Arab Bank Group is set for another year of record profits. Share price is trading near its fair value.

January 09, 2007

By end of 2005, the Arab Bank Group had posted a record net profit of US$ 503.2 million, marking a whopping 53.9% increment over the preceding year. The trend continued in 2006 as the bottom line grew by another 28.3% during the first nine months of the year as compared to the corresponding period of 2005. The bank’s record profits stem from the trickle down effects of surging energy prices. Following the boom in its stock price in 2005, driven by irrational market euphoria, and owing to the subsequent market correction in 2006, the Arab Bank stock is trading near its fair value, according to Arab Advisors Group analysis and calculations.

A new equity report, “Arab Bank Group Initial Coverage” was released by the Arab Advisors Group’s Financial Markets Strategic Research Service on December 12, 2006. This report can be received from the Arab Advisors Group free of charge. The 51-page report provides a comprehensive background on the Arab Bank Group’ and a detailed analysis of its performance during 2005 and up to September-end 2006. The Arab Bank Group is thoroughly profiled, highlighting its major accomplishments during the aforementioned period, including an examination of its major strengths and challenges that lie ahead. The report concludes by offering our opinion on the fair value of the Arab Bank Group’ equity. The valuation is based on both historical information and a set of justified assumptions. Arab Advisors Group’s analysis of the stock price yields a fair value estimate of JD 20.91.

Please contact the Arab Advisors Group to get a copy of the full report.

Arab Advisors Group’s analysis reveals that despite its stellar performance during 2005, the following first nine months of 2006 and a positive outlook for 2007, the Arab Bank remains exposed to certain unfavorable conditions. With the possible legal contingency of its New York operation, the Arab Bank Group could be facing yet more legal fees and penalties.

More over, and despite great improvements over preceding years, the Bank still has ample room for improvement in areas such as net profit margin, and return on assets and equity especially when compared to the regional peers listed in the report. Having said that, it must be noted that unlike the mentioned peers, the Arab Bank Group’s net profit is mainly sourced from core banking operations with minimal contribution from investment portfolios dependant on volatile capital markets.

The Arab Advisors Group’s team of analysts in the region has produced a number of equity reports on companies and sectors within the Amman Stock Exchange (ASE) and the Doha Securities Market (DSM). Currently, company equity reports are delivered free of charge as a special promotion To have your address added, please contact us at faisal@arabadvisors.com.

Moreover, the Arab Advisors Group’s team of analysts in the region has produced close to 700 reports on the Arab World’s communications and media markets. The reports can be purchased individually or received through an annual subscription to Arab Advisors Group’s (www.arabadvisors.com) Strategic Research Services (Media and Telecom). To date, Arab Advisors Group has served over 390 global and regional companies by providing reliable research analysis and forecasts of Arab communications markets to these clients.