BURG KK BUY KWD 2.7% 2.79% 2.59% 2.53% 2.52% 3.5% 3.1% 1.3% 1.3% 1.1% 10.0% 6.1% 11.5% 11.0% 11.0% 49.5% 72.9% 35.3% 42.5% 49.3%

Boubyan BOUBYAN KK SELL KWD 2.6% 2.81% 2.90% 2.96% 2.98% 6.5% 1.4% 1.1% 1.3% 0.8% 11.7% 0.7% 0.5% 2.9% 3.1% 84.8% 1257.4% 2286.6% 332.7% 317.0%

Muscat BKMB OM BUY OMR 3.1% 3.36% 3.42% 3.23% 3.16% 2.2% 0.8% 0.6% 0.7% 0.7% 5.2% 4.2% 3.0% 4.0% 4.0% 101.5% 105.9% 118.4% 75.6% 74.5%

Sohar BKSB OM HOLD OMR 2.5% 2.74% 2.64% 2.86% 2.92% 0.3% 0.4% 0.3% 0.4% 0.5% 0.2% 0.9% 1.5% 1.9% 2.3% 655.6% 212.5% 133.6% 131.8% 131.8%

HBMO HBMO OM SELL OMR 3.3% 3.02% 2.79% 2.78% 2.78% (0.1%) (0.1%) (0.4%) 0.3% 0.4% 10.5% 10.8% 10.9% 10.7% 10.6% 43.5% 42.7% 38.8% 48.1% 47.4%

AUB AUB BI HOLD BHD --% 2.24% 2.26% 2.31% 2.35% --% 1.1% 0.8% 0.8% 0.8% --% 2.4% 2.5% 3.0% 3.2% --% 119.5% 135.3% 130.7% 135.7%

CoverageNPL RatioLoan Loss Charge / Avg LoansNet Interest Margin

October 1 2012

Region – Banks

October 2 2012

Banks


Exhibit 14: MENA financials: Share price performance


Company Arqaam Currency Share Peformance

Rating Price High Low High Low 5D 1M 3M 6M 12M y-t-d 5D 1M 3M 6M 12M y-t-d 5D 1M 3M 6M 12M y-t-d since initiation

ADCB HOLD AED 3.3 3.5 2.6 6% 24% (1.5) (3.6) (2.4) 4.8 10.9 16.9 (1.5) (5.0) (11.6) 3.1 (1.4) 5.9 (1.3) (4.8) (8.8) 3.3 8.1 8.5 5.5

ADIB SELL AED 3.3 3.7 2.9 12% 12% 0.3 0.3 7.6 (4.7) 1.6 3.2 0.3 (1.1) (1.6) (6.5) (10.8) (7.8) 0.5 (0.9) 1.1 (6.2) (1.2) (5.3) 3.2

CBD BUY AED 3.0 3.2 2.7 9% 11% 2.1 3.5 5.7 3.9 3.6 7.2 1.7 2.0 2.3 16.9 13.7 14.1 2.9 1.3 (3.0) 10.1 (6.2) (9.5) 5.7

DIB SELL AED 2.0 2.3 1.8 14% 8% -- 1.5 7.0 (6.2) -- 2.1 (0.4) (0.0) 3.6 6.9 10.1 9.0 0.9 (0.6) (1.7) 0.0 (9.8) (14.6) 4.2

ENBD HOLD AED 3.0 4.0 2.6 25% 15% (1.7) (1.7) 9.6 (2.3) (23.0) 1.4 (2.0) (3.2) 6.1 10.8 (12.9) 8.3 (0.8) (3.8) 0.8 3.9 (32.8) (15.3) 10.0

FGB BUY AED 10.0 11.0 6.9 9% 44% 0.4 4.7 24.9 2.7 39.7 29.3 0.4 3.3 15.7 0.9 27.4 18.3 0.6 3.5 18.4 1.2 36.9 20.9 12.1

NBAD BUY AED 9.1 9.4 7.4 3% 23% -- 6.8 9.6 4.7 15.9 12.2 (0.0) 5.4 0.4 2.9 3.6 1.2 0.2 5.6 3.2 3.2 13.1 3.7 4.5

UNB BUY AED 3.0 3.3 2.8 8% 10% (2.3) (4.7) 9.4 (3.2) (1.0) 5.2 (2.3) (6.2) 0.1 (5.0) (13.3) (5.8) (2.0) (5.9) 2.9 (4.7) (3.8) (3.3) 4.8

Tamweel BUY AED 1.3 1.6 0.5 20% 142% (2.1) (6.5) (13.5) (30.1) (19.9) 9.1 (2.1) (8.0) (22.8) (31.9) (32.2) (1.9) (1.9) (7.8) (20.0) (31.6) (22.7) 0.6 10.3

Mashreq HOLD AED 52.7 102.0 52.7 48% 0% (1.5) 5.8 11.3 5.8 80.3 112.3 (1.5) 4.3 2.1 4.0 68.0 101.3 (1.3) 4.6 4.9 4.3 77.5 103.8 (21.4)

Rakbank BUY AED 0.6 4.7 3.9 87% -84% (1.8) 3.1 3.9 (15.2) (9.7) 16.1 (1.8) 1.6 (5.3) (17.0) (22.1) 5.1 (1.6) 1.8 (2.5) (16.7) (12.5) 7.6 5.8

UAE

CBQ HOLD QAR 74.5 87.2 67.7 15% 10% (0.7) 2.5 8.9 (3.0) (5.9) (11.3) 0.2 2.3 5.5 (2.1) (6.7) (6.3) 0.0 2.2 4.2 0.2 (7.0) (8.2) 5.1

Doha HOLD QAR 55.3 67.2 53.0 18% 4% (1.1) (3.0) 2.4 (9.2) (9.5) (13.7) (0.2) (3.2) (1.0) (8.3) (10.2) (8.7) (0.4) (3.3) (2.4) (6.0) (10.5) (10.7) (4.0)

QIB HOLD QAR 77.0 86.1 75.0 11% 3% (1.2) (1.3) 1.3 0.1 (3.9) (8.7) (0.3) (1.5) (2.1) 1.0 (4.6) (3.6) (0.5) (1.6) (3.5) 3.3 (4.9) (5.6) (1.4)

QNB BUY QAR 135.8 142.7 126.1 5% 8% (0.9) 1.3 3.4 0.5 5.0 (1.7) (0.0) 1.0 0.0 1.4 4.2 3.3 (0.2) 1.0 (1.3) 3.7 3.9 1.3 1.8

MAR HOLD QAR 27.1 28.6 23.2 5% 17% (0.4) (0.6) 0.4 (1.8) 8.5 (2.9) 0.5 (0.8) (3.0) (0.9) 7.8 2.1 0.3 (0.9) (4.4) 1.4 7.5 0.2 0.7

Khaliji SELL QAR 17.2 18.3 16.1 6% 7% (1.1) (2.8) 4.2 4.9 1.2 0.2 (0.3) (3.0) 0.8 5.8 0.4 5.2 (0.5) (3.1) (0.6) 8.1 0.1 3.2 (0.3)

QIIB Hold QAR 52.2 56.5 47.9 8% 9% (1.1) 1.8 7.6 2.8 (2.1) (3.3) (0.3) 1.5 4.2 3.7 (2.8) 1.7 (0.5) 1.4 2.9 5.9 (3.1) (0.3) 4.4

Qatar

CAE BUY EGP 14.1 14.4 7.7 2% 83% 5.8 39.1 55.5 52.6 77.8 77.6 6.6 38.8 52.0 53.5 77.1 82.6 5.7 29.7 31.8 37.1 35.6 16.9 56.8

CIB BUY EGP 34.7 36.5 18.5 5% 87% 1.9 15.2 33.5 38.8 51.2 85.3 2.8 14.9 30.1 39.7 50.4 90.3 1.8 5.8 9.8 23.3 9.0 24.6 35.5

HDB HOLD EGP 14.9 17.5 10.5 15% 42% (0.9) 12.5 25.4 19.6 28.0 35.2 (0.0) 12.3 22.0 20.5 27.3 40.3 (1.0) 3.2 1.8 4.1 (14.2) (25.5) 32.5

NSGB HOLD EGP 44.0 44.8 16.8 2% 163% 16.9 39.3 67.0 66.9 130.5 138.4 17.7 39.0 63.6 67.8 129.7 143.4 16.8 29.9 43.3 51.4 88.3 77.7 42.0

EGB SELL EGP 1.7 1.8 1.3 6% 32% 3.0 9.7 15.6 17.2 (1.7) 11.8 3.9 9.5 12.2 18.2 (2.5) 16.9 2.9 0.4 (8.0) 1.7 (43.9) (48.9) 13.3

Egypt

Audi BUY USD 5.5 6.5 5.2 15% 7% (0.9) 0.2 (2.8) (15.4) (8.3) (5.3) 0.8 (0.2) (3.4) 0.9 (0.8) 5.0 (0.2) 0.8 (0.8) (6.5) 1.2 (0.1) (7.1)

BLOM BUY USD 7.4 8.2 7.0 10% 6% -- -- -- (3.3) (9.6) (0.3) (0.1) (0.0) (6.2) (14.5) (9.1) (0.3) 0.7 0.6 2.1 5.6 (0.1) 4.9 (5.0)

Byblos HOLD USD 1.5 1.7 1.5 14% 1% 0.7 (1.3) -- (12.8) (9.1) (8.0) 0.8 (0.2) (3.4) (2.4) (10.4) 4.7 1.4 (0.7) 2.1 (3.9) 0.5 (2.8) (5.7)

BOB SELL USD 19.0 19.5 18.8 3% 1% -- -- -- (1.5) (2.5) (2.1) 1.5 (1.5) (3.4) (11.9) (9.8) (3.0) 0.7 0.6 2.1 7.4 7.1 3.1 --

Lebanon

ANB BUY SAR 26.6 34.1 25.5 22% 4% (2.6) (6.7) 2.3 (21.1) (4.3) (3.3) 0.2 (1.7) 3.5 (5.0) (10.4) (7.0) 0.2 (2.5) 0.3 (7.6) (16.1) (9.8) (8.0)

Al Rajhi BUY SAR 71.3 83.3 67.0 14% 6% (2.7) (3.4) (3.4) (13.9) 2.9 2.5 0.0 1.6 (2.2) 2.2 (3.2) (1.2) (0.0) 0.7 (5.4) (0.4) (8.9) (4.1) (2.7)

BSFR HOLD SAR 31.1 40.6 29.7 23% 5% (0.6) (5.5) (6.9) (21.6) 0.2 (7.7) 2.1 (0.5) (5.7) (5.5) (5.9) (11.4) 2.1 (1.3) (8.9) (8.1) (11.6) (14.2) (13.1)

Riyad BUY SAR 22.7 27.2 22.6 17% 1% (1.9) (2.4) (1.3) (12.0) (4.0) (2.6) 0.8 2.6 (0.2) 4.1 (10.1) (6.3) 0.8 1.8 (3.3) 1.5 (15.8) (9.2) (3.8)

Samba BUY SAR 44.3 57.0 43.0 22% 3% (3.5) (7.9) (1.8) (21.9) 1.1 (4.9) (0.7) (3.0) (0.6) (5.9) (5.0) (8.7) (0.8) (3.8) (3.8) (8.4) (10.7) (11.5) (7.1)

SABB HOLD SAR 30.4 37.2 27.8 18% 10% (2.9) (7.0) (6.7) (16.7) 2.9 (0.4) (0.1) (2.1) (5.6) (0.6) (3.3) (4.2) (0.2) (2.9) (8.8) (3.2) (8.9) (7.0) (13.1)

SHB BUY SAR 26.3 29.7 21.3 11% 24% (0.8) (4.7) 1.2 (9.3) 21.9 5.9 2.0 0.2 2.3 6.8 15.7 2.1 2.0 (0.6) (0.8) 4.2 10.0 (0.7) (3.3)

Albilad BUY SAR 28.2 35.4 18.0 20% 57% (1.7) (8.4) 5.6 (1.1) 54.1 42.1 1.0 (3.5) 6.8 15.0 48.0 38.3 1.0 (4.3) 3.6 12.4 42.3 35.5 4.8

Aljazeera SELL SAR 26.1 33.9 16.0 23% 63% (5.4) (8.1) 20.8 (11.5) 55.4 54.0 (2.7) (3.1) 22.0 4.6 49.2 50.2 (2.7) (4.0) 18.8 2.0 43.5 47.4 4.4

SIB HOLD SAR 16.0 21.4 15.5 25% 3% (2.4) (4.2) 1.9 (23.8) (6.2) (0.9) 0.3 0.8 3.1 (7.7) (12.3) (4.7) 0.3 (0.1) (0.1) (10.3) (18.0) (7.5) (7.8)

Alinma HOLD SAR 13.0 16.9 9.1 23% 43% (5.1) (5.8) 5.7 (17.0) 40.0 38.5 (2.4) (0.9) 6.9 (0.9) 33.9 34.7 (2.4) (1.7) 3.7 (3.5) 28.2 31.9 (0.8)

KSA

Relative Performance (vs. market) %Relative Performance (vs. sector) %Absolute Performance %% to 52 week52 Week

October 1 2012

Region – Banks

October 2 2012

Banks


Exhibit 15: MENA financials: Share price performance (Continued)


Exhibit 16: MENA diversified financials: Share price performance




NBK HOLD KWD 1.0 1.1 0.9 11% 6% 2.1 -- (2.9) (8.3) 2.7 (2.8) 2.1 -- (2.9) (8.3) 2.7 (2.8) (0.7) (5.0) (6.8) (7.8) 0.7 (5.8) (6.6)

KFH SELL KWD 0.8 0.9 0.7 11% 15% 6.9 11.6 4.1 (1.3) (7.6) (7.6) 6.9 11.6 4.1 (1.3) (7.6) (7.6) 4.2 6.6 0.2 (0.8) (9.6) (10.6) 5.5

Gulf Bank SELL KWD 0.4 0.5 0.4 16% 14% 8.6 10.0 1.1 (4.3) (11.2) (9.4) 8.6 10.0 1.1 (4.3) (11.2) (9.4) 5.9 5.0 (2.7) (3.8) (13.2) (12.5) 7.3

Burgan BUY KWD 0.5 0.5 0.4 2% 26% -- 7.4 20.0 18.6 7.1 12.7 -- 7.4 20.0 18.6 7.1 12.7 (2.8) 2.4 16.1 19.1 5.1 9.7 22.9

Boubyan SELL KWD 0.6 0.6 0.5 2% 17% 3.3 3.3 -- 14.8 3.3 5.1 3.3 3.3 -- 14.8 3.3 5.1 0.5 (1.6) (3.9) 15.3 1.3 2.0 1.6

Kuwait

Muscat BUY OMR 0.6 0.7 0.5 15% 12% (1.8) (0.5) (4.5) (7.9) (3.0) (15.0) (1.8) (0.5) (4.5) (7.9) (3.0) (15.0) (0.8) (1.4) (1.8) (4.7) (1.6) (12.2) (4.0)

Sohar HOLD OMR 0.1 0.2 0.1 13% 8% -- 3.7 (5.0) (2.4) (9.8) (9.2) -- 3.7 (5.0) (2.4) (9.8) (9.2) 1.0 2.9 (2.3) 0.9 (8.4) (6.4) (7.9)

HBMO SELL OMR 0.2 0.3 0.2 26% -2% (2.7) (3.1) (11.8) (22.2) (17.2) (21.9) 97.3 96.9 88.2 77.8 (17.2) 78.1 (1.7) (3.9) (9.1) (18.9) (15.8) (19.1) (7.3)

Oman

AUB HOLD BHD 0.5 0.7 0.5 22% 3% (0.9) -- (7.6) (13.9) (18.3) (13.9) -- -- -- -- -- -- (0.2) (1.3) 3.5 5.5 8.1 4.9 (9.2)

Bahrain




Shuaa HOLD AED 0.6 1.0 0.4 40% 40% (2.1) (6.5) (13.5) (30.1) (19.9) 9.1 (0.7) (12.6) (24.0) (16.9) (19.9) (17.1) (1.2) (8.7) (22.3) (23.9) (29.7) (7.6) (14.3)

EFG BUY EGP 11.9 16.8 8.8 29% 35% (0.4) (1.7) 17.4 (12.2) (11.0) 19.1 (1.0) (11.0) (5.2) (24.4) (30.8) (24.6) (0.5) (11.1) (6.2) (27.7) (53.2) (41.6) 6.7

DFM SELL AED 1.0 1.3 0.7 27% 43% (1.8) 3.1 3.9 (15.2) (9.7) 16.1 (0.4) (3.0) (6.5) (2.1) (9.7) (10.2) (0.9) 0.9 (4.8) (9.0) (19.5) (0.6) --

Salama BUY AED 0.7 1.0 0.5 30% 50% (1.4) 2.3 14.4 (12.0) 7.3 23.9 (0.7) 0.8 12.5 (3.9) 5.7 18.0 (0.5) 0.2 5.7 (5.8) (2.5) 7.2 3.4

Qatar InsuranceBUY QAR 70.0 78.3 63.3 11% 11% (0.8) (0.4) (2.0) (4.9) 5.7 8.2 0.0 0.3 0.0 (1.4) (0.1) (0.1) (0.2) (0.7) (6.7) (1.7) 4.6 11.3 (5.5)

Tawuniya BUY SAR 40.9 66.8 39.8 39% 3% (1.7) (6.8) (13.7) (33.0) (23.9) (21.0) na na na na na na 1.0 (2.7) (15.7) (19.4) (35.7) (27.5) (16.5)

MedGulf SELL SAR 24.3 37.5 24.0 35% 1% (4.7) (6.5) (17.3) (33.4) (6.2) (13.2) na na na na na na (2.0) (2.4) (19.4) (19.9) (18.0) (19.8) (17.9)


October 2 2012

Banks


Exhibit 17: RORWA FY 12e vs. FY 12-15e Loan CAGR

Source: Company Data, Arqaam Capital Research

Exhibit 18: P/E FY 15e vs. P/tNAV FY 12e


ADCBADIB

CBD

DIBEMIRATES

FGBNBAD

UNB

TAMWEEL

MASQ

RAKBANK

CBQK

DHBK

QIBK

QNBK

MARK

KCBK

QIIKCIEB

COMI

HDBK

NSGB

EGBEAUDI

BLOM

BYB BOB

ARNB

RJHI

BSFR

RIBL

SAMBA

SABB

AAAL

ALBI

BJAZ

SIBCALINMA

NBK

KFIN

GBK BURG BOUBYAN

BKMB

BKSB

HBMO

AUB

0%

1%

2%

3%

4%

5%

6%

0% 5% 10% 15% 20% 25% 30% 35%

High returns, low growth

Low returns, high growth

Low returns, low growth

Sweet SpotHigh returns, low growth

Low returns, high growth

Low returns, low growth

ADCBADIB

CBD

DIB

EMIRATES

FGBNBAD

UNB

TAMWEEL

MASQRAKBANK

CBQK

DHBK

QIBK

QNBK

MARK

KCBK

QIIK

CIEB

COMI

HDBK

NSGB

EGBE

AUDI

BLOM

BYB

BOB

ARNB

RJHI

BSFR

RIBL

SAMBA

SABB

AAAL

ALBI

BJAZ

SIBC

ALINMA

NBK

KFIN

GBK

BURG

BKMB

BKSB

OIBB

AUB

HRHO

SALAMA

QATI

TAWUNIYA

MEDGULF

3.0x

5.0x

7.0x

9.0x

11.0x

13.0x

15.0x

0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x

Expensive

Cheap

October 2 2012

Banks


Exhibit 19: P/tNAV12e vs. RoRWA12e


ADCB

ADIBCBD

DIB

EMIRATES

FGB

NBAD

UNBTAMWEEL

MASQ

CBQK

DHBK

QIBK

QNBK

MARK

KCBK

QIIK

CIEB COMI

HDBK

NSGB

EGBE

AUDI

BLOM

BYB

BOB

ARNB

RJHI

BSFRRIBL

SAMBA

SABB

AAAL

ALBI

BJAZ

SIBC

ALINMA

NBK

KFIN

GBKBURG

BOUBYAN

BKMB

BKSB

OIBB

AUB

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

0% 1% 2% 3% 4% 5% 6%

Expensive

Cheap

October 2 2012

Banks


Important Notice

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Core portfolio changes€¦ · Loubna ElHassan Michael Malkoun Nisreen Assi Jonathan Milan...

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