Qatari banks face weakening profitability in 2016: S&P

Updated 02 February 2016

Qatari banks face weakening profitability in 2016: S&P

DUBAI: In an article published this week, titled “Qatari Banks’ Profitability To Wane In 2016,” Standard & Poor’s Ratings Services says that it anticipates tightening liquidity, slackening credit growth, and weakening profitability for Qatar’s banks in 2016.
Although the drop in hydrocarbon prices and the Qatari government’s streamlining of its public investment program are putting the brakes on the domestic economy, banks’ asset quality held generally steady while credit growth remained resilient on the back of strong private sector activity in 2015.
“Nevertheless, as liquidity in the banking sector tightens further with the rise of local and global interest rates, we expect credit growth will lose some steam,” said the report.
“We think that operating conditions for Qatari banks will toughen this year, denting their profitability,” said Standard & Poor’s credit analyst Timucin Engin.
In 2015, the Qatari public sector withdrew some of its deposits from the domestic banking system in the process.
The report added: “We expect more of the same in 2016 and foresee a further squeeze on banks’ liquidity. Further trimming of government spending will likely reduce private-sector lending opportunities. At the same time, we think banks will manage their funding profiles more conservatively, which should translate into lower growth. We also expect credit losses will increase given the economic slowdown and the pressure we expect in some sectors, such as contracting.”
Standard & Poor’s credit analyst Nadim Amatouri said: “Importantly, we foresee some tension on banks’ asset quality.”
Amatouri said: “Over the past few years, public-sector lending took a back seat, while a visible portion of new lending was in the private sector. We now anticipate increased credit losses in the private sector, particularly given our expectations for slowing real GDP growth.”
In particular, the banks’ exposures to contractors are susceptible to losses amid slacker capital spending.
“Moreover, as in other GCC states, we think a drop in the performance of capital markets could translate into some losses on certain high-net-worth portfolios,” said the report.


Huawei’s third-quarter revenue jumps 27% as smartphone sales surge

Updated 17 October 2019

Huawei’s third-quarter revenue jumps 27% as smartphone sales surge

  • American companies, significantly disrupting its ability to source key parts
  • Huawei was all but banned by the United States in May from doing business with American companies

SHENZHEN, SHANGHAI: Huawei Technologies Co. Ltd’s third-quarter revenue jumped 27%, driven by a surge in shipments of smartphones launched before a trade blacklisting by the United States expected to hammer its business.
Huawei, the world’s biggest maker of telecom network equipment and the No. 2 manufacturer of smartphones, was all but banned by the United States in May from doing business with American companies, significantly disrupting its ability to source key parts.
The company has been granted a reprieve until November, meaning it will lose access to some technology next month. Huawei has so far mainly sold smartphones that were launched before the ban.
Its newest Mate 30 smartphone — which lacks access to a licensed version of Google’s Android operating system — started sales last month.
Huawei in August said the curbs would hurt less than initially feared, but could still push its smartphone unit’s revenue lower by about $10 billion this year.
The tech giant did not break down third-quarter figures but said on Wednesday revenue for the first three quarters of the year grew 24.4% to 610.8 billion yuan.
Revenue in the quarter ended Sept. 30 rose to 165.29 billion yuan ($23.28 billion) according to Reuters calculations based on previous statements from Huawei.
“Huawei’s overseas shipments bounced back quickly in the third quarter although they are yet to return to pre-US ban levels,” said Nicole Peng, vice president for mobility at consultancy Canalys.
“The Q3 result is truly impressive given the tremendous pressure the company is facing. But it is worth noting that strong shipments were driven by devices launched pre-US ban, and the long-term outlook is still dim,” she added.
The company said it has shipped 185 million smartphones so far this year. Based on the company’s previous statements and estimates from market research firm Strategy Analytics, that indicates a 29% surge in third-quarter smartphone shipments.
Still, growth in the third quarter slowed from the 39% increase the company reported in the first quarter. Huawei did not break out figures for the second quarter either, but has said revenue rose 23.2% in the first half of the year.
“Our continued strong performance in Q3 shows our customers’ trust in Huawei, our technology and services, despite the actions and unfounded allegations against us by some national governments,” Huawei spokesman Joe Kelly told Reuters.
The US government alleges Huawei is a national security risk as its equipment could be used by Beijing to spy. Huawei has repeatedly denied its products pose a security threat.
The company, which is now trying to reduce its reliance on foreign technology, said last month that it has started making 5G base stations without US components.
It is also developing its own mobile operating system as the curbs cut its access to Google’s Android operating system, though analysts are skeptical that Huawei’s Harmony system is yet a viable alternative.
Still, promotions and patriotic purchases have driven Huawei’s smartphone sales in China — surging by a nearly a third compared to a record high in the June quarter — helping it more than offset a shipments slump in the global market.