Abu Dhabi banks had significant capital levels and manageable liquidity, but their long-term profitability was still tied to the country's development plans, analysts at HSBC said.
They recommended National Bank of Abu Dhabi was the best way to play Abu Dhabi banks.
HSBC said it favoured banks from Saudi Arabia and Egypt in the Middle East and North Africa, as both countries had strongly capitalised banking sectors and good visibility on credit quality.
HSBC said Saudi's Riyad Bank and Samba Financial Group were the most compelling investment cases in its coverage universe, and forecast corporate loan growth of eight per cent in 2010 for Saudi banks.
The brokerage said it expected credit growth in Egyptian banks to recover starting from mid-2010, driven by foreign currency lending, and raised Nationale Societe Generale Bank to "overweight" from "neutral", terming it its pick of Egyptian banks.
Analysts at HSBC said they had a positive view for Omani banks this year, and that the banks were expecting a boost from corporate loans, mainly from project financing for power projects, roads and civil infrastructure.
The brokerage said the Kuwaiti banking environment was still weak and uncertain, and expected banks to continue providing heavily for loan losses through 2010, with the exception of National Bank of Kuwait (NBK).
HSBC said NBK had the strongest asset quality among Kuwaiti banks.