UAE’S First Abu Dhabi Bank books profits of $3.4bn

UAE’S First Abu Dhabi Bank books profits of $3.4bn
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Updated 27 January 2022

UAE’S First Abu Dhabi Bank books profits of $3.4bn

UAE’S First Abu Dhabi Bank books profits of $3.4bn
  • The outstanding performance reflects indicators of economic recovery and positive momentum for the bank's core business

RIYADH: Largest bank in the UAE, First Abu Dhabi Bank announced its financial results of the last fiscal year with profits of 12.5 billion dirhams ($3.4 billion).

This figure compares to 10.6 billion dirhams in 2020, representing a 19 percent increase, according to a statement.

The outstanding performance reflects indicators of economic recovery and positive momentum for the bank's core business, the statement revealed.

Moreover, the group’s revenue saw a 17 percent surge thanks to strong trading performance and growth in fee-generating business. This contributed to alleviating the repercussions of low interest rates, the statement said.

Operational costs rose when compared to the corresponding period in 2020. This comes as a result of the persisting investments in digital and strategic initiatives as well as taking into consideration Egypt’s Bank Audi business.

Asset quality maintained adequate rates thanks to the proper management of risks and stimulus measures. These were within the framework of the comprehensive economic support plan tailored for the country’s central bank.

The group also maintained strong levels of liquidity, financing, and capital altogether.

Founded in 2017, FAB provides financial solutions, products, and services through its corporate and investment banking and personal banking franchises. 


MENA Project Tracker: Algeria’s Sonatrach, Italy’s Eni cancel work on $500m pipeline project

MENA Project Tracker: Algeria’s Sonatrach, Italy’s Eni cancel work on $500m pipeline project
Updated 18 sec ago

MENA Project Tracker: Algeria’s Sonatrach, Italy’s Eni cancel work on $500m pipeline project

MENA Project Tracker: Algeria’s Sonatrach, Italy’s Eni cancel work on $500m pipeline project

RIYADH: Algeria’s Sonatrach and Italy’s Eni have both terminated work on a major pipeline project in Algeria. On another note, UAE’s Masdar and National Petroleum Construction Co. have agreed to explore potential partnerships in the offshore wind, green hydrogen, among other renewables. Elsewhere, contractors have been requested to submit bids for Emaar’s Lamborghini-branded villas in Dubai. Meanwhile, Saudi Arabia’s El-Seif has begun working on Aramco’s public private partnership staff accommodation complex.

·      Algerian national state-owned oil company Sonatrach and Italian multinational oil and gas company Eni have canceled work on a $500 million worth pipeline project in Algeria, MEED reported. The project’s scope included laying pipelines, installing valve stations, installing a control system, installing fenced burn pits, among other tasks. 

·      UAE government-owned renewable energy company Masdar and National Petroleum Construction Co. are planning to explore potential partnerships in offshore wind, green hydrogen, and other renewable energy technologies, MEED reported. While both firms will initially focus on offshore wind, they will later explore the remaining sectors including battery storage technologies. 

·      Contractors are expected to submit their bids for a package for multinational real estate developer Emaar’s Lamborghini-branded villas to be located at Dubai Hills Estate by May 19, MEED reported. The package is the building of 40 six-bedroom villas. The contractors prequalified for the package include local firms al-Basti & Muktha, ASGC, and Engineering Construction Co., besides India’s Shapoorij Pallonji.

·      Saudi Arabian construction engineering firm El-Seif Engineering Contracting has commenced work on Saudi Aramco’s public private partnership, also known as PPP, staff accommodation complex to be located in oil complex Tanajib. The package which was awarded to the firm includes the building of 2,500 housing units, a food court, parking facilities, and infrastructure. 


Shares slump as retail giants sound stagflation alarm

Shares slump as retail giants sound stagflation alarm
Updated 3 min 32 sec ago

Shares slump as retail giants sound stagflation alarm

Shares slump as retail giants sound stagflation alarm
  • Bond markets rallied in the dive for safety and on bets that interest rate rises may get recalibrated

LONDON: Heavy falls in European and Asian stock markets followed Wall Street’s worst day since mid-2020 on Thursday, as stark warnings from some of the world’s biggest retailers underscored just how hard inflation is biting.

Bond markets rallied in the dive for safety and on bets that interest rate rises may get recalibrated, but it was the gloom striking down equities after Wednesday’s $25 billion wipeout in US retail giant Target’s shares that dominated the action.

Europe was down 2 percent by lunch, led by a 2.5 percent fall in its retail sector , while scarlet red US futures and a sharp overnight Chinese tech tumble pushed MSCI all-country world back toward 1-1/2 year lows.

That 47-country index is now down almost 18 percent in what is its worst start to a year on recent record.

“Target and Walmart coming out with disappointing numbers has really, really spooked people,” said Close Brothers Asset Management’s Chief Investment Officer Robert Alster.

“We are going to see a raft of downgrades to US GDP (forecasts) now... it really looks like we are running into a faster slowdown than we expected.”

The S&P 500 had lost 4 percent on Wednesday while the Nasdaq had fallen almost 5 percent as interest-rate sensitive megacap stocks Amazon, Nvidia and Tesla dropped close to 7 percent while Apple tumbled 5.6 percent.

Asia-Pacific shares ex-Japan then snapped four days of gains to wilt 1.8 percent, dragged down by a 1.65 percent loss for Australia’s resource-heavy index, a 2.5 percent drop in Hong Kong. Tokyo’s Nikkei shed 1.9 percent too.

Tech giants listed in Hong Kong were hit particularly hard, with the index falling nearly 4 percent. China’s online behemoth Tencent sank more than 6 percent after it reported no revenue growth in the first quarter, its worst performance since going public in 2004.

China’s technology and property sectors are still reeling from a year-long government crackdown and slowing economic prospects stemming from Beijing’s strict zero-COVID policy, even though soothing comments from Vice Premier Liu He to tech executives buoyed sentiment on Wednesday.

Central Focus
The focus remained on what central banks will now do as they walk the tightrope of trying to regain control of inflation, which is now at 40-year highs in some countries, without causing painful recessions.
“We will have to discuss what we can do together in our respective areas of responsibility to avoid stagflation scenarios,” German finance minister Christian Lindner said as he arrived for a two-day meeting of top central bankers near Bonn.
Two top US central bankers had said on Wednesday that they expect the Federal Reserve to downshift to a more measured pace of rate rises after July, but in Europe traders were suddenly pricing in as many as four ECB hikes. It hasn’t raised interest rates for a decade.
However, while things haven’t reached the point of no return, they are seemingly heading in the direction of “out of control. That is probably the most worrying part for the market,” said Hebe Chen, market analyst at IG.
In the currency markets, the US dollar eased back 0.3 percent against a basket of major currencies, after a 0.55 percent jump overnight that ended a three-day losing streak.
The euro gained 0.4 percent on the ECB rate rise view, while the Aussie dollar gained 0.8 percent and New Zealand’s kiwi dollar bounced 0.6 percent, helped by an easing of Shanghai’s COVID lockdown in China.
US Treasuries rallied overnight and were bright at 2.84 percent in Europe where the risk-adverse mood also saw Germany’s 10-year bond yield — which moves inverse to price — fall back below the closely watched 1 percent level.
Inflation worriers watched oil prices ease again too, as fears over slower economic growth and signs that Venezuelan oil might be coming back onto the market outweighed lingering fears over tight global supplies.
Brent crude went from $110.41 to $108.04 per barrel in London trading, while US crude dipped to $108.05 a barrel and gold, which has fallen more than 12 percent since March, clawed up to $1,830 an ounce.
(Additional reporting by Francesco Canepa in Koenigswinter, Germany, Stella Qiu in Beijing and Alun John in Hong Kong; Editing by Nick Macfie and Chizu Nomiyama)


ECB to force UK-based investment banks to relocate staff, trading

ECB to force UK-based investment banks to relocate staff, trading
Updated 51 min 12 sec ago

ECB to force UK-based investment banks to relocate staff, trading

ECB to force UK-based investment banks to relocate staff, trading
  • Banks could be required to appoint a head of trading desk within the euro area legal entity or may be asked to ensure the desk has the adequate infrastructure and number and seniority of traders

FRANKFURT: Too many global investment banks continue to serve euro zone clients out of London and the European Central Bank plans to force them to relocate senior staff and trading activity to the bloc, ECB supervisory chief Andrea Enria said on Thursday.

The ECB has long battled the industry’s biggest players, who are reluctant to relocate activities after Brexit, despite explicit demands by the ECB, which supervises the bloc’s biggest financial institutions.

In a sign that patience is wearing thin, Enria said the ECB will issue “binding decisions” to key investment firms, prescribing action on a case-by-case basis.

“We want to ensure that incoming legal entities have onshore governance and risk management arrangements that are commensurate, from a prudential perspective, with the risk they originate,” Enria said in a blog post. “The extent of the actual relocation and specific booking configuration will depend on the current set-up of each bank.”

Banks could be required to appoint a head of trading desk within the euro area legal entity or may be asked to ensure the desk has the adequate infrastructure and number and seniority of traders to manage risk locally, the ECB said.

They could also be asked to establish a solid governance and internal control framework of remote booking practices and to ensure limited reliance on intragroup hedging.

Of the trading desks assessed by the ECB at seven key institutions, around 70 percent still used a back-to-back booking model, a frowned upon practice in which a firm transfers risks to a third party or to another intragroup entity which then hedges it.

It also concluded that 20 percent of desks were organized as split desks, in which a duplicate version of the primary trading desk located offshore is established within the euro area legal entity to manage the part of the risk originated there.

These practices remove risk management expertise from the euro zone entity, leaving the local unit vulnerable in case of market turbulence.

“It is our duty to protect the depositors and other creditors of the local legal entity, prevent the disruption of banking services and safeguard broader financial stability in our area of jurisdiction,” Enria said. 


Russian pipeline gas exports to EU fall 4.5% as supplies through Ukraine get hit

Russian pipeline gas exports to EU fall 4.5% as supplies through Ukraine get hit
Updated 19 May 2022

Russian pipeline gas exports to EU fall 4.5% as supplies through Ukraine get hit

Russian pipeline gas exports to EU fall 4.5% as supplies through Ukraine get hit

RIYADH: Russia’s gas pipeline exports through its main trade routes — an aggregate of Nord Stream 1, Ukraine transit, and Yamal pipeline — fell 4.5 percent on May 16, a recent market note issued by Rystad Energy said.
The dip is caused due to a near 30 percent decline in the flows via Ukraine’s gas transportation system.
The European benchmark for natural gas prices — Dutch TTF M+1 — surged 15 percent on May 12 as Moscow placed sanctions on Gazprom units that operate in countries that have imposed sanctions on Russia since the start of the Ukraine war, according to another note from RE.
The Russian government has barred 31 companies from conducting transactions and entering Russian ports including Gazprom Germania and Europol Gas -– the owner of the Polish part of the Yamal Europe pipeline.
The Yamal-Europe pipeline is seen as a potential alternative route to the Russian transits via Ukraine that has been put in jeopardy due to the ongoing war between the two countries.
Russia had previously halted supplies to Poland and Bulgaria to take action against “unfriendly” countries that refuse to make payments in rubles, according to Bloomberg.
Shipments via Ukraine, on the other hand, were also curtailed on May 11 after a key cross-border entry point was put out of action because of troop activity on the ground.
“Current gas contracts could be deemed null and void because of this decision and supplies could be stopped unilaterally by Gazprom, citing a regulatory order outside of their control,” Kaushal Ramesh, a senior analyst at Rystad Energy said in a May 12 note.
“There is historical precedent for Gazprom stopping gas flows as they did several times between 2005-2014,” Ramesh pointed out then.
While this situation is not probable, it will put pressure on Europe “to arrange for additional LNG, speed up plans for a buyer’s alliance and potentially consider demand-side measures such as gas rationing,” the analysis said.
The EU, however, has been taking precautionary measures to ensure appropriate storage levels. The current stock is expected to last through most of 2022 taking into consideration the possibility of a complete halt of Russian flows.
But the outlook for winter 2022 supply is now much more pessimistic, the note said.
As Europe and its allies in the US and the UK impose a wide range of sanctions targeting Russia over the war in Ukraine, they are yet to find alternatives to Russian gas that makes up 40 percent of their consumption.


Oil prices extend losses on fears of economic slowdown

Oil prices extend losses on fears of economic slowdown
Updated 19 May 2022

Oil prices extend losses on fears of economic slowdown

Oil prices extend losses on fears of economic slowdown
  • Russian Deputy Prime Minister Alexander Novak said on Thursday that Moscow would send any oil rejected by European countries to Asia and other regions

LONDON: Oil prices fell on Thursday, following earlier gains, on concerns that high fuel prices could hurt economic growth, but planned easing of restrictions in Shanghai and a tight supply outlook capped losses.

Brent crude futures for July were down $1.25, or 1.2 percent, at $107.86 a barrel by 0932 GMT. US West Texas Intermediate (WTI) crude futures for June fell $1.96, or 1.8 percent, to $107.63 a barrel.

Front-month prices for both benchmarks fell about 2.5 percent on Wednesday.

“Slumping stocks led by the US retail sector raised concerns about growth, and with that, demand for fuels,” Saxo Bank analyst Ole Hansen said.

Heavy falls on European and Asian stock markets followed Wall Street’s worst day since mid-2020, as stark warnings from some of the world’s biggest retailers underscored just how hard inflation is biting.

The looming possibility of a European Union ban on Russian oil imports has been supporting prices, however.

This month the EU proposed a new package of sanctions against Russia for its invasion of Ukraine, which Moscow calls a “special military operation.”

That would include a total ban on oil imports in six months’ time, but the measures have not yet been adopted, with Hungary among the most vocal critics of the plan.

Russian Deputy Prime Minister Alexander Novak said on Thursday that Moscow would send any oil rejected by European countries to Asia and other regions.

Novak said Russian oil production was about 1 million bpd lower in April but had increased by 200,000 bpd to 300,000 bpd in May with more volumes expected to be restored next month.

On Wednesday, the European Commission unveiled a 210-billion-euro ($220-billion) plan for Europe to end its reliance on Russian fossil fuels by 2027, and to use the pivot away from Moscow to quicken its transition to green energy.

Also, US crude inventories fell last week, an unexpected drawdown, as refiners ramped up output in response to tight product inventories and near-record exports that have forced US diesel and gasoline prices to record levels.

Capacity use on both the East Coast and Gulf Coast was above 95 percent, propelling those refineries close to their highest possible running rates.

In China, investors are closely watching plans to ease coronavirus curbs from June 1 in the most populous city of Shanghai, which could lead to a rebound in oil demand from the world’s top crude importer.