Kuwait says market conditions to determine any extension of OPEC-led oil cuts

OPEC, Russia and several other non-OPEC producers began to cut supply in January 2017 in an effort to lift oil prices. (Reuters)
Updated 16 April 2018
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Kuwait says market conditions to determine any extension of OPEC-led oil cuts

KUWAIT: Kuwait’s oil minister said on Monday a pact between OPEC and non-OPEC producers to curb supplies would run to the end of the year and market conditions would determine whether to extend it further.
Bakhit Al-Rashidi also said the meeting of the Organization of the Petroleum Exporting Countries in June in Vienna would offer a chance to review the deal, adding that oil markets were heading in the right direction for stability.
“The agreement will continue until the end of this year,” the minister told reporters at an oil industry event in Kuwait.
He added that “it would depend on market conditions whether to extend this agreement beyond 2018 or to reach a permanent agreement between OPEC and non-OPEC to support market stability,” saying this issue would be reviewed later in the year.
An initial draft of a longer-term alliance agreement between OPEC and non-OPEC oil producers would be discussed at the June meeting, OPEC Secretary-General Mohammad Barkindo said last week.
OPEC, Russia and several other non-OPEC producers began to cut supply in January 2017 in an effort to lift oil prices. The pact runs until the end of this year, and the June meeting will see participants decide their next course of action.
A surplus in global oil inventories was close to evaporating, OPEC said last week, citing healthy energy demand and its own supply cuts. It also revised up its forecast for output from rivals that have benefited from higher oil prices.
OPEC has a self-imposed goal of bringing oil inventories in industrialized countries down to their five-year average.
Barkindo said in Kuwait on Monday that oil stocks in the developed world fell in February to below 50 million barrels above the latest five-year average and that the declining trend would continue over the coming months.


Emirates NBD profit surges on asset sale and forex gains

Updated 20 min 57 sec ago
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Emirates NBD profit surges on asset sale and forex gains

  • Dubai’s largest bank reports 80 percent rise in net profit for second quarter

DUBAI: Emirates NBD, Dubai’s largest bank, reported an 80 percent rise in second-quarter net profit helped by the sale of a stake in Network International and strong non-interest income on foreign exchange gains.

The result included a gain of 2.1 billion dirhams ($572 million) from the sale of a stake in digital payment provider Network International in an initial public offering in London in April.

The earnings showed that top banks in the UAE have still withstood strains from a sluggish economy and a property downturn in Dubai.

Second-quarter net profit jumped 80 percent to 4.74 billion dirhams. EFG Hermes had expected a net profit of 4.06 billion in the second quarter.

The bank said net interest income rose 6 percent in the second-quarter from a year earlier, as growth in assets offset a drop in net interest rate margins.

Non-interest income surged 23 percent, helped by gains in foreign exchange income and investment banking activities.

Provisioning for bad debts more than doubled to 656 million dirhams in the second quarter from a year earlier.

The bank said the cost of risk had increased in 2019 to a more normalized level from relatively better credit quality conditions in 2018.

Cost of risk reflects the price a lender pays to manage its risk exposure. In 2018, Emirates NBD signaled that it expected cost of risk to revert to a long-term level of 80-100 basis points from the 63 basis points seen in 2018.

“The increased cost of risk of 82 basis points in H1 2019 is a result of an expectation of a reversion of credit quality to more normalized levels from the benign conditions in 2018, coupled with the expectation of lower write-backs and recoveries,” it said.

Credit-rating agency Moody’s had warned earlier this year provisioning charges for top banks in the UAE will increase in 2019 owing to pressure in the property and the retail sectors.

The Dubai lender said its net profit surged 49 percent in the first half of the year. “Core operating profit advanced 8 percent compared to the first half of 2018, helped by loan growth, higher foreign exchange income and increased investment banking activity,” the bank’s chief executive Shayne Nelson said in a statement.

Nelson said that the bank continued to make progress on the acquisition of Turkey’s Denizbank and expects this transaction to close in the third quarter of 2019.

Emirates NBD said in April that it was buying Denizbank from Russia’s Sberbank at a roughly 20 percent discount to a previously agreed price, after a steep fall in the Turkish lira.