First Abu Dhabi Bank
Fundamental — what it's worthbottom-up fair value
Built up from a dividend model, a discounted-cash-flow (FCFF) 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 — four lenses
Four independent valuation methods, blended into one weighted central fair value.
| Valuation lens | Per share (AED) | Weight |
|---|---|---|
| Dividend discount model — primary | 19.81 | 40% |
| FCFE discounted cash flow | 20.70 | 20% |
| Relative — P/B–ROE and peer P/E | 18.78 | 15% |
| Normalized return on tangible equity | 19.90 | 25% |
| Weighted central fair value | 19.90 | +14% vs spot |
The four lenses cluster at AED 18.8 (relative) to AED 20.7 (FCFE), about 14% above spot — the tightness says the value gap is a statement about the multiple the market assigns a quality franchise, not a fragile single-lens artefact. The net interest margin through the Fed easing cycle and the normalization of a benign ~49bps cost of risk 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: First Abu Dhabi Bank trades about 14% below our weighted central fair value — modestly cheap, with four bank lenses clustered close together. A dividend-discount model lands near AED 19.8, an FCFE (capital-generation) build near AED 20.7, relative multiples near AED 18.8 and a normalized return-on-tangible-equity read near AED 19.9 — a tight AED 18.8–20.7 cluster. FAB is the UAE’s largest bank and one of the biggest in the Middle East, formed from the 2017 NBAD–First Gulf Bank merger: ~AED 1.4 tn of assets, an Aa3 rating and one of the region’s lowest costs of funds, a ~20% return on tangible equity at a sector-low ~22% cost-to-income, and a record AED 0.80 dividend. The bull case (~AED 22.4) is durable margin resilience as the Fed eases slowly and a step-up in payout; the cautious case (~AED 17.1) is a faster Fed cutting cycle that squeezes an asset-sensitive net interest margin and a normalization in the benign ~49bps cost of risk. What moves it near-term is the rate path and the quarterly NIM print.
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. | ~1.8% |
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 Fed rate path via the dirham peg (the NIM driver), oil and Gulf sovereign liquidity, UAE non-oil credit demand, ADX and EM-frontier foreign flows, regional deposit growth, the US 10-year, and the UAE real-estate cycle — plus event forces: a quarterly earnings surprise, a dividend/distribution surprise, a geopolitical shock, an asset-quality shift, a sovereign/GRE credit event, a Fed-pivot repricing, an M&A/capital action, an index-flow rebalance, and a large block placement. Details in the methodology.
Peer set & risks
Where First Abu Dhabi Bank sits in its markets
FAB is the UAE’s largest bank and one of the biggest in the Middle East — formed from the 2017 NBAD–First Gulf Bank merger, with an Aa3 rating and one of the region’s lowest costs of funds. It screens in line with its returns against UAE and GCC peers. This is a competitive map, not a price table.
| Arena | FAB's position | Main rivals |
|---|---|---|
| Market cap (UAE banks) | #1 (~AED 192bn) | Emirates NBD · ADCB · DIB |
| Total assets | #1 (~AED 1.4tn) | Region's largest balance sheet |
| Return on tangible equity | ~20% (top-tier) | vs GCC ~14–20% |
| Cost-to-income | ~22% (sector-low) | sector ~28–35% |
| Capital (CET1) | ~13.9% (strong) | well-capitalised |
| Ratings | Aa3 / AA− / AA− | region's strongest |
The debate is valuation, not quality — whether the region’s largest bank at ~1.6× book on a ~20% return on tangible equity is too cheap, which all four lenses answer modestly yes. Competitive map, not advice.
About this series & how we build these
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Edition: 3 Jul 2026. Older editions stay in the Library.