Guidance:   Loan growth of mid-single-digit (+3% Y-o-Y in 2Q16) Revenue growth flat (-3% Y-o-Y in 1H16) NIM of 3.0-3.2% (3.1% in 1H16) NPL ratio <3.0% (3.1% in 2Q16) Net profit growth of negative low single digit (-8% Y-o-Y in 1H16)   Overall: Revenue growth has been a challenge; however, management is relatively comfortable with credit quality.   Loan growth: FGB revised loan growth guidance to mid-single digit from low single digit on account of a healthy pipeline of corporate loans.   Profitability: Management expects earnings momentum to improve in 2H16 on the back of i) wider spreads; ii) improved loan growth; iii) stronger fees (underpinned by growth in trade volume and loan growth); iv) focus on increasing FX and derivative volumes; v) controlled cost growth; and vi) lower provisioning (reserve release due to upgrade of certain corporates).   Credit quality: FGB stated that credit quality in retail and corporate segments has been resilient. FGB expects credit quality to improve by year-end and it reduced its NPL ratio guidance to <3.0% from <3.5% earlier. FGB’s NPL ratio rose to 3.1% in 2Q16 from 2.6% in 1Q16, owing to a downgrade of a corporate exposure in the real estate sector. Management further said that this downgrade is a one-off case and is not a reflection of systemic challenges in the real estate sector. The bank expects this account to be upgraded in 3Q16.   Spreads outlook: Management believes spreads can improve in 2H16, if improved yield on corporate and lower cost of funds offset pressure on yield of consumer loans. FGB said that yield is beginning to improve in the corporate segment, and it expects this trend to continue in 2H16. Management also expects cost of funds to improve in 2H16 as i) liquidity in the system is likely to remain stable; ii) FGB’s funding has become more diversified; and iii) one of FGB’s sukuk (USD650mn with a profit rate of 3.8%) is maturing in August and is likely to be replaced with an instrument with lower funding cost.     Fee income improves: Fee income was strong this quarter (+26% Q-o-Q and +4% Y-o-Y). Management attributed the improvement to renewed business activity in First Gulf Libyan Bank and pick-up in syndications and DCM transactions in the Singapore office. (Company results conference call, Shabbir Malik, Murad Ansari)   First Gulf Bank (AD): AED12.10 as of 28 July 2016, Rating: Neutral, FV: AED13.70 per share, MCap: USD14,837mn, FGB UH / FGB.AD