Oil racks up more gains on US-Iran tensions, gold breaks $1,400

The US drown shot down over the Gulf of Oman sent oil prices soaring more than six percent Thursday. (AFP)
Updated 21 June 2019

Oil racks up more gains on US-Iran tensions, gold breaks $1,400

HONG KONG: Oil prices rose again Friday, extending the previous day’s surge on tensions between the United States and Iran, while gold rose above $1,400 an ounce for the first time since 2013.

Fears of a conflict in the crude-rich Middle East ratcheted up Thursday when Tehran said it had shot down a US “spy drone” that was violating its airspace, which Washington denied.

Donald Trump described the move as a “big mistake”, adding: “This country will not stand for it”.

The news – which comes a week after the US accused Iran of attacking two tankers in the Gulf of Oman – sent oil prices soaring more than six percent Thursday, while talk has increased of a military stand-off that could deal a massive blow to supplies.

Observers said the cost of crude could continue to rise.

“If we meld supply risk fear, a powerfully bullish narrative, (the Federal Reserve’s) willingness to execute a pro-cyclical rate cut juicing risk assets and frame it with the potentially game-changing G20, you have the makings of a solid base for oil to shoot even higher,” said Stephen Innes, managing partner at Vanguard Markets.

The focus is also on next week’s planned meeting between Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 in Japan next week.

Trump’s tweet about “a very good telephone conversation” between the pair this week fuelled a surge across global markets on hopes for a deal to end their countries’ long-running trade war that has impacted the world economy.

However, Asia took a step back Friday, having been given an extra boost by the Fed indicating it will begin to cut interest rates soon, and other central banks erring towards softer monetary policies.

Gold breaks $1,400

A cheaper dollar and tensions in the Middle East have also ramped up demand for gold – seen as a go-to asset in times of uncertainty and upheaval – sending it above $1,400 an ounce for the first time since 2013.

“Gold jumped more than three percent on Thursday as the Fed left little doubt that an interest rate (cut) is coming and with trade and political tensions still at play the yellow metal was a clear choice for investors looking for a safe haven,” said OANDA senior market analyst Alfonso Esparza.

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.