Thursday September 2,  2010














Financial  News


UAE budget surplus set to triple


The National


The Federal Government’s consolidated budget surplus should more than triple to Dh14 billion (US$3.81bn) this year if oil prices are sustained at existing levels, says the Arab Monetary Fund (AMF). Nonetheless, it is still a long way short of the Dh197bn budget surplus the country posted in 2008 when crude prices rose to record highs, a report by the Abu Dhabi-based fund said. It said the surplus should be about 6 per cent of national GDP this year, up from Dh4bn last year. Economists expect an improvement in the price of oil from last year to help lift the fortunes of the economy this year. “The main reason for the increased surplus is that the oil price saw a big jump this year,” said Monica Malik, the chief economist at EFG-Hermes in Dubai. EFG Hermes has forecast the surplus to reach 5.6 per cent of GDP this year. Moody’s Investors Service expects the balance to be about 8.4 per cent of national income compared with 0.4 per cent of GDP last year. Oil prices have more than doubled from their lows of below $34 a barrel in December 2008. Younis al Khouri, the Director General of the Ministry of Finance, said last week the UAE was on course to balance its budget after spending about half of its projected Dh43.6bn annual appropriation in the first six months of the year.   


Ministry official chosen as leader of change


Emirates 24|7

Acting Director of Financial Resources Management at the Ministry of Labour Mohamed Saqr Al Nuaimi has been named as one of the leaders of change in Federal government. Al Nuaimi was voted by the Ministry of Finance, the body overseeing the application of the zero-based budget. Al Nuaimi was chosen for the role for his direct contribution to supervising the preparation of the zero-based budget in accordance with the Strategic Plan of the Ministry of Labour. The zero-budgeting is a new orientation of the federal government of UAE and conforms to the strategic direction of the Ministry of Cabinet Affairs.

Banks can deal with fresh exposures: Suwaidi

Emirates 24|7


UAE banks can deal with fresh exposure to debt defaults given their high liquidity and reserves they have built over the past year, Central Bank Governor Sultan bin Nasser Al Suwaidi was quoted on Wednesday as saying. Suwaidi said the country’s 51 banks are still following a tight credit policy but expected them to resume normal lending after the economic situation improves. “The UAE banking sector is capable of facing any economic situation in the future, including difficulties by indebted companies or individuals,” he told the semi-official Arabic language daily Al Ittihad. “The Central Bank is following closely all the developments in the banking sector. I think the capital and reserves controlled by the UAE banks are large and sufficient and the liquidity situation is good.” Suwaidi said the banks’ strong liquidity position is underscored by a surge in their investment in the Central Bank, with their certificates of deposits swelling by more than Dh6.5 billion in July alone. “But banks are still cautious in expanding their credit because of the repercussions of the global financial crisis. I believe they will resume normal lending once economic conditions start to improve. 


UAE economy remains robust due to diversification


Gulf News


Abu Dhabi: The Minister of Economy, Sultan Bin Saeed Al Mansouri, said the UAE economy remains robust thanks to the diversification provided for by the wise leadership's economic policies. The UAE economy is capable of achieving a growth rate of 2.5 per cent in 2010, compared to 1.3 per cent last year, while inflation is expected to fall to 1.1 per cent, down from 1.56 last year, according to Al Mansouri in statements during a Ramadan gathering at Mina Salam Hotel, Dubai. The UAE economy weathered the financial crisis thanks to certain measures and incentive reforms which helped minimise the losses, he noted. "The UAE GDP in 2009 reached Dh914.3 billion," Al Mansouri said. "Non-oil sectors accounted for about 71 per cent in the country's 2009 GDP compared to 66.5 per cent in 2008," he added. Strategy aims Industry is expected to account for 20-25 per cent in the UAE's GDP in the years to come; up from 16.2 per cent this year, he noted, adding that the Ministry's strategy aims to push up this contribution to 90 - 97 per cent. 


Gulf banks recovering despite bad debts


Khaleej Times


DUBAI — Gulf banks have spent more than 20 billion dollars on provisions for bad debt and lost investments but are showing signs of returning to high profitability, Standard and Poor’s said Wednesday.  The rating agency said that the Gulf banks it rates have spent “more than 20 billion dollars (more than 15 billion euros) on loan loss provisions and investment impairments since 2008.”  But it said it believed those banks appeared to show “signs of improvement,” saying that the economies of the Gulf Cooperation Council (GCC) were starting to recover, thanks to high oil prices and government policies.  The GCC comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.  “We believe the asset quality of Gulf banks should improve from 2011 and that their good margins and efficiency will provide a solid foundation for their return to high profitability,” said Standard and Poor’s credit analyst Mohamed Damak.  But the agency added that challenges lay ahead.   


UAE fourth in expats financial quality of life list: HSBC


Emirates 24|7


The financial crisis has failed to dampen spirit of expatriates in the UAE as they believe that their financial quality of life has improved this year compared to last year. In a survey of 25 countries conducted by HSBC bank showed that the UAE’s ranking improved by one notch in 2010 against last year, placed fourth worldwide in financial quality of life among expatriates. Majority of respondents are still sanguine about the UAE economy, with more than three quarters claiming that they have not been directly hit by the economic malaise and don’t plan to return home. The survey is based on four main factors which are annual income in excess of US$200,000; a monthly disposable income in excess of US$3,000; an increase in saving while living / working abroad (in their current country of residence); and having at least two luxury items in the country in which they live.  Emirate is ranked sixth in wealth hotspot, eighth in income and sixth in disposable income and fourth in luxuries worldwide. 


 DIFC Investments to make payment on sukuk


Emirates 24|7

DIFC Investments, part of the group which operates Dubai's tax-free business hub, said its unit will make a periodic profit distribution on its $1.25 billion Islamic bond on time, a statement said on Wednesday. The amount to be repaid for the three month period from June 14 to Sept 13 by Dubai Sukuk Centre is $2.88 million, a statement posted on Nasdaq Dubai exchange said. DIFC Investments has a debt pile of more than $3 billion. In a note earlier in August, JP Morgan Securities said the government of Dubai may write off its $1 billion loan to the state-owned entity in exchange for shares and infuse additional capital of up to $600 million to help the struggling group restructure its debt.

 UAE working on strategy to boost trade: Lubna


Emirates 24|7


Sheikha Lubna Al Qassimi, Minister of Foreign Trade, has said that ministry is working on innovative strategy to make UAE trade competitive globally. Addressing her annual Ramadan meeting with employees of the ministry, she said the UAE is working on realistic policies and innovative models to enhance UAE trade globally in tandem with government vision and its developmental strategy. Sheikha Lubna said that the ministry relies on new methodologies and sophisticated and modern tools to deal with strategies to develop the components of the state's foreign trade, increase national exports to foreign markets, develop UAE's global trade position and face challenges in regional and global markets. She urged the employees to strengthen efforts, develop initiatives that meet strategies and objectives of the ministry, better promote the UAE and its growing economy, strengthen the presence of UAE products in global markets and increase foreign investment in UAE markets, which will lead to raising the competitiveness of UAE economy worldwide

Hamdan bin Rashid, Majid bin Mohammed offer condolences


Emirates 24|7

Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance; and Sheikh Majid bin Mohammed bin Rashid Al Maktoum, Chairman of the Culture and Arts Authority in Dubai, have offered their condolences to Ahmad Abdullah Al Shaikh, Director General of Dubai Government Media Office, on the death of his father Abdullah bin Al Shaikh Ahmad. Ahmad and his father also accepted condolences from a number of sheikhs, ministers, dignitaries, senior officials and representatives of the mass media nationwide. The Speaker of Federal National Council Abdul Aziz Al Ghurair has also offered his condolences.

Dubai Private Equity Invests in Europe With First Sukuk: Islamic Finance



Millennium Private Equity Ltd., a Dubai government-linked investment company with about $5 billion in capital, plans to use Islamic financing for venture capital in Europe after buying the first corporate sukuk in the U.K. Millennium, part-owned by Dubai Islamic Bank PJSC, the United Arab Emirates’ largest Shariah-compliant bank, bought $10 million of four-year convertible notes in July that were sold by International Innovative Technologies Ltd., a clean energy company in Gateshead.  “We are looking at transactions in Europe and other areas,” Vally Khamisani, a director at Millennium said in an interview in Dubai yesterday. “They can tap into capital which is focused on Shariah principles. The structures can fly well here.”  Persian Gulf investors are exploring opportunities outside the region, taking advantage of tightened lending in Europe to diversify. Middle East and North Africa private equity funds have about $10 billion available to invest after raising a record $5.4 billion in 2008, Gulf Venture Capital Association said in a July 20 statement.

Saudi economy’s growth enters cooling period


Arabian Business


A slowdown in corporate activity during the holiday period has touched the brakes on the GCC’s largest economy despite a boost in consumer spending, according to the latest data from Riyadh-based Jadwa Investment. The finance house said that data for July had suggested slowing, though still healthy economic growth, with performance distorted by the start of the summer holiday season combining with the advent of Ramadan. Broad money supply (M3) growth fell to its lowest level in over a decade as low interest rates continued to encourage consumers to withdraw funds from savings accounts. Just under $15.5bn has been wiped off the total value of savings accounts in the past year.  Elsewhere, bank lending to the private sector rose by 0.6 percent – about average for the year to date – while inflation hit six percent in July, its highest level since March last year. Food prices and the rising cost of gold helped boost inflation, while this was offset by a slowing in rental inflation.