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Monday, 26 October 2009

Gulf Bank Q3 net profit plunges 98 pct, shares down

Kuwait's Gulf Bank (GBKK.KW) posted a 98 percent plunge in its third-quarter net profit, driving its shares down 3 percent on Monday.

Net income in the three months to Sept. 30 came in at 469,000 dinars ($1.64 million), after 29.925 million dinars of net profit in the same period in 2008, the bank said in a statement on the bourse website on Monday.

The lender made a net loss of 7.02 million dinars in the first nine months, compared with 85.96 million dinars of net profit in the year-earlier period, it said.

Prudential eyes Dubai sharia funds, Indonesia licence

British insurer Prudential (PRU.L) plans to launch two Islamic equity funds in Dubai in the coming months and apply for an asset management licence in Indonesia, an official said on Monday.

Demand for sharia funds would be strong once Dubai bounces back from an economic slowdown, said Mark Toh, Prudential Corp Asia's regional Islamic fund management head.

"If Muslims have a choice, they would invest in (Islamic funds), previously there were none," Toh said on the sidelines of a fund launch. "There are very little of such products available not just for Malaysia, but for the global market as well."

Deyaar slashes workforce by 20 pct

Deyaar Development said on Monday it has slashed its workforce by 20 percent as it looks to cut costs amid the collapse of Dubai’s once-booming real estate market.

The Dubai-listed developer said in a statement the job cuts were “in line with the company’s commitment to align those resources with its current and medium-term business requirements”.

The developer said the cuts were “the only such measure carried out by Deyaar since the start of the global financial crisis”.

Dubai Plans to Sell 5-Year Dollar, Dirham Bonds, Investors Say

Dubai’s government plans to sell five-year dollar and dirham denominated bonds as part of its $6.5 billion medium-term fund-raising plan, according to three investors who have been approached for the sale.

The dollar bonds may be priced to yield 350 basis points to 400 basis points over the benchmark midswap rate, said the investors who didn’t want to be identified because the talks are private. The dirham bonds may be priced to yield in the “high” 300 basis points above the 3-month emirates interbank offered rate, they said.

“This is a pricing sweet spot,” said Norval Loftus, head of sukuk and convertible bonds at Matrix Corporate Capital Ltd. in London, which manages $2.5 billion in assets. “A high 300 basis point spread over swaps is the perfect pricing zone because as an investor you are being compensated very generously for the risks you are taking.”

It’s the first international bond sale from Dubai since June 2008, when Dubai Electricity & Water Authority, the Gulf emirate’s state-run utility known as Dewa, raised $1 billion through a five-year floating rate note by paying 125 basis points above emirates interbank offered rate, Bloomberg data show. One basis point is 0.01 percentage point.END

Dubai Index Gains Most in Two Weeks on Emirates NBD Earnings

Dubai shares climbed the most in almost two weeks as Emirates NBD PJSC reported third-quarter earnings that beat analysts’ estimates.

Emirates NBD, the United Arab Emirates’ biggest bank by assets, advanced to the highest intraday level in a week. Aramex PJSC, the Middle East’s biggest courier company, added as much as 2.3 percent. The Dubai Financial Market General Index gained 2.9 percent, the biggest jump since Oct. 14, to 2,328.89 at 12:54 p.m. in the emirate.

Better-than-expected earnings from Dubai’s biggest companies are boosting investor confidence. Emaar Properties PJSC, the heaviest weighted member in Dubai’s benchmark index, on Oct. 22 posted a profit that was almost twice as high as analysts estimated. The shares rose as much as 4.5 percent.

Gosaibi to seek Sanea default in U.S. court

Saudi family conglomerate Algosaibi will ask a New York court for a default judgment against the billionaire head of the Saad Group, Maan al-Sanea, over allegations he defrauded the company out of $10 billion, a spokesman said on Sunday.

Representatives of al-Sanea and the Saad Group could not be reached for comment on the case, which has drawn attention along with other litigation in the United States because of debt restructuring at Ahmad Hamad Algosaibi & Bros (AHAB) and Saad Group that worsened the Arab Gulf financial crisis.

AHAB spokesman Jim Courtovich said al-Sanea had not answered its July 15 lawsuit in New York State Supreme Court over allegations of $10 billion in loan irregularities. Maan al-Sanea is a former employee of AHAB.

Emirates NBD Q3 profit up, beats expectations

Dubai bank Emirates NBD ENBD.DU posted a small rise in third-quarter net profit on Monday, sending its shares higher as it beat analysts' expectations, but said it remained cautious after soaring credit impairments dampened growth.

Emirates NBD, the United Arab Emirates' largest bank by assets, said net profit rose three percent to 1.05 billion dirhams ($285.9 million) from 1.02 billion dirhams in the third quarter of 2008.

Two analysts polled by Reuters had forecast an average third-quarter net profit of 580 million dirhams. [ID:nL4495965]

Islamic Debt to Rally on Nakheel Recovery, GE Sukuk

Islamic bonds are poised for record gains amid confidence that Nakheel PJSC, the developer of palm- tree shaped islands off the Dubai coast and the market’s biggest issuer, will avoid default.

“Nakheel is the flagship,” said Yannick Lopez, who helps oversee Paris-based OFI Asset Management’s $30 billion in assets. “A default by Nakheel could have wider implications” on the Islamic bond market, he said. “Our view is that the probability of default on this name is quite low.”

Almost non-existent a decade ago, the Islamic bond market has grown to $130 billion, according to Moody’s Investors Service. Prices are rebounding after three defaults in the past year because investors expect Dubai’s government to prevent state-owned developer Nakheel from failing to make payments on its obligations. The company’s bonds due Dec. 14 rose to a record 108 cents on the dollar this month, up from 93.5 on Sept. 2 and 70 percent higher than a February low.

BBC NEWS | Business | Warren Buffett: Crisis, what crisis?

BBC NEWS | Business | Warren Buffett: Crisis, what crisis?

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UAE interbank rates hit multi-year lows

Interbank lending rates in the UAE fell to multi-year lows yesterday as the dollar-pegged country brings the cost at which banks lend to each other into line with its Gulf neighbours and the United States.

Since August, the UAE Central Bank has undertaken a raft of measures to lower the rates it long said were too high.

The central bank took control of the fixing process earlier this month when participating banks began submitting their daily rates to the central bank.

Algosaibi to meet creditors in a bid to strike deal

Saudi conglomerate Ahmad Hamad Algosaibi and Brothers (Ahab) plans to meet creditors within weeks in a bid to reach a global settlement with lenders, sources said yesterday, as around $10 billion (Dh36.7) in outstanding obligations loom.

The debt implosion at Saudi firms Algosaibi and Saad Group has sent shockwaves through the region, left foreign and local banks facing massive debt exposures and sparked a flurry of litigation around the globe.

Some bankers say the total cost of writedowns from both groups may hit $22bn and affect 120 banks.

Qatar’s $14bn airport to open in 2011

Qatar is on track to open its new US$14 billion (Dh51bn) international airport in 2011 as the world’s largest gas exporter looks to diversify government revenues and stimulate employment, an official said on Sunday.

Speaking at an aviation conference in Doha, Qatar, the chairman of the country’s civil aviation authority said the new airport would have capacity for 24 million passengers and cargo of 1.4 million tonnes a year.

“The new $14bn airport will be over 22 kilometres and open in 2011,” Adul Aziz Al Noaimi said.

Fraud: more diligence is due

It is more than a year since Dubai launched a highly publicised clampdown on corruption, which led to the arrest of several executives from some of the emirate’s top property developers and financial institutions.

But while Dubai grabbed the international headlines, it represented just the tip of the iceberg in a region that has been identified as a hot spot of corruption.

Kroll, an international risk consultancy, said last week the Middle East was the world’s only region to see a rise in fraud in the past year. It singled out corruption and bribery as the single largest threats.

US helps Dubai borrow cheaply

Could Dubai be on the verge of getting a bailout, courtesy of Washington?

Dubai’s bond roadshow does not include a stop in the US. But it is conditions established there that analysts and economists say appear to have reopened international credit markets to the emirate.

To revive the US economy, the Federal Reserve has pushed its lending rates to their lowest since the Second World War. That and concerns that ballooning debt could fuel inflation have sparked a boom in demand for higher-yielding bonds elsewhere.

Gulf Investors Sold $4.3 Billion in Dubai Properties

Gulf Arab nationals sold properties valued at 15.7 billion dirhams ($4.3 billion) in Dubai during the eight months ended August, the Real Estate Regulatory Agency and the Land Department said in a joint statement today.

Land sales by developers and individuals accounted for 10.8 billion dirhams of Dubai’s total property sales between January and August. Apartment sales followed with 2.9 billion dirhams and villa sales reached 2 billion dirhams, RERA said without providing comparative figures.

The value of land transactions in the first three quarters of this year slid to 14.9 billion dirhams, compared with 61 billion dirhams a year ago, according to data posted on the Land Department’s Web site.

Abdullah brothers to repay Damas transactions

Dubai jeweller Damas International Ltd DAMAS.DI on Sunday said that two executives and the former chief of the company have pledged to repay nearly $165 million "unauthorized transactions" that led to the chief executive's departure.

Nasdaq Dubai-listed Damas recently appointed Hisham Ashour, the former deputy chief executive, to replace Tawhid Abdullah after "unauthorized transactions" for nearly $165 million were discovered. [ID:nLC467286]

"The three Abdullah brothers have signed a formal settlement agreement with the company in which they have committed to repay in full and in cash the full value of the transactions under review," according to a statement posted on the Dubai website.

Kuwait may post big surplus

Opec member Kuwait is expected to post a budget surplus of 9.75 billion Kuwaiti dinars ($34.14bn) in its 2009/10 fiscal year if oil prices remain at current levels, reports said yesterday.

The world’s fourth-largest oil exporter is expected to post about 5.5bn dinars for the next five months of the fiscal 2009/10 that ends in March, finance ministry sources said.

Current oil prices at around $80 a barrel will drive up the surplus of the Gulf state, which has assumed its crude, the main revenue earner, would fetch $35 a barrel in its 2009/10 budget.

Kuwait posted a budget surplus of 2.74bn dinars in its 2008/09 fiscal year, on higher oil revenues.END

Bahrain’s positive growth is praised

Bahrain’s two per cent gross domestic product (GDP) growth this year is a sign of good things to come, said a global financial expert yesterday.

Standard Chartered Bank Middle East North Africa and Pakistan global markets regional head Marios Maratheftis said the positive growth, though it was low compared with the 7pc in the previous year, was very creditable in view of the other major Gulf economies recording negative growth.

Speaking to the media at the Ritz-Carlton Bahrain, Hotel and Spa, the Dubai-based Mr Maratheftis said Bahrain’s GDP will grow by 3pc or more next year and will contribute significantly to the GCC region, which is slowly emerging as a major player in the global economic scenario.

Dubai ponders $6.5bn debt issuance

Dubai is gauging investor appetite for debt issuance of $6.5bn as the emirate seeks to take advantage of easing credit markets to set the commercial hub on a more stable financial footing.

Appetite for its sovereign debt will be crucial as Dubai seeks to refinance its pile of short-term loans and bonds and replace them with longer-term debt.

“Dubai can probably raise money, but the key issue is how much they will have to pay,” said Chavan Bhogaita, head of credit research at the National Bank of Abu Dhabi. “We will have to wait to see what the investor appetite is.”