Abu Dhabi Islamic Bank
Fundamental — what it's worthbottom-up fair value
Built up from a dividend model, an FCFE cash-flow valuation, relative multiples and the value of retained capital — what is it worth?
Is it cheap or expensive right now?
Latest price vs our fair value. A comparison, not a recommendation.
What it's worth — five lenses
Five independent valuation methods, blended into one weighted central fair value.
| Valuation lens | Per share (AED) | Weight |
|---|---|---|
| Dividend discount model — primary | 22.5 | 30% |
| Residual income (multi-period build) | 22.5 | 20% |
| FCFE (equity DCF) | 23.5 | 15% |
| Relative multiples (ROE-adjusted) | 17.9 | 20% |
| Normalized through-cycle | 19.0 | 15% |
| Weighted central fair value | 21.2 | -2% vs spot |
The five lenses span AED 17.9 (what the sector pays today for this return, conservative) to AED 23.5 (the FCFE build, which credits the surplus capital growth frees up); the dividend model and residual income both land at AED 22.5. ADIB already trades at 3.31× book against the 2.69× its 28.8% ROE justifies — a +23% premium. How long that ROE lasts, and whether the UAE’s new minimum tax bites from FY2027, are the swing factors. Full detail is in the study and the open model.
Technical & price structuretrend, momentum, key levels
Trend, momentum and key levels — what is the price doing now?
What the chart says
In plain terms: ADIB is the UAE’s most profitable bank — a 28.8% return on equity built on deposits that are 91% current-and-savings — and it is priced for it: 3.31× book against a sector at 1.55×. Five lenses put fair value at AED 17.9–23.5, with a weighted central of AED 21.23 — about 2.4% below the price. On the payout it has held for five straight years (48.5–49.9% of profit), the dividend model alone says AED 22.5; give it credit for the surplus capital a slowing growth rate frees up and the FCFE ceiling is AED 23.5. The crux is durability: at our cost of equity the price already implies a 26% return on equity forever, better than management’s own 25% 2030 target. The bull case (~AED 23) is that the moat is structural and holds; the conservative case (~AED 18) is what the sector actually pays for this return today. What moves it near-term is whether the Strait of Hormuz stays open and how the UAE’s new minimum tax lands.
Key levels
Volatility & where the case breaks
| Typical daily moveRoughly how far the price swings in an average day (based on a measure called ATR). Bigger means choppier. | ~1.9% |
Monte Carlo — where could the price go?near-term price paths
50,000 simulated futures — near-term price paths, independent of the fundamental value.
The 5th–95th and 25th–75th percentile bands from the 50,000-path simulation. Static and pre-computed — independent of the fundamental levers above.
The exact percentiles
The 5th / 25th / middle / 75th / 95th outcomesLine up all 50,000 outcomes low to high — these are the values at the 5%, 25%, 50%, 75% and 95% marks., from 50,000 paths.
| Timeframe | Rare low (5%) | 25% | Middle | 75% | Rare high (95%) |
|---|
What drives the odds
50,000 paths, 16 forces: the CBUAE/Fed rate path (the NIM driver), non-oil GDP & diversification credit demand, oil price & fiscal impulse, sector credit growth, dividend/payout signal, foreign (index-inclusion) flows, and momentum/mean-reversion tilt — plus event forces: a quarterly earnings surprise, a CBUAE policy surprise, a dividend declaration surprise, a sovereign rating action, a regulatory fee/levy change, a large corporate credit event, an index rebalance, an oil shock, and a geopolitical/regional event. Details in the methodology.
Peer set & risks
Where ADIB sits in its markets
ADIB is the UAE’s most profitable listed bank on the one measure that matters to a shareholder — a 28.8% return on equity against a sector at 18.3% — built on deposits that are 91% current-and-savings. It is priced for that return, at 3.31× book against a sector at 1.55×. This is a competitive map, not a price table.
| Arena | ADIB's position | Main rivals |
|---|---|---|
| Return on equity | 28.8% (sector-leading) | DIB ~14% · ADCB 16.3% · sector 18.3% |
| Net profit margin | 4.11% | DIB 2.6% actual, guided to 2.3% for 2026 |
| Price to book (spot) | 3.31× (a premium, earned but full) | ADCB ~1.52× · sector 1.55× |
| Cost-to-income | 28.6% (lean, improving) | sector ~26–32% |
| CASA / low-cost funding | 65% group, 91% retail | the structural margin defence peers lack |
| Capital (CET1 ratio) | 12.0% (held flat 4yrs) | sector well-capitalised |
The debate is whether the 3.31× book the market pays already reflects a fading ROE as the equity base compounds, or whether ADIB keeps compounding near 25%+ — which the cash-flow lenses answer yes and the relative lens more cautiously. Competitive map, not advice.
About this series & how we build these
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Full write-up plus the editable Excel model.
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The full study (PDF) and Excel model are available on a computer.
Edition: 11 Jul 2026. Older editions stay in the Library.