CGI Gulf Insights of the Week Aug 16 2020

  • ByCGI Gulf Insights of the Week
  • Sunday, 16 August 2020
  • Published inAugust 2020
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Country Risk Update - Kuwait

Risk Indicator  - DB4a
Risk Level        - Moderate

Ratings Trend  Deteriorating rapidly

Political infighting between parliament and government flares up as lockdown eases, meaning that the government faces difficulty in funding the budget deficit. Business opportunities should increase as the government's national development plan targets a more diverse economy. Resumption of operations in the Divided Zone will boost oil-production capacity (though OPEC quotas will still constrain actual production). 
Market Overview
Emirates NBD confirms talks on with Lebanon's BLOM Bank on Egypt stake
Emirates NBD is in preliminary discussions with Lebanon’s BLOM Bank to pick up the latter’s stake at its Egypt operations. “Discussions are still ongoing and there is no certainty that any transaction will be completed,” Emirates NBD said in a statement on Dubai Financial Market. “Emirates NBD routinely evaluates potential opportunities in different markets… and a further announcement will only be made if there is a material development.” According to Bloomberg, Emirates NBD, Dubai's largest bank, already has a sizable presence in Egypt after buying the local business of France's BNP Paribas SA in 2012 in a $500 million deal.
Shuaa Capital scores a Dh5m profit in first-half 2020 on investment gains, asset disposals
The asset management company Shuaa Capital managed a Dh5 million attributable net profit for first-half 2020 in what has been an exceptionally difficult trading environment.  If mark-to-market losses on portfolio investments are discounted, Shuaa’s net profit would have been Dh164 million, while EBITDA (earnings before interest, tax, depreciation, amortization) would have swelled to Dh284 million. In the first half of 2019, the asset management company reported a loss of Dh56.5 million. “Whilst COVID-19 as well as the economic and geopolitical challenges will continue to impact overall business and market activity for some time, our business model is calibrated around seizing opportunities across economic cycles, geographies, and products,” said Jassim Alseddiqi, CEO.
UAE banks headed for more job losses in the second half of 2020
UAE banks, especially those with large retail operations are headed for more redundancies as businesses are contracting fast and margins are thinning, according to banking industry sources. Last month Emirates NBD acknowledged job cuts of 800 people on a single day. Sources in the bank said the numbers could climb further in the second half of the year. While ADCB has let go of 400 people this month, a few other smaller banks too have been implementing job cuts and branch closures quietly. Two mid-sized banks are understood to be in the process of closing seven and nine branches respectively in the current quarter.
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