CGI Gulf Insights of the Week

  • ByCGI Gulf Insights of the Week
  • Monday, 30 December 2020
  • Published inDecember 2020
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Country Risk Update - Oman

Risk Indicator  - DB4d
Risk Level        - Moderate 
Ratings Trend  - Stable

Oman saw strong demand for its USD3bn bond in late July, this came despite downgrades but amidst brief indications of an easing deficit. The government is targeting high-end tourism as an area for growth.The ports of Sohar and Salalah are emerging as regionally-competitive infrastructure facilities, soon to be joined by Al Duqm.

Market Overview
Saudi banking giants forecast to maintain 'strong profitability'
Saudi Arabia's three largest banks, National Commercial Bank (NCB), Al Rajhi Bank, and Saudi British Bank (SABB), will maintain strong profitability even as interest margins on their lending narrow because of falling interest rates, according to Moody's Investors Service. In a new research note, the rating agency said the three banks have a combined market share of 47 percent of the country's banking assets. "SABB will be hardest hit because it must also absorb the costs of its merger with smaller peer Alawwal Bank, and NCB will face a similar pressure if its planned merger with Riyad Bank is completed," said Ashraf Madani, VP-Senior Analyst at Moody's.  "Al Rajhi's retail focus will provide initial protection, but prolonged low rates will take their toll. Nevertheless, sound efficiency and strong capital at all three banks will protect their credit profiles," he added. Madani said fee-based income will start to stabilize over the coming quarters as fees attached to rising consumer lending and mortgages offset lower trade and foreign-exchange income. The report said NCB has the largest and most stable non-interest income and is expected to maintain its lead. It added that large Saudi banks will maintain very efficient cost structures with SABB's corporate focus delivering the strongest efficiency while both NCB and Al Rajhi carry the cost of larger branch networks to service their sizeable retail businesses.
India's PayMate eyes GCC expansion
Indian digital payments company PayMate will invest $3 million to expand its operations in the GCC by 2021, according to local media reports.  In an interview with the Abu Dhabi-based The National​, PayMate founder, and CEO Ajay Adiseshann said that the investment will be made in the next 18 to 24 months, with the money going towards hiring new talent, data localization efforts and the development of new business solutions for the region.  The firm has already opened an office in Dubai, which will begin operations in January.  "We will go live with six-to-seven big customers in the UAE that might also have cross-border requirements across the GCC," Adiseshann was quoted as saying.  Next year, he added, the company will expand its operations to Saudi Arabia.  "Owing to its size, the kingdom holds even more potential than the UAE," he said. "In the next couple of years, we will be present in all GCC countries and in some pockets of North Africa as well." 
Gulf investors to turn the focus on Amsterdam amid European uncertainty
Gulf investors are set to turn their focus to Amsterdam as they seek value in an uncertain European commercial property market, according to real estate advisor Savills. It said the Dutch city is set to lead the way among alternative office investment destinations in 2020, as political uncertainty creates volatility in the UK and expensive prices in France and Germany are encouraging investors to look elsewhere. As part of its latest European Office Outlook report, Savills said prime office rents are forecast to grow by six percent in Amsterdam in 2020, the highest level of growth alongside Stockholm and Luxembourg. That compares to an average of two percent growth across other surveyed European cities.According to Savills figures, the Dutch real estate market received more than £563 million from foreign institutions, which is the most capital the country had seen in more than a decade. 
Saudi fund signs $140m loan deals with Ethiopian gov't 
Saudi Fund for Development (SFD) has signed two loan agreements worth $140 million with the Ethiopian Government to boost economic development, create vital infrastructure and tackle water poverty in the country. The first loan was made in partnership with other international agencies including the World Bank, the UK Department for International Development (DFID) and UNICEF and will deliver a water, sanitation and hygiene program (WASH) to rural and urban areas in Ethiopia. The partnership will provide communities across Ethiopia with access to clean water and sanitation and demonstrates the fund’s commitment to strengthen prosperity in East Africa.  The second loan will contribute towards the construction of a 118km road linking the town of Motta with the city of Debre Markos in the northwest of the country as part of an Ethiopian government’s program to develop the transport sector and expand the regional road network. Once operational, the road will help to facilitate the flow of trade between towns and cities, contributing to the development of the local economy. Dr Khaled bin Sulaiman Al Khudairy, vice chairman and managing director of SFD, said: “SFD and the Government of Ethiopia have a long record of investing in successful development projects in critical sectors such as infrastructure and energy.
Bahrain gov't extends the third deadline for VAT registration
Bahrain has extended the deadline for value-added tax (VAT) registration by a week to December 26 to give companies that are yet to register some more time to comply with the law. The new VAT registration deadline will cover businesses whose annual supply value exceeded BD37,500 in the previous 12 months or will exceed BHD37,500 in the next 12 months. It is the third stage of VAT registration in Bahrain. The first stage covered large businesses whose annual supply value exceeding BD5 million with a deadline of December 20. For the second phase, businesses with an annual supply value exceeding BD500,000 were instructed to register before June 20.  Vikas Panchal, business head - Middle East, Tally Solutions said: “The government has taken yet another step to give businesses time to register under the VAT regime. We are confident that the new deadline will be sufficient to help business owners prepare the necessary documents required for their registration.” Businesses that fail to register within their deadlines are required to pay a fine of BD10,000. They also face 3 to 5 years of imprisonment if they do not register 60 days after their deadlines expire.
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