China inflation hits highest level in 15 months

The consumer price index hit 2.7 percent in May, China’s National Bureau of Statistics said. (AFP)
Updated 12 June 2019

China inflation hits highest level in 15 months

  • The consumer price index hit 2.7 percent in May compared with 2.5 percent a month earlier
  • The rise was ‘largely the result of renewed acceleration in food price inflation’

BEIJING: Inflation in China rose to its highest level in more than a year in May driven by surges in prices due to the African swine fever epidemic and bad weather, official data showed Wednesday.
But while prices are increasing, demand remains weak because of the trade war with the United States and economic uncertainty.
The consumer price index (CPI) — a key gauge of retail inflation — hit 2.7 percent, the National Bureau of Statistics (NBS) said, compared with 2.5 percent in April and the highest since February 2018.
The data was in line with a forecast of analysts polled by Bloomberg News.
The rise was “largely the result of renewed acceleration in food price inflation,” and supply disruptions caused by African swine fever, Capital Economics said in a note.
Beijing’s official statistics say around one million pigs have been killed since the first outbreak in August — but that is widely considered to be an underestimate.
The producer price index (PPI), an important indicator of domestic demand, hit 0.6 percent in May, from 0.9 percent the previous month.
Economic “growth could slow further on escalating US-China trade tensions,” Nomura International said in a note.
“We expect Beijing to undertake further easing/stimulus measures to bolster confidence and to stabilize growth.”
US President Donald Trump is expected to meet China’s Xi Jinping at the G20 summit in Japan this month to discuss the long-running trade row, but US Commerce Secretary Wilbur Ross has warned that it will not be a stage for a “definitive agreement.”

Emirates NBD profit surges on asset sale and forex gains

Updated 17 July 2019

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.