The benchmark index of Abu Dhabi has jumped up to its highest value within the last 2 weeks after investors bought banking stocks to take the advantage of the higher dividends available at this point of time. The ADX General Index has increased by 0.6% on today and thereby finished at 3049.60, marking its highest value since 27th February. Incidentally, the benchmark gauge of Dubai stocks, the DFM General Index has jumped up by 0.1% on today.
The financial institutions of the United Arab Emirates have raised the dividends as they are currently recovering from the possible impact of the global credit crisis. Incidentally, the global credit crisis slowed down the lending, hit investment banking and also caused a surge in the loan-loss charges. Currently, the Abu Dhabi banks, on an average, offer a dividend yield of 5.2%, if compared to the 3.4% of the BGCCFINL’s Gulf Cooperation Council’s most traded stocks.
According to the Partner of Al Fajer Securities, Nabil Farhat, the investors are currently switching positions to the high-dividend paying stocks such as banks in Abu Dhabi. Nabil added that the earnings prospects for the banks look good at this time of the year, the potential growth in the aggregate profits is expected to be of 5% at least.
Incidentally, in last December, Franklin Templeton Investment Management Ltd. stated that the North Africa and Middle East equities will be able to outperform the emerging markets, thanks to the fact that the state-funded expansion and higher dividends lure the investors who are hunting for better return opportunities.
First Gulf Bank PJSC saw an advance of 2.2% in its share prices and each share is currently priced at 13.85 dirhams. This marks First Gulf’s best ever finish since May, 2001 as its profits grew by 12% in last year. Frist Gulf has already recommended a cash dividend of 83 fils per share for last year. The bank is also expected to post the fastest loan growth in United Arab Emirates in 2013, as far as the statement of EFG-Hermes Holding SAE is concerned. First Gulf’s net income for 2013 is expected to increase by 7%.
The 3rd largest UAE lender by assets, Abu Dhabi Commercial announced to pay a 25% cash dividend for last year, 20% more than 2011. Shares of it gained 0.5% on today and each share is priced at 4 dirhams now.