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Thursday, 11 July 2013

Egypt faces moment of reckoning on its economy as protests wane -

"The initial euphoria of those who backed the military overthrow of Egypt’s elected Islamist government is fading and Egyptians must now reckon with an economy that remains in crisis, despite a large injection of financial aid promised by Gulf states supportive of the coup.
Energy-rich Saudi Arabia, Kuwait and the United Arab Emirates this week committed a collective $12bn in loans, grants, deposits and fuel to shore up the interim government put in charge of the country by the armed forces after it deposed and jailed Mohamed Morsi, the former president."

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Severstal Takes $454M Credit Lines | Business | The Moscow Times

"Severstal, the country's second-biggest steel producer, said it had signed contracts with Sberbank for two revolving credit facilities amounting to 15 billion rubles ($454 million).

Severstal, controlled by billionaire Alexei Mordashov, said late Wednesday that the 9 billion and 6 billion ruble loans both had a three-year maturity.

"We have signed a credit line that will increase our pool of credit lines, which in turn will improve the financial security of the company. The funds will be used as needed," a company spokesman said."

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Europe Feels the Squeeze as Urals Oil Heads East | Business | The Moscow Times

"Russia, making a strategic shift towards fast-growing Asian markets, said Thursday that it would ramp up eastbound oil exports next year, squeezing supplies to Europe as production is expected to plateau in the years ahead.

The Kremlin is staking a claim to the Asia-Pacific region while boosting the price it commands in Europe for its Urals Export Blend crude, which now often trades at a premium to North Sea benchmark Brent. As a result, European refiners are finding themselves pressed.

Deputy Energy Minister Kirill Molodtsov said Russia, the world's top oil producer, planned to increase oil exports via the Pacific port of Kozmino to 30 million tons (600,000 barrels per day) next year from the 21 million tons expected to be shipped this year."

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Czech Rep: Fischer’s headache | beyondbrics

There was not a lot of public regret about the recent defenestration of the centre-right government of outgoing Czech premier Petr Necas in a sex-and-spying scandal. One reason is that his austerity policies are blamed for sinking the country into its longest-running recession – one that began in the third quarter of 2011.

The new caretaker administration of Jiri Rusnok aims to change that. But it may find it hard to do anything of substance.

When the government was sworn in this week, Jan Fischer (pictured), the new finance minister (and former technocratic prime minister in 2009-2010), said he would focus on boosting spending as a way of reviving growth."

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Hungary’s economy: looking good? | beyondbrics

Visitors to downtown Budapest – teeming with tourists in these summer months – may be surprised by the number of forlorn shops, their fronts closed and shuttered, awaiting new tenants. Yet despite such evidence of a prolonged retail downturn, the Hungarian economy can still show the world a thing or two says Viktor Orban, the country’s pugnacious prime minister: not least that it has brought its budget deficit down below 3 per cent of GDP, and cut inflation to record lows.

Whether these achievements are sustainable is another matter. But government officials repeat the positive elements of the story, and the markets seem to believe it.

“The resilience of Hungarian assets to the recent sell-off in emerging markets has been quite remarkable,” says Nicholas Spiro, managing director of London-based Spiro Sovereign Strategy. “Hungarian 10-year bond yields have backed up a tad less than their Polish equivalents since early May, while the forint’s losses since then have been recouped – and even these were negligible relative to EM currencies like the Turkish lira and the rand.”"

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Temasek, Abu Dhabi fund invest in Kedaara Capital | Business Standard

"The environment may be tough for private equity fund managers who are struggling to raise their debut funds, but Manish Kejriwal has managed to buck the trend. Kedaara Capital, founded by the former head of Temasek India has successfully roped in some of the largest sovereign funds such as Temasek Holdings and Abu Dhabi Investment Authority (ADIA).

According to sources in the know, Kedaara Capital raised $500 million last month. About half the amount has come from major investors including Temasek, ADIA and Canada's Ontario Teachers Pension Plans (OTPP), one of the largest pension funds in the world.

Kedaara Capital, set up by Kejriwal, and Sunish Sharma (former managing director of General Atlantic India) in October 2011, had roped in UK-based PE firm - Clayton, Dubilier and Rice (CD&R) last year."

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Subramanian Swamy seeks suspension of India-Abu Dhabi air services pact - The Economic Times

"Janata Party chief Subramanian Swamy today sought suspension of the new bilateral air services agreement between India and Abu Dhabi, saying prima facie it appeared to be linked with Jet-Etihad deal.

The timing of the agreement and "from a close reading of the minuted note of (Finance Minister) P Chidambaram after the meeting convened by him as directed by you appears prima facie to be linked to the Jet-Etihad deal," he said in a letter to Prime Minister Manmohan Singh, adding, "it is now time to formally suspend the said bilateral agreement."

Referring to the Supreme Court verdict that auction was the preferred mode of allocation of natural resources like spectrum for commercial exploitation, Swamy said, "In this case, India allocated without any substantive reason to prefer a bilateral agreement allotment of airspace."

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Egyptian Bonds Advance as $12 Billion Aid Eases Economic Concern - Bloomberg

"Egyptian bonds gained for a second day, sending yields to the lowest level in five weeks, as $12 billion of aid pledges from the Persian Gulf eased concern that the army-backed government will struggle to revive the economy.
The yield on the government’s $1 billion of 5.75 percent notes declined 34 basis points to 8.4 percent at 4:43 p.m. in Cairo, the lowest on a closing basis since June 6, according to data compiled by Bloomberg. The yield dropped 69 basis points, or 0.69 percentage point, yesterday after Saudi Arabia, Kuwait and the United Arab Emirates offered the money in the form of grants, central bank deposits and petroleum products."

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MIDEAST STOCKS-Bank earnings weigh on Saudi; Egypt rebound falters | Reuters

"Saudi Arabia's Al Rajhi Bank fell on Thursday, souring bourse sentiment after the kingdom's largest listed lender posted a near-flat quarterly profit, while other Gulf markets gained on earnings optimism.

Thin trading volumes again plagued most markets on the second day of Ramadan, the Muslim holy month.

Shares in Al Rajhi fell 1.6 percent, trimming 2013 gains to 15.8 percent. The lender posted near-flat earnings as pressure on net interest margins crimped bottom-line growth."

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Saudi Banks Drop Most in Month on Al Rajhi Profit: Riyadh Mover - Bloomberg

"Saudi Arabia’s bank index fell the most in almost a month as second-quarter profit at the kingdom’s largest lender missed analysts’ estimates.
The Tadawul All Share Bank Index dropped 1.1 percent, the most since June 15 on a closing basis, to 16,804.81 at 1:12 p.m. in Riyadh. Al Rajhi Bank, which has the biggest weighting on the broader measure, retreated 2 percent, also the most since June 15. The benchmark Tadawul All Share Index declined 0.5 percent.
Al Rajhi’s second-quarter profit was 2.12 billion riyals ($570 million), missing the average estimate of 10 analysts for a profit of 2.16 billion riyals, according to data compiled by Bloomberg. The bank’s shares have advanced 3.1 percent in the past year, lagging a rally of 15 percent for the Tadawul and a gain of 12 percent for Samba Financial Group. (SAMBA)"

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Russian police bust major money-laundering gang | Russia Beyond The Headlines

"Russian law-enforcement agencies have caught a large, underground group of bankers engaged in illegal cash conversions, the Ministry of Internal Affairs’ press service announced. The police have identified the group’s members and hierarchy, as well as the schemes it used to cash the money.
According to two law-enforcement sources and a bank employee, 42-year-old Mytischi native Sergei Magin is the group’s leader.
More than 400 people and over 100 Russian and foreign firms were involved in the illegal activities, the Ministry of Internal Affairs reported, without naming the person who organized everything."

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Is Egypt’s Fuel Crisis Over? | REBEL ECONOMY

That’s the short answer. Here’s the long one:
I’m afraid Egypt still has a long way to go before we never experience a power cut or experience gas shortages again."

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CORRECTED-Bahrain's GFH hopes more active investment stance to secure recovery | Reuters

"Bahrain-based investment firm Gulf Finance House (GFH) hopes a leaner balance sheet and a revamped business model can revive the fortunes of a firm which once symbolised growth of the kingdom's Islamic finance sector.

GFH's new strategy calls for it to become more involved in its investments, and to hold projects until completion rather than passing them to third parties to develop as was done in the past, its acting chief executive said in a telephone interview.

For several years a hands-off approach worked well for the sharia-compliant investment house, which was founded in 1999. Strong global markets allowed it to book healthy premiums in the stakes it sold in real estate projects."

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Qatar National Bank Gains After Net Beats Estimates: Doha Mover - Bloomberg

"Qatar National Bank SAQ rose the most in more than a week after the Arab world’s biggest lender reported a better-than-expected climb in second-quarter profit.
Shares of the bank known as QNB rose 1.3 percent, the most since July 1, to 161.5 riyals at 1:03 p.m. in Doha, taking the three-day advance to 1.8 percent. The stock was the second-biggest gainer among 20 shares trading on the benchmark QE Index (DSM), which increased 0.9 percent.
QNB’s quarterly net income jumped 23 percent to 2.6 billion riyals ($714 million), compared with the 2.35 billion-riyal average estimate of six analysts compiled by Bloomberg. MSCI Inc. (MSCI), which last month upgraded Qatar to emerging-market status, gave QNB a provisional weighting of 21.7 percent on the MSCI Qatar Index, the index provider said in an e-mail yesterday."

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DUBAL and Mubadala complete acquisition of Guinea Alumina Corporation -

"Dubai Aluminium (DUBAL) and Mubadala Development Company (Mubadala) yesterday secured full ownership of Guinea Alumina Corporation (GAC), having completed the acquisition of the remaining project interests in the joint venture from Global Alumina Corporation (TSX: GLA.U) and BHP Billiton.

This follows the recent announcement of the creation of Emirates Global Aluminium (EGA), which will become the world’s fifth largest aluminium company through integrating the businesses of DUBAL and Emirates Aluminium (EMAL).  The GAC acquisition also underscores EGA’s plans for significant local and international expansion."

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FocusEconomics Consensus Forecast Eastern Europe

Growth forecasts for Eastern Europe deteriorated again this month, and remain firmly entrenched in the downward trajectory that started in January 2012. FocusEconomics Consensus Forecast panellists cut their projections by 0.1 percentage points over the last month and now expect regional GDP to expand 2.3% in 2013, marking the 11th downward revision to the regional outlook in the past 12 months. The deteriorating prospects reflect lower growth forecasts for eight out of the 14 countries surveyed, including Poland and Russia, which together account for more than half of the regional average. Meanwhile, the outlook for three economies (Croatia, Lithuania and Turkey) was left unchanged, while panellists raised their growth forecasts for another three countries (Hungary, Latvia and Romania). For 2014, the panel expects economic growth to accelerate to 3.2%, which is also down a notch from last month's projection.

The deteriorating outlook for Eastern Europe comes within a global context of lower growth forecasts for the Eurozone and the BRIC economies, which more than offset upward revisions to Japan and the United Kingdom. The outlook for the United States remained unchanged over the previous month, with news mostly focused on the possible timing and pace of the Federal Reserve's exit strategy from its quantitative easing (QE) programme. Fed Chairman Ben Bernanke indicated on 19 June that monetary authorities may start tapering the QE program later this year, triggering tensions in financial markets that drove yields on 10-year U.S. Treasuries to the highest levels in three years, before a downward revision to first quarter GDP growth figures eased concerns that the Fed will withdraw its stimulus in the near future...
Excerpt from July 2013 edition of the FocusEconomics Consensus Forecast Eastern Europe. Full text available for purchase in our Online Store.

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Turkey is desperate to not hike rates – but is it sustainable? | beyondbrics

It looks like a case of whiplash Thursday for Turkey.

Ankara is looking to stave off a decline in the lira and avoid a rise in interest rates – and all that entails for growth prospects and the prime minister’s denunciations of a shadowy interest rate lobby. Developments this week have made things even harder.

First – overnight – came the good news. That was the word from Washington that Federal Reserve plans to rein in monetary stimulus were apparently less than definitive. It was welcome solace for the lira after Turkey’s own central bank sold $2.25bn on Monday and $1.3bn on Wednesday in defending the currency, to limited effect."

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Russia’s daily oil production hits 25-year high | Russia Beyond The Headlines

"In June, Russia’s daily oil production reached 10.53 million barrels, according to Central Dispatching Department of Fuel Energy Complex (CDU TEK) data. The only time Russia has produced more oil was in 1988, when the average daily production in the Russian Soviet Federative Socialist Republic reached 11.07 million barrels.
Oil production has been falling since, hitting an all-time low of 6.06 million barrels per day in 1996. Last year, daily oil production averaged 10.37 million barrels.
There are two reasons for the new record, says Andrei Gromadin, oil and gas analyst at JPMorgan. The first is the increase in oil production at the Vankor Oil and Gas Field developed by Rosneft, where last year’s output totaled 18.3 million tons. In 2013, Rosneft expects the Vankor Field to reach its peak capacity of 25 million tons."

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Ukraine expects big benefits from free trade pact with EU : Ukraine News by UNIAN

"The Ukraine government said on Wednesday it expects to reap big benefits from a free trade agreement with the European Union (EU) expected to be signed in November this year, according to Xinhua.
According to a statement posted on the website of the Economic Development and Trade Ministry, the potential savings and gains could reach 624 million U.S. dollars annually.
Ukrainian agricultural and chemical companies would benefit the most, earning an additional 490 million dollars and 31 million dollars per year, respectively, the statement said."

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Saudi Arabia’s Long Search for Gas Ending With Low Price - Bloomberg

"Saudi Arabia’s decade-long search for natural gas is ending with only two companies finding fields, and those drillers need higher prices to move forward.
Royal Dutch Shell Plc (RDSA) (RDSA) and OAO Lukoil (LKOH) are nearing the end of well tests in the Empty Quarter desert. The future of any output hinges on talks with the government, which pays an official gas price of 75 cents per million British thermal units. In the U.S. gas costs about $3.70 per million Btu, while Japan pays at least $12 for imports. China and India are increasing state-set rates.
“The Saudis need to raise prices to encourage new developments,” Kamel al-Harami, an independent oil analyst based in Kuwait, said by telephone. “But they need at first to find enough non-associated gas,” or fields where the fuel exists separately from oil."

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Dead Russian Lawyer Magnitsky Found Guilty |

"Russian news agencies say a court in Moscow has found dead lawyer Sergei Magnitsky guilty of tax evasion, concluding an unusual posthumous trial.

The court on Thursday also found Magnitsky’s onetime client, the US-born British investor William Browder, guilty of evading some $17 million in taxes.

Magnitsky died in prison of untreated pancreatitis in 2009, months after alleging that organized criminals colluded with corrupt Interior Ministry officials to claim a $230 million tax rebate through illegally obtained subsidiaries of Browder’s Hermitage Capital investment company.

His death prompted widespread criticism from human rights activists and the presidential human rights council found in 2011 that he had been beaten and deliberately denied medical treatment.

A U.S. law named for Magnitsky calls for sanctions on Russians identified as human rights violators."

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Azarov not wants contrapose EU, CU - ForUm

"Ukraine cannot contrapose foreign trade markets in the current crisis, Prime Minister Mykola Azarov said, opening the Cabinet’s meeting, ForUm correspondent reports.

"Ukraine should look for alternatives on foreign markets and work on the balance of foreign trade. We cannot choose what external markets are more important to us. Any opportunity to ensure the stability of the economy is important, so the task of the Cabinet is to adapt our economy to the situation in the EU and the CU, as well as in other countries," he said.

According to him, Ukraine has no right to turn a blind eye to any markets.

"Some opposition politicians state that they are not interested in cooperation with the Customs Union. They should evaluate the level of public responsibility on one hand, and the level of economic competence on the other," Azarov noted.


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India’s Worst Currency Too Weak With 5% Growth: Market Reversal - Bloomberg

"India’s rupee, the world’s worst-performing currency in June, is poised to rebound from a record low as trading patterns suggest the rout in emerging markets prompted by shifting sentiment on U.S. stimulus is overdone.
The currency’s 14-day relative strength index against the dollar this week crossed the 70 threshold that signals it had fallen too far, too fast. Options traders were paying the highest premium in more than a year to sell the rupee on July 8, 25-delta risk reversal rates show. The measure had what’s known as a Z-score of 1.6 percent, meaning the premium was almost two units of standard deviation from the 20-day average."

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Egyptian army’s financial coup: 12 billion petrodollars from Saudi, UAE, Kuwaiti fans

"In a dazzling display of monetary muscle, Saudi Arabia and the United Arab Emirates poured $8 billion in a single day into the coffers of Egypt’s army rulers in cash, grants, loans without interest and gifts of gas, a dizzying life-saving infusion into its tottering economy. Forking out sums on this scale in a single day – or even month - is beyond the capacity of almost every world power – even the US and Russia - in this age of economic distress. The Arab oil colossuses managed to dwarf Iran’s pretensions to the standing of regional power.
Tuesday, July 9, just six days after the Egyptian army overthrew the Muslim Brotherhood president Mohamed Morsi, a UAR delegation of foreign and energy ministers and national security adviser landed in Cairo. They came carrying the gifts of $1 billion as a grant and $2 billion in long-term credit."

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Fitch Affirms Bahrain at 'BBB'; Outlook Stable | Reuters

"Fitch Ratings has affirmed Bahrain's Long-term foreign currency Issuer Default Rating (IDR) at 'BBB' and local currency IDR at 'BBB+'. The Outlook is Stable. The agency has simultaneously affirmed Bahrain's Country Ceiling at 'BBB+' and Short-term foreign currency IDR at 'F3'. "

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Kuwait Energy Profile: Holds World's Sixth Largest Oil Reserves - Analysis Eurasia Review

As a member of the Organization of the Petroleum Exporting Countries (OPEC), Kuwait was the world’s 10th largest oil producer in 2012. Despite having the second smallest land area among the OPEC member countries, Kuwait exports the third largest volume of oil.

Kuwait’s economy is heavily dependent on petroleum export revenues, accounting for nearly half of its gross domestic product and nearly 70 percent of export revenues. EIA estimates these revenues were 75 billion dollars in 2012. Kuwait should remain one of the world’s top oil producers as the country pushes towards a target of 4 million barrels per day (bbl/d) of production capacity by 2020.

In an effort to diversify its oil-heavy economy, Kuwait has expanded efforts to develop its non-associated natural gas fields, which remain a small portion of its natural gas production. Greater production of gas can provide fuel for electricity generation which frequently falls short during periods of peak electricity demand."

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Kuwait banking outlook stable | Arab News

"The outlook for Kuwait's banking system remains stable, unchanged since 2011, says Moody's Investors Service in a new report ("Banking System Outlook: Kuwait) published yesterday. The outlook reflects the rating agency's expectation of a benign operating environment, supported by high oil revenues and government spending (mainly current account).
Over the 12-18 month outlook period, the operating environment for the banks will remain accommodative, underpinning the banking sector's robust capitalization and ample liquidity. Moody's expects that Kuwait's nonoil 2013 GDP growth (local banks operate primarily in the non-oil sectors of the economy) will increase to 3.2 percent, the highest rate for the past five years, mainly driven by the government's current account spending."

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ENERGY - Azeri Socar, BP, Total to get TAP stakes

"Azeri state energy company SOCAR and British BP will get 20 percent each, while French Total will have a 10 percent stake in the Trans Adriatic Pipeline (TAP) project, SOCAR’s president said yesterday.

Abdullayev said that the partners for the Shah Deniz development will coordinate and sign all agreements and contracts for the export of Azerbaijani gas to Europe by late 2013 which will enable them to take a final financial decision on the second stage of the Shah Deniz field development project by the end of this year. "

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ERSU ABLAK - Never-ending story over billions of future income

"The dispute between the three parties at Turkcell is slowly coming to a conclusion.

The Privy Council decided the terms between the dispute of Çukurova and Altimo.

According to Reuters the ruling relates to a quarrel over a 13.8 percent stake in Turkcell that had been held by Cukurova and which is a controlling stake due to the company’s shareholder structure. Russian group Altimo had seized the shares when Cukurova defaulted on a $1.35 billion loan, but the British court has now ruled Cukurova must pay $1.57 billion – a sum which includes interest payments – to Altimo within 60 days if it wants to recover the stake."

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Saudi Gazette - Samba, Al Rajhi net profits increase in Q2

"Samba Financial Group said its second-quarter net profit rose 1.5 percent over last year, in line with the average forecast of analysts.

The bank said in a bourse filing Wednesday it made SR1.18 billion ($314.7 million) in the three months to June 30, compared to SR1.16 billion in the same period of last year.

Net profit for the first six months of 2013 was SR2.33 billion, up 1.4 percent on the same period of last year."

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Saudi Gazette - Saudi GDP to grow 4.2% in ’13 fueled by non-oil sector

"Saudi Arabia’s real GDP is projected to expand by around 4.2 percent, fuelled by the non-hydrocarbon sector as the oil GDP is expected to decline due to lower output and prices, Jadwa Investments said in its monthly bulletin.

The non-oil private sector is expected to rise by around 5.3 percent while the government sector will grow by 4.3 percent, the report said.

It showed the oil sector would shrink by around 1.5 percent after high growth in the previous two years, adding that the decline would be a result of a drop in average Saudi crude prices to $99.4 a barrel in 2013 from $108.1 in 2012. The Kingdom’s oil production is also expected to fall to 9.6 million barrels per day after reaching its highest annual average of around 9.8 million bpd in 2012."

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Saudi Gazette - SABB net profit jumps 10.4% to SR1.95bn in H1

"The Saudi British Bank (SABB) recorded a net profit of SR1.95 billion for the six months of 2013 ended June 30, an increase of SR183 million or 10.4 percent compared to SR1.77 billion for the same period in 2012.

SABB recorded a net profit of SR1.01 billion in the second quarter of this year, an increase of SR57 million or 6.0 percent as compared to the first quarter ended March 31, 2013, which amounted to SR948 million.

Operating income of SR2.94 billion for the six months, an increase of SR326 million or 12.5 percent, compared with SR2.61 billion for the same period in 2012."

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