UK economy strengthens recovery as virus lockdown eases

UK economy strengthens recovery as virus lockdown eases
Britain’s economy had contracted 1.5 percent overall in the first quarter. (AP)
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Updated 12 June 2021

UK economy strengthens recovery as virus lockdown eases

UK economy strengthens recovery as virus lockdown eases
  • Finance minister cautiously welcomes the 2.3% growth figure as the Delta variant spreads

LONDON: Britain’s economy gathered pace in April as the government eased its coronavirus lockdown, official data showed Friday, with Finance Minister Rishi Sunak cautiously welcoming the 2.3-percent growth figure as the Delta variant spreads.
It was the fastest monthly output for the UK gross domestic product since July last year “as government restrictions affecting economic activity continued to ease,” the Office for National Statistics (ONS) said in a statement.
Britain’s economy had contracted 1.5 percent overall in the first quarter, although had already begun to bounce back strongly in March with GDP of 2.1 percent.
The UK’s overall output for April remains 3.7 percent below pre-pandemic levels seen in February last year.
“Overall, the economic recovery stepped up another gear in April and GDP is on track to return to its February level before the end of the year,” noted Thomas Pugh, UK economist at Capital Economics research group.
“If anything, the economy could regain its pre-crisis level even sooner.”
April’s growth was driven by the service sector, which jumped 3.4 percent as consumers once again started to visit nonessential physical stores, restaurants and bars and as more children returned to onsite lessons, the ONS said.
Output in the production sector however dropped 1.3 percent during the same month, recording the first fall since January. And construction contracted 2.0 percent following a strong March.
Since May, the government has further eased restrictions, with people now allowed to eat and drink inside restaurants and bars, having initially been able to sit only outside.
“Today’s figures are a promising sign that our economy is beginning to recover,” said Chancellor of the Exchequer Sunak.
His cautious response comes amid mounting concerns over whether the emergence of the Delta variant of the coronavirus threatens the UK government’s provisional June 21 deadline for further lifting virus restrictions.
The Delta variant, which first emerged in India, is now the dominant strain in the UK, according to Public Health England figures.
And the UK government on Friday said it is 60 percent more transmissible in households than the variant that forced the country to lock down in January.
Separate data Friday showed UK exports fell 0.6 percent in April after two months of growth, with drops in exports to non-EU countries offsetting increases to nations within the bloc, the ONS said.
While exports to the EU rose 2.3 percent month-on-month, they remained 9.0-percent below 2019’s average level, or ahead of Britain’s formal exit from the European Union at the start of this year, according to Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
“That is a disappointing performance, given the boom in global trade flows. UK exporters have lost market share,” he added.
Goods imported to the UK meanwhile grew 3.9 percent in April.
The trade data was published as Britain hit back at French President Emmanuel Macron’s uncompromising stance on Brexit, in a simmering row over new trading arrangements for Northern Ireland.
Macron on Thursday warned London that it was “not serious” to review agreements signed last December, just weeks before the UK left the European single market and customs union.
But Foreign Secretary Dominic Raab insisted that Brussels should be more flexible in its approach to Northern Ireland, which shares the UK’s only land border with the EU.
Under the so-called Northern Ireland protocol, checks are required on some goods heading to the British province from mainland Britain — England, Scotland and Wales.


Saudi Aramco investors expect profit surge after strong first half

Saudi Aramco investors expect profit surge after strong first half
Updated 11 min 41 sec ago

Saudi Aramco investors expect profit surge after strong first half

Saudi Aramco investors expect profit surge after strong first half
  • Investors looking for news on size of dividend
  • JP Morgan predicts $23.7bn of net income

DUBAI: The oil reporting season will reach a climax next week with the announcement of first half results from the biggest company in the sector, Saudi Aramco.

With strong crude prices for most of the six months to June 30, and rising output as OPEC+ constraints were steadily lifted during the period, analysts are expecting a big increase in profits from the Saudi oil giant.

Analyst Christian Malek at JP Morgan is forecasting around $23.7bn of net income, a huge jump on the $6.6bn Aramco reported last year after the oil price collapsed as the COVID-19 pandemic severely hit demand.

“Against a positively trending demand/price backdrop, we expect a robust quarterly net income print from Aramco,” Malek said in a recent report to investors.

Higher oil prices, seasonally higher gas volumes, strong conditions in the petrochemical business and higher throughput from the start up of the Jazan facility will contribute to a strong first half performance, he added.

But analysts will also be looking for news on the dividend. At the time of its flotation in late 2019, Aramco promised at least $75bn per year in payouts to shareholders, but there is increasing speculation that the company might pay a higher special dividend for the first half, buoyed by strong financials. Other big oil companies like Shell, BP and Total all announced measures to boost shareholder returns in results this week.

“There is a logic to the argument for a special dividend this time round,” Malek told Arab News. “Aramco has done fantastically well consolidating fiscally. The majors in the oil sector have all been looking at ways of returning cash to shareholders, and there is no reason Aramco should be an exception.”

Other analysts agreed that there was scope for Aramco to boost its dividend.

“Aramco has had a fantastic year so far, and the results will be good,” said Ranjith Raja, head of MENA oil and shipping research at data group Refinitiv. “Other oil companies announced dividend increases or share buy-backs, so why not Aramco? They would not only be meeting the $75bn promise, but going beyond that, which would be very good for investor sentiment.”

In a program of investor and media calls after the results are announced on Sunday, analysts will ask CEO Amin Nasser about plans for further asset sales after the disposal of a stake in its pipeline business earlier this year, and for an update on the renewed talks about a link-up with Indian refining and petrochemicals group Reliance Industries.

They will also seek guidance on the progress of plans to sell another tranche of shares in Aramco, believed to be under consideration at the company.

Aramco’s finances are regarded as especially strong in a global oil sector that is just beginning to recover from the pandemic recession.

Last week, ratings agency Fitch upgraded Aramco’s status from negative to stable, explaining “Saudi Aramco’s financial profile is conservative compared with that of international integrated oil producers.”

Aramco’s Tadawul-traded shares fell 1.9 percent on Aug. 3 to SR38.25 a piece.


Standard Chartered posts highest half-year MENA profit in 5 years

Standard Chartered posts highest half-year MENA profit in 5 years
Updated 39 min 14 sec ago

Standard Chartered posts highest half-year MENA profit in 5 years

Standard Chartered posts highest half-year MENA profit in 5 years
  • MENA operating profit reaches $476 million, up from $91 million a year earlier
  • MENA income was flat, rose 6 percent in Africa

JEDDAH: Standard Chartered Bank reported its biggest half-year operating profit in the Middle East and North Africa for five years as wealth management income increased and credit impairments fell.

The emerging market-focused lender posted an operating profit in MENA of $476 million in the six months to the end of June, up from $91 million a year earlier, it said in a statement. Globally, it reported a 57 percent increase in pretax profit to $2.55 billion, announced a $250 million share buyback and a $94 million dividend.

Income in the MENA region was flat year on year after being impacted by rate cuts and currency devaluation, which provided a drag of about 8 percent, the bank said. Income in Africa grew by 6 percent on a constant currency basis.

There was a significant improvement in the bank’s return on tangible equity in the region, and it reported a “great turnaround story in the UAE, with significantly improved returns.”

“This is the result of all the hard work the team has put in over the years and the execution of some tough decisions we made to drive efficiencies and reduce risk,” said Sunil Kaushal, regional CEO, Africa and Middle East. “This has happened during a period when the backdrop, while improving, remains uncertain and challenging and is a true testament to the resilience of our underlying business.”

“We are excited about the recent expansion of our network into the Kingdom of Saudi Arabia,” he said. “We will leverage our presence in the Kingdom to promote trade, investment and capital flows in support of the Saudi Vision 2030.”

Standard Chartered has launched digital banking platforms in nine key African Markets – Cote d’Ivoire, Uganda, Tanzania, Ghana, Kenya, Botswana, Zambia, Zimbabwe and Nigeria – the adoption of which has been accelerated by the pandemic, the bank said.


Saudi Arabia’s financial wealth exceeds $1tn as next generation takes over

Saudi Arabia’s financial wealth exceeds $1tn as next generation takes over
Updated 03 August 2021

Saudi Arabia’s financial wealth exceeds $1tn as next generation takes over

Saudi Arabia’s financial wealth exceeds $1tn as next generation takes over
  • Wealth to grow 4.1 percent annually through 2025
  • Saudi Arabia represents 45 percent of GCC financial wealth

RIYADH: Saudi Arabia’s financial wealth is expected to grow by 4.2 percent annually over the next five years, hitting $1.2 trillion in 2025 as the Kingdom sees more young people take over ventures, according to a study by Boston Consultancy Group (BCG).

The Kingdom’s wealth grew by 4.1 percent on annual basis from 2015 to hit $1 trillion in 2020, 84 percent of which is investable wealth, the report said, noting the Kingdom’s resilience in the face of the protracted COVID-19 pandemic.

Last year, Saudi Arabia represented 45 percent of the Gulf Cooperation Council’s (GCC) $2.2 trillion in 2020 of financial wealth, which is forecast to reach $2.7 trillion in 2025, BCG said.

The rise of the next-generation affluent and high-net-worth clients will have impact on the business landscape, BGC said in the report. These individuals, between 20 and 50 years of age, have longer investment horizons, a greater appetite for risk, and often a desire to use their wealth to create positive societal impact as well as earn solid returns, it said.

However, many wealth managers are not yet ready to serve the new young business leaders.

“Saudi Arabia’s growth of wealth has proven to be robust, springing back from challenges presented by the COVID-19 pandemic,” said Mustafa Bosca, managing director and partner at BCG.

“The Kingdom’s Vision 2030 has been a driving force to increasing economic productivity, which also is allowing Saudis to participate in an ever-more-global economy which has enabled growth in wealth despite the many economic disruptions that have occurred in recent times,” he said.


Bahri profit falls 93 percent in H1 as oil transport revenue slumps

Bahri profit falls 93 percent in H1 as oil transport revenue slumps
Updated 03 August 2021

Bahri profit falls 93 percent in H1 as oil transport revenue slumps

Bahri profit falls 93 percent in H1 as oil transport revenue slumps
  • Profit decline attributed to 67 percent drop in oil-transport revenue

JEDDAH: Profits at Bahri, formerly The National Shipping Company of Saudi Arabia, dropped 93 percent in the first half of the year as revenue from transporting oil slumped on lower volumes and prices.

Net profit after zakat and tax of SR82.5 million ($22 million) compared with SR1.18 billion in the same period a year earlier, Bahri said in a filing to the Saudi stock exchange, Tadawul. Total revenue of SR2.48 billion represented a decline of 56 percent on the first six months of 2020.

The drop in profit was attributed to a 67 percent slump in revenue from shipping oil due to the sharp drop in transportation rates and operations.

However, an increase in bunker subsidies and other income along with decrease in zakat and income tax, financing expenses and the provision on trade receivables and contract assets, helped offset the fall in oil-related revenue, the company said.

Bahri, established in 1978 as a joint venture between Saudi Aramco and the Public Investment Fund, owns and manages a fleet of 89 tankers and container ships dedicated to transporting oil, petrochemicals, dry bulk and other cargo.

The company's shares fell 1.9 percent to SR38.25 as of 3:12 p.m. in Riyadh. 


Oman adjusts electricity tariffs to ease burden on citizens

Oman adjusts electricity tariffs to ease burden on citizens
Updated 03 August 2021

Oman adjusts electricity tariffs to ease burden on citizens

Oman adjusts electricity tariffs to ease burden on citizens
  • Oman has been pushing through reforms to ease pressure on public finances

DUBAI: Oman has adjusted its electricity tariffs structure to offer consumers on lower rates more supply, a government official said on Monday, following consumer complaints about steep summer bills.
Household energy costs are sensitive in a country that recently saw protests over unemployment.
The government also wants to keep the public onside as the Gulf state’s ruling sultan, who assumed power last year, continues to push through reforms to ease pressure on public finances in the debt-burdened state. They include a value-added tax, introduced in April, and overhauling an expensive subsidies system.
A Public Services Regulation Authority official told a news briefing that after receiving over 5,000 complaints, authorities had decided to expand consumption categories for households in a move that would be applied retroactively to cover May and June.
Under the adjustment, consumers paying a tariff of 12 baisas ($0.03) per kilowatt/hour (kw/h) will now be able to get up to 4,000 kw/h of electricity, up from a previous cap of 2,000 kw/h.
Consumers paying a tariff of 16 baisas per kw/h will now be able to get up to 6,000 kw/h, against up to 4,000 kw/h previously.
“Most citizens fall under these two segments,” Authority head Mansoor Al-Hinai told reporters.
He said the body has instructed licensed firms to restore services cut off due to late bill payments during the summer.
Protests in May by hundreds of Omanis seeking employment had subsided after Sultan Haitham bin Tariq Al-Said, facing his biggest challenge yet, ordered acceleration of government plans to create thousands of jobs and amid a security crackdown.