x Abu Dhabi, UAEFriday 19 January 2018

ADCB recovers ground thanks to buyback of shares

Abu Dhabi Commercial Bank, among the best-performing bank stocks this year, has scope for further buybacks following its latest success.

Abu Dhabi Commercial Bank has bought back Dh377.2 million of its own shares, steadying one of the best-performing bank stocks of the year after a recent dip.

The commercial lender, which trades at the most expensive price-to-earnings multiple of any UAE bank, bought 77.6 million shares for Dh4.86 each, the bank said in a statement to the Abu Dhabi Securities Exchange.

The buyback signals the potential for further capital gains for investors in ADCB's shares, which have risen 73.4 per cent in the year-to-date period.

The bank has repurchased about two thirds of the total number of shares from investors for which regulators have given approval.

"If you're doing a share buyback you're showing confidence in your own stock," said Naveed Ahmed, a financial analyst at Kuwait's Global Investment House.

A sharp sell-off in ADCB's share price during the past few weeks had presented an opportunity to buy on the dip, Mr Ahmed said.

But the shares look expensive, he added. "ADCB was on our buy list, only now it's one to hold because the price has gone up exorbitantly," he said.

Having purchased 4.6 per cent of its shares in May, ADCB retains considerable scope for further share buybacks. The bank has received regulatory approval to acquire a further 218.9 million shares, equivalent to 3.9 per cent of its total stock.

ADCB's shares rose 0.1 per cent yesterday to Dh5.16 each.

The move also boosts the value of the stake held by the Abu Dhabi Investment Council, the government-owned investment fund which is the bank's biggest shareholder, owning a 58 per cent stake.

Banks in the capital have been one of the UAE's best performing industries this year. The ADX Banks index has risen 45.8 per cent during the year so far.

The share purchases were made on Wednesday, the same day that the index provider MSCI said the bank would account for 9.95 per cent of the reweighted MSCI UAE Index.

MSCI upgraded the UAE and Qatar from "frontier" to "emerging" market status alongside Brazil, Russia, India and China last month.