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BUSINESS
Monday, March 1, 2010
Bank reports solid income despite market volatility
GIB records $163.2 million operating income for 2009 MANAMA: At their meeting on Saturday, the board of directors of Gulf income of $163.2 million for 2009. This was only 9 per cent lower than the prior International Bank BSC (GIB) approved the consolidated financial statements year operating income of $179.8 million, despite the ongoing market volatility for the year ended 31st December 2009. GIB recorded consolidated operating and the challenging economic environment prevailing during the year. Total income of $286.0 approach to provisioning, the provision charge, the Bank Bank through the further Importantly, the reduction in million was 11 per cent lower Bank made significant addi- recorded a net loss of $152.6 diversification of funding the loan volume was achieved than in 2008 while total tions to both specific and non- million for the year. This was sources and a reduction in the while maintaining revenue expenses at $122.8 million specific loan provisions in a significant improvement asset and liability mismatch; levels from the Bank’s stratewere 14 per cent down on the 2009. In view of the prevailing over the net loss of $396.2 and the alignment of the gically important GCC lendprior year. Within operating economic conditions, the million recorded in the previ- Bank’s organization and infra- ing activity. Enhancements to income, there was a signifi- Bank increased its non-spe- ous year. A net loss of $132.4 structure, and associated loan margins to reflect the cant year-on-year improve- cific loan provision so as to million was recorded in the costs, in order to maintain its new market dynamics offset ment in trading income maintain provisions at a level fourth quarter being entirely historic efficient cost-to- the impact of lower lending volumes.” resulting from the elimination consistent with the historical attributable to an exceptional income ratio.” He added “The Bank’s Al-Suhaimi continued “I of trading losses incurred in highest ever corporate default loan provision charge of the prior year following the rates. As a result, the non- $157.3 million. At the pre- am pleased to report that funding profile was signifitermination of all proprietary specific loan provision was provision level, the Bank these key objectives were all cantly enhanced by a groundtrading activities as part of increased by $60.0 million to recorded operating income of successfully achieved. The breaking Saudi Riyal 2 billion bond issue in the Bank’s derisking initia- $240.0 million at the end of $30.2 million in the fourth achievements and develop- 3-year ments in 2009 have put GIB November. This was the first tives. A year-on-year 2009. This represented 2.6 quarter. GIB’s Chairman, HE in a considerably stronger, bond to be issued by a finandecrease in net interest times the carrying amount of income was attributable to unsecured past due loans, Jammaz bin Abdullah Al- leaner, and more efficient and cial institution in the the deleveraging of the bal- thereby providing a highly Suhaimi, commented “GIB focused position to begin Kingdom of Saudi Arabia in ance sheet in the current conservative buffer in the entered the year facing a chal- looking forward. I am confi- 2009. The bond issue was challenging environment and current uncertain environ- lenge to its future growth as dent that the Bank is well oversubscribed more than the negative impact on inter- ment and minimizing future one of the region’s leading placed to take advantage of three times. The demand institutions. new business opportunities, from a diverse group of highest earnings of the historical- provisioning requirements. financial ly low interest rate environ- The net loan and investment Accordingly, the Board of continue its key role in Saudi ly respected institutional ment. Market conditions also securities provision charge Directors and Management Arabia and the region as a investors reflected not only contributed to lower fee- for the year amounted to identified and addressed a leading financial institution, the market’s strong confirelated income. A $20.1 mil- $313.7 million. The net provi- number of key issues, name- and ensure prosperity for all dence in GIB, but also manifests the dynamism of Saudi lion or 14 per cent year-on- sion charge principally related ly: deleveraging and derisking its stakeholders.” Dr Yahya bin Abdullah Arabia’s economy and its year decrease in total expens- to exceptional events for the balance sheet through a GIB’s Chief growing capital markets. GIB es reflected the implementa- which the potential losses managed reduction in the loan Alyahya, an associated Executive Officer stated also signed a $4 billion Euro fully provisioned. portfolio; tion of effective measures to were align the cost base with the Excluding the provisions restructuring of the loan port- “The managed reduction in Medium Term Note (EMTN) Bank’s current operating relating to these events, the folio to reduce undue concen- the loan portfolio has result- program in the fourth quarmodel, and further improve- provisioning requirements in trations and eliminate lower ed in a decrease in the loan to ter, providing a platform to ments in operational efficien- 2009 were limited reflecting rated exposures; the termina- equity ratio from 6.7 at the diversify its investor base the high quality of the Bank’s tion of all proprietary trading beginning of 2009 to a more and the flexibility to further cies. In keeping with GIB’s tra- loan portfolio. After taking activities; the strengthening comfortable multiple of 5.2 at improve the maturity profile ditional conservative account of the exceptional of the funding position of the the end of the year. of its liabilities.”
Merrill Lynch Wealth Management appoints O’Neill as CIO for EMEA LONDON: Bank of America Merrill Lynch announced the appointment of Bill O’Neill as Chief Investment Officer, Europe, the Middle East and Africa (EMEA) Wealth Management. Based in London, O’Neill will report to David Jervis, Head of EMEA Merrill Lynch Wealth Management, and Michael O’Keeffe, Chief Investment Officer, Merrill Lynch Global Wealth Management. O’Neill has been a senior member of the Chief Investment Office team since 2007. The Chief Investment Office plays a key role in providing investment intelligence to financial advisors and portfolio managers. In his role as Chief Investment Officer, O’Neill will further enhance the team’s offering to a growing client base across the region. O’Neill has 28 years of experience in the institutional market as an economist and strategist, both on the sell and buy-side. O’Neill joined Merrill Lynch in October 2007 as a consultant for Global Wealth Management EMEA. Prior to this, he worked at Barclays Wealth as a leading member of its asset allocation team covering multi-asset portfolios. From 2001 to 2005, O’Neill worked in the Global Strategy team at JP Morgan Asset Management focused on asset allocation. Before JP Morgan, he was a member of HSBC Investment Bank’s global strategy group for ten years, first in Sydney, Australia, and later in London, UK. David Jervis, Head of EMEA Merrill Lynch
Bill O’Neill Wealth Management said, “The Chief Investment Office is pivotal in providing Merrill Lynch EMEA Wealth Management’s professionals with intelligence to best structure investments for their clients. We are delighted with Bill’s appointment as Chief Investment Officer.”
Masdar to sponsor CNN’s series ‘Earth’s Frontiers’ ABU DHABI: The Abu Dhabi Future Energy Company, Masdar begins its 2010 commercial association with CNN International with the exclusive sponsorship of the network’s newest monthly environmental series, ‘Earth’s Frontiers’, due to launch to international audiences on 25th February. As CNN seeks to set the agenda for moving the sustainability debate forward, the multi-platform advertising campaign extends the Masdar brand footprint, with their first international program sponsorship, connecting with CNN’s audience of opinion leaders on air, online, in print and through a series of global debates. Rani R Raad, Senior VP Advertising Sales, CNN International comments: “Masdar’s bold vision and leadership in future energy is a great fit for this innovative programming initiative and we’re very pleased to have them on board as our commercial partners. This advertising campaign is a turn-key international media solution, on every platform and we look forward to seeing the Masdar brand con-
nect with CNN’s high profile audiences - so many of whom have a huge interest in sustainability and the economics of future energy.” Wadi Ahmed, Director of Marketing & Corporate Communications, said: “Masdar is committed to finding viable solutions to the world’s future energy challenges, which is why we are delighted to partner with CNNs new ‘Earth’s Frontiers’ series. These cutting edge programs will not only serve to educate viewers but will also help to raise the profile of the challenges that the world faces in relation to global resources, helping to push these issues to the forefront of political and media consciousness. The world has started to take notice of the strategic role that Abu Dhabi is increasingly playing on the global stage; exemplified by CNNs recent decision to launch its fourth broadcast facility in the emirate. Our commercial partnership, with what is one of the world’s leading news broadcasters, allows us to communicate Masdar’s unique proposition and reinforce Abu Dhabi’s visionary
approach in the global future energy market to audiences across the world,” he concluded. The Masdar campaign includes exclusive sponsorship of advertorial vignettes made by CNN Ad Sales’ dedicated in-house production unit Turner Commercial Productions. The series of five vignettes airing throughout the month, will serve to highlight Masdar’s varying initiatives in renewable energy from the Masdar Institute with its partnership with MIT to Masdar City, a groundbreaking project to build the first carbon neutral city of its kind in the world. Masdar also sponsors four 30-minute quarterly televised debates held in major cities around the world where CNN hosts discussions between leading environmental entrepreneurs, business leaders and personalities, bringing the issues and Masdar branding front and centre with CNN’s audiences worldwide. The commercial partnership affords Masdar the license to leverage Earth’s Frontiers programming assets including the vignettes and debates for internal purposes.
in the news Saudi regulator fines top Islamic lender RIYADH: Saudi Arabia’s regulator has fined the country’s biggest Islamic bank, Al-Rajhi, for not notifying it about the resignation of two senior executives, the regulator said yesterday. The fine is the latest action by the Capital Market authority (CMA) to enforce greater adherence to corporate governance following debt defaults at two family owned companies. CMA fined the bank and two smaller listed firms 50,000 riyals ($13,330) each for failing to notify markets about changes in their top management last year, CMA said in a statement posted on the bourse website. A spokesman for Rajhi could not be immediately reached for comment.
Egypt domestic liquidity up CAIRO: Egypt’s domestic liquidity rose at an annualised rate of 9.38 percent to 867.7 billion Egyptian pounds ($158 billion) in January, slower than the 9.46 percent rise a month earlier, the central bank said yesterday.
Sinai Cement 2009 net profit jumps CAIRO: Egypt’s Sinai Cement said consolidated net profit rose 62 percent in 2009 to 671.5 million Egyptian pounds ($122 million), the Egyptian stock exchange reported yesterday. The firm last year reported net profit of 414.1 million pounds for 2008. The stock exchange gave no other details on the company’s consolidated results. Sinai Cement’s shares closed 2.6 percent higher yesterday at 54.89 pounds. SABIC says to hike steel prices RIYADH: State-controlled Saudi Basic Industries (SABIC) will raise prices of steel rebar and wire rod by 100 riyals ($26.7) per ton as of yesterday, the company said. Higher iron ore and scrap metal costs led to the increase, SABIC’s viceChairman for metals AbdulAziz bin Al-Humaid said in a statement emailed to Reuters. This is the first time SABIC has raised steel prices since 2008. SABIC controls the kingdom’s biggest steel producer Hadeed.
French Economy Minister Christine Lagarde says she personally believed that derivatives on sovereign debt, such as credit default swaps (CDS), had to be either tightly regulated, limited or even banned.
French FM says state debt CDS should be banned PARIS: French Economy Minister Christine Lagarde said yesterday she personally believed that derivatives on sovereign debt, such as credit default swaps (CDS), had to be either tightly regulated, limited or even banned. CDS, which are used by investors to hedge against the risk of default by a borrower, together with other derivatives, have been the subject of mounting criticism as they may have helped conceal Greece’s debt problems. The Federal Reserve and securities investigators are currently looking at how Goldman Sachs may have helped Greece disguise the size of its budget deficit though the use of derivatives. Lagarde had previously called for better regulation of the market for sovereign credit default swaps but had stopped short of suggesting a ban. “I think that derivative products... the CDS on sovereign debt have to be at least very, very regulated, rigorously
regulated, limited or banned, this is a personal position on financial instruments,” Lagarde told Europe 1 radio. Lagarde said she had no doubt Greece would be able to refinance its debt with the help of public, private funds or both. Revelations that Greece’s deficit was three times bigger than originally forecast has plunged the country into a debt crisis. A German member of European parliament said on Saturday that Germany, France and the Netherlands planned to buy Greek bonds to help Athens refinance its debt. “I have no doubt that Greece will be able to refinance itself, using means which we are currently exploring, and for which we have a number of propositions,” Lagarde told Europe 1. “It would involve private partners or public partners or both.” Lagarde declined to give more details on the matter. She added it was “out of the question” that Greece would leave the euro. —Reuters
Iraq to develop Nassiriya after Nippon talks end Iraq sets production levels for Zubair, W Qurna Phase One BASRA: Iraq plans to develop the Nassiriya oilfield on its own after talks with a Japanese group led by Nippon Oil Corp reached a dead end, the head of Iraq’s South Oil Co said yesterday. Nippon and its partners, oil explorer Inpex Corp and engineering firm JGC Corp, had been negotiating the deal since the first half of last year but a final deal was held up by issues over financing. “Talks with the Nippon group have reached a dead end, and we will start developing the field through national efforts,” Dhiya Jaafar, head of the SOC told Reuters in an interview in the oil hub of Basra. Jaafar did not give more details. The largely undeveloped Nassiriya field is listed as having reserves of under 5 billion barrels. Nippon Oil Corp had projected it could pump up to 200,000 bpd within two years, according to Iraqi officials. Iraq plans to drill 10 oil wells in Nassiriya this year, Jaafar said. “We are capable of boosting production from Nassiriya from 10,000 bpd to 50,000 bpd by the end of 2010,” he said. Iraq’s Oil Ministry has also agree with foreign oil firms to set baseline production levels for West Qurna Phase One and Zubair oilfields, Jaafar said. Exxon Mobil and Royal Dutch Shell agreed to a baseline production level at the 8.7billion-barrel West Qurna Phase One oilfield of 244,000 bpd. Italy’s Eni-led group agreed to set the baseline production level at Iraq’s 4-billion-barrel Zubair oilfield at 183,000 bpd. Iraq has struck a series of deals with foreign oil companies to develop its vast oilfields in a bid to boost production capacity to 12 million bpd, from around 2.5 million bpd now. —Reuters
MindTree efforts to leverage Mideast IT services market DUBAI: MindTree Ltd, a global IT solutions company, has announced that it is stepping up its efforts to leverage the Middle East IT services market, which is expected to hit $3.5 billion by 2011, according to recent reports from the Economist Intelligence Unit (EIU). Identified by the company as one of its fastest growing regions, the Middle East forms part of MindTree’s ‘Rest of the World’ (ROW) market along with Japan, Australia and Singapore, which collectively contributed 10.8 per cent to its total earnings in Q3 FY ‘09-’10. MindTree sees the Middle East region to play a key role in its plan to become a USD 1 billion organization. MindTree is taking particular interest in the State of Kuwait, with EIU forecasting that the country’s IT services market will grow annually by 12 per cent to reach 0.254 billion by 2011. MindTree is gearing up to address the need by further strengthening its alliance management, boosting its sales force, initiating and reinforcing strategic partnerships with local companies, and focusing on key sectors such as the government and the manufacturing industry. “Following the decline in 2009, the IT services mar-
Anjan Lahiri, president and CEO - IT Services, MindTree ket in the Middle East region is poised for another round of growth in 2010. Companies in the region are becoming increasingly interested in deploying high-end technologies to gain competitive advantage and save costs,” said Anjan Lahiri, President and CEO IT Services, MindTree. “Through the years, MindTree has partnered with major technology players in the region, and delivered leading edge solutions to our customers.” The demand for decision-makers to have access to accurate intelligence at their fingertips is also driving the growth of data warehousing and business intelligence in the Middle
East, particularly in Kuwait. MindTree has outlined specific plans to work with strategic local partners for markets such as Kuwait, Qatar and Saudi Arabia following its success in Oman, Bahrain, and UAE. Specializing in IT services and ERP, Independent Testing, Infrastructure Services, and Analytics, MindTree has completed a number of high-profile implementations for several prestigious organizations in the region. The company also maintains strong relationships with Oracle (Oracle Partner), SAP (Partner Edge Status), IBM and Microsoft (Service Ready Partner).
Five Saudi companies eye IPOs RIYADH: Three Saudi insurance companies, a property developer and an appliance manufacturer will sell shares to the public before the end of May, the bourse regulator said yesterday. Saudi property developer Knowledge Economic City plans to raise 1.02 billion riyals ($272 million) from its initial public offering, the Capital Market Authority said in a statement. It will offer 102 million shares at 10 riyals each in the May 24-30 period IPO, it added. CMA also approved IPOs for 30 percent of the capital of three Saudi
insurance companies over the March 22-28 period. Solidarity Saudi Takaful insurance firm, affiliated to Bahrain-based lender Ithmaar, plans to raise 222 million riyals by selling 22.2 million shares for ten riyals each. Amana Cooperative Insurance company plans to raise 128 million riyals by selling 12.8 million shares at 10 riyals each, the statement said. Al-Wataniya Cooperative Insurance Company plans to raise 30 million riyals by selling 3 million shares for ten riyals each.
Al Hassan Ghazi Ibrahim Shaker Co (HGISC) will offer 10.5 million shares over the April 26-May 2 period, CMA said. A book-building process will determine pricing for HGISC’s IPO, it added. According to its website, HGISC makes and maintains air conditioners and home appliances. Several Saudi companies have unveiled IPO plans as the Saudi bourse is among the best-performing in the Gulf, but last week travel agent AlTayyar Travel Group cancelled its IPO plansdue to weak demand. —Reuters