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Wednesday, 2 September 2009

Banks for Sale! (Re-post)

After reading Adel’s most recent post which suggested going long GCC banks because they are lagging the rally; I decided to further examine the claim. To identify laggard banks, I put together a comparative chart of GCC banks P/BV multiples as of Sept 1st to country/GCC means:

As Adel implied, Qatari banks had their share in the rally which is evidently reflected in their high P/BV multiples. Kuwaiti banks have always traded at a premium, but we got a multiple of 2.47x after omitting Gulf bank’s figure. Boubyan bank is trading at an acquisition premium, hence justifying the high multiple. I believe Burgan Bank is trading at an attractive level. UAE banks seem to be the most attractive, but we have to take a closer look at the quality of their loan books.

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