Emirates NBD: Doubling foreign ownership limit puts a cheap, large-cap GCC bank on the table
In this note, we compare key performance metrics for ENBD and regional peers and also dig in to the bank’s recently published Q2 results. When ENBD increased its foreign ownership limit from 5% to 20% in September 2019, and indicated plans to raise the FOL to 40%, its shares rallied c20% as investors looked to improved liquidity and foreign investor inflows to boost the valuation. Near-term financial performance is likely to be depressed by a high cost of risk; NPLs are likely to climb further over the next 2-3 quarters. Margins are also likely to be squeezed further as recent interest rate cuts feed through the balance sheet.