2016 guidance: i) Loan growth: low single-digits (2015: c7.0%); ii) Revenue growth: flat to low single-digit (2015: c5.0%); iii) Net profit growth: flat to low single-digit (2015: c6.0%); iv) NIM: 3.0% - 3.2% (2015: 3.27%); v)NPL ratio: < 3.5% (2015: 2.8%); cost of risk: <100bps (2015: 91bps)   Investment view: We have a favourable view on FGB owing to its strong capacity to withstand credit stress – 2015 CAR of 17.5%, 2016e: pre-provision ROA of 3.21%, and a proven track record of coping with macro risks. Management’s earnings guidance suggests that despite the headwinds, FGB should be able to at least maintain its dividend – 2015: AED1.0/share (div yield 8.5%) – in 2016. We have a Buy rating on the stock.   NIM: FGB stated that it is being prudent with its 2016 NIM forecast, which implies a c20-27bps YoY decrease to 2015. The guided decline in NIM factors in the timing difference that can occur between re-pricing of assets and liabilities. Liquidity: Management believes that pressure on liquidity in the sector has eased off at the start of this year. FGB’s funding strategy would be increased diversification to reduce its dependence on government and public sector deposits, which make up c31% of the bank’s deposits.  Dividend: Management said that its decision to raise the dividend pay-out was made after considering the bank’s capitalisation level and 2016 growth prospects. At this time, management does not see why it cannot maintain its dividend policy.   Consolidation in the sector: FGB would welcome any move for consolidation in the banking sector and if there is an interesting opportunity, the bank would look into it. Management believes that there is scope for consolidation in the market considering that the UAE is overbanked and economic growth is relatively low.   Credit quality: FGB stated that it downgraded one large international exposure to NPL in 4Q2015. The exposure is a coal mining business in Asia Pacific, which was hit by a decrease in coal prices. FGB downgraded the cAED1 billion exposure after consulting with the local auditor and regulator in the country where the exposure is based. Management did not indicate how much it has set aside as provisions against the exposure. Capital: FGB’s floor for Tier 1 ratio continues to be 14% (4Q2015:  16.3%). Management however said that it would look to review this floor once Basel III rules are implemented in the UAE.   Real estate income: FGB’s income from the real estate portfolio was quite strong in 4Q2015. Management signaled that there are likely to be additional gains from this real estate portfolio in 2016.  (Company disclosure, Shabbir Malik)