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UAE banking sector tops in GCC with h1 assets surging to dh2.7t

The UAE banking sector, currently undergoing a new cycle of consolidation, continues to surpass GCC peers in terms of total assets that had surged two per cent to Dh2.7 trillion ($748 billion) in the first half.

The Saudi banking sector came second with total assets valued at $617 billion followed by Kuwait with $215 billion, Bahrain with $188 billion and Oman with $87 billion. Thanks to banking sector consolidation, the First Abu Dhabi Bank (FAB), which came into being following the merger of National Bank of Abu Dhabi and First Gulf Bank, topped the Gulf banks with $188 billion worth of assets by the end of the first half.

The GCC bank with the second largest asset was Saudi National Commercial Bank with $121 billion, followed by National Bank of Kuwait with $90 billion and Bahrain’s Ahli United Bank with $34 billion and Bank Muscat with $30 billion.

The market cap of Saudi National Commercial Bank hit $38.9 billion during the first six months, followed by FAB at $36 billion, the National Bank of Kuwait at $15.2 billion, Bahrain Ahli United Bank at $4.8 billion and Bank Muscat at $2.9 billion. Despite the regional economic headwinds, the UAE banking sector has been remaining resilient, with robust capital ratios, liquidity buffers, profitability, and stable sources of funding. The UAE Central Bank’s Financial Stability Report for 2017 showed that macroeconomic and financial-market conditions remained stable in the UAE while the global and domestic economic growth and outlook improved during the year. According to the Central Bank, the UAE banking sector remained well capitalised, with solid liquidity buffers, stable funding, and improved profitability.

Moody’s analysts expect the UAE’s banking sector to remain largely resilient to oil price volatility and its impact on government finances and economic growth. They believe real estate and government-related entity (GRE) exposure are the main risks to banking asset quality, but macro-prudential regulations have largely cooled real estate speculative activity and will cap GRE exposure.

Analysts said new regulatory measures in the real-estate sector had reduced the scope for speculation-induced asset bubbles, while new lending regulations include caps on banks’ exposure to local governments and to government-related commercial entities. Rating agencies and analysts believe the fourth round of consolidation in the UAE banking sector, which is currently under way, would be credit positive for the banking sector and serve to further consolidate the over-crowded financial system.

The commencement of three-way exploratory talks involving Abu Dhabi Commercial Bank (ADCB), Union National Bank (UNB) and Al Hilal Bank, a year after the merger of the National Bank of Abu Dhabi and First Gulf Bank would create another financial powerhouse with increased pricing power ensuing reduced pressure on funding cost. Such an entity will have increased ability to meet sizeable investment requirement, analysts at Moody’s said.

Will the next iphones breach dh5,000 mark?

Three days from now, the world – especially Apple die-hards – will be treated to the next batch of iPhones. Last year, Tim Cook and Co entered unchartered territory when the decade-anniversary iPhone X was priced at $999 (64GB) and $1,149 (256GB), the first time a mainstream device topped the 4-digit dollar mark.

In the UAE, the device has price tags of Dh4,304 and Dh4,965.50, respectively – although this was after 5 per cent VAT kicked in; they were originally Dh4,099 and Dh4,729.

Note that the latter is practically at the Dh5,000 mark. Question: will the next iPhones breach that level?

If these hold up, then the biggest news is on the storage side.

Let’s start by pointing out that there are three new iPhones expected to be unveiled at the Steve Jobs Theater in Apple Park this Wednesday, with screen sizes of 5.8 inches, 6.1 inches and 6.5 inches.

Two of them – the smallest and biggest – will have OLED screens; OLED screens have been in smartphones for some years now, though Apple only decided to use it for the first time last year on the iPhone X.

Both OLED devices are expected to come in three storage configurations: 64GB, 256GB and a new 512GB, the last of which would put it at par with the Samsung Galaxy Note9. They’d also have 1GB more RAM and higher battery capacities.

The middle one, meanwhile, is expected to sport an LED display, and will only have the first two storage capacities. It would also have a single-lens camera, compared to the other two’s dual-lens snapper. All these specs for the 6.1-incher make sense because Apple is planning to position this as a more ‘entry-level’ device, the price of which would be at par with the iPhone X’s lesser co-star last year, the iPhone 8, which is currently priced starting at Dh2,991.50, which is about $815.

If the $699 expected starting price of the 6.1-inch phone holds up, then that translates to roughly Dh2,600. Add the expected price difference in the UAE and, yes, it would indeed be at the same level of the iPhone 8’s starting price.

Going back to the middle and top of the spectrum, if the higher end of the prices for the 5.8- and 6.5-inch variants hold up, then the former would be at par with the iPhone 8 Plus, which starts at Dh3,411.50, while the latter will be in the iPhone X’s Dh4,304.

You get the pattern, right? The 6.1-incher replaces the iPhone 8, the 5.8-inch option is the follow-up to the iPhone 8 Plus and the 6.5-inch variant succeeds the iPhone X – in terms of pricing, at least.

Now, here’s where we’ll get to answer our question above: if the 256GB iPhone X is at Dh4,965.50, then – yes – the 512GB is a sure-fire above-Dh5,000 device.

The iPhone 7 and 7 Plus have a difference of Dh420 between its 32GB and 128GB models. The iPhone X, meanwhile, has a Dh661.50 disparity between its own 64GB and 256GB offerings. If reports saying that the 512GB 6.5-inch iPhone will be priced at $1,299, then that means you have to be prepared to shell out at least Dh5,580.

To be fair, listed prices in America are still subject to sales tax – anywhere between less than 1 per cent to over 10 per cent, depending which state you’re in. So even those in the US have to dole out additional dough for it.

And to make you feel even better, there are lots of other countries that have higher starting iPhone prices. Business Insider details this, showing that the iPhone 8 is highest in Brazil at $1,377 (Dh5,058). Quartz, meanwhile, reported that the iPhone X tops out at $1,455.23 (Dh5,346) in Hungary.

And while there are bump-ups indeed, reports say that Apple was able to keep the price at the same levels by going with cheaper components. It could also drop the 3.5mm audio jack adaptor, yet another reason to bring costs down.

One more thing: the new iPhones – or at least one of them – could also support the Apple Pencil.

Oh, and you may have noticed ‘iPhone Xs Max’ mentioned up there; that’s the rumoured name of the 6.5-inch model. The 5.8-inch OLED option is said to be named ‘iPhone Xs’ (that’s ’10 s’), while the 6.1-inch LED model’s monicker remains unclear; it could be the ‘iPhone 9’ to make up for continuity, or something else. Among ‘suggested’ names have been ‘iPhone X Plus’, ‘iPhone XI’ and ‘iPhone X2’, but it’s clear that the names are still a mystery. Apple does not comment on speculation or rumours.

The ‘s’ cycle would make more sense, since Apple has done it every other year, until the transition between the iPhone 7 and 8.

In any case, expect Apple to still sell their stuff; their gamble with the high-priced iPhone X paid off, so it won’t be a surprise if users continue their patronage – or a number from the other side of the fence jump to them.

 

Dubai’s Gitex shopper entry ticket price cut by 33%

Dubai World Trade Centre, which hosts the technology exhibition, has reduced entry ticket for the upcoming Gitex Shoppers Autumn edition by 33 per cent from Dh30 in 2017 to Dh20 this year.

“The ticket price per person per entry on all days of the show is Dh20. Student groups of 50 and above can get tickets at Dh10 per student. Entrance for children below the age of 5 years is free. Children below the age of 14 years must be accompanied by an adult at all times,” the organiser said on its website.

Last year, the exhibition was held for 8 days from September 23 to September 30, 2017 but this year’s edition has been reduced to five days from October 2 to 6.

This 5-day electronics extravaganza will bring top electronic brands, retailers and tech enthusiasts together, to maximise on great electronics deals and offers, daily prize draws and product launches.

Banks’ merger news boosts UAE equities

The UAE equity markets jumped on Tuesday on the back of huge gains made by Abu Dhabi banks following confirmation of merger talks of three lenders.

Abu Dhabi Commercial Bank (ADCB) and Union National Bank (UNB) confirmed that they’re engaged in merger talks. ADCB revealed that separate merger talks are underway with Al Hilal Bank too. The merger of the three lenders will create the fifth largest GCC bank with assets totalling Dh415 billion.

Overall, the Abu Dhabi Securities Exchanged gained 0.94 per cent to 4,984 points while the Dubai Financial Market (DFM) surged 0.27 per cent to 2,837 on a busy day. The UAE stock exchanges gained Dh7.5 billion in market cap on Tuesday.

UNB and ADCB counters witnessed strong activity as both the lenders’ scrips surged 14.77 per cent and 12.8 per cent, respectively – the biggest gainers of the day. ADCB and UNB closed high at Dh8 and Dh4.34, respectively, following robust demand by investment agencies and individual investors.

The merger news drove other equities high as well. Etisalat jumped to Dh16.76 while Taqa gained 6.3 per cent to Dh1.18. At DFM, Emirates NBD climbed to Dh9.30 followed by Dubai Islamic Bank to Dh5.15, with Emaar leading the growth in the real estate sector at Dh5.40.

Mahitab Ashmawi, VP, asset management, Al Masah Capital, said the local banking sector is currently trading at very attractive levels and any positive news will be reflected on the sector.

“The merger is expected to have significant cost synergies, providing a stronger new entity that is expected to come in the fifth place among its GCC peers with assets standing at almost $110 billion,” Ashmawi added.

Vijay Valecha, chief market analyst, Century Financial Brokers, said as a result of the merger, the banks would reduce the number of jobs.

“A lot of duplication as well as flab will be eliminated and this will lead to less jobs. However, considering this fact, there are approximately 50 banks in UAE serving a population of nine million. By all yardsticks, the UAE is heavily overbanked and it is in the interest of the economy to merge these entities so that the overall cost is reduced,” Valecha added.

Indian rupee could hit 19.65 against UAE dirham next week

Indian rupee on Monday slumped to new low of 19.39 against UAE dirham in line with decline in currencies of emerging economies and analysts expect rupee’s free fall will continue in coming days.

Rajiv Raipancholia, CEO, Orient Exchange, said rupee’s free fall is due to more dollar flowing into India as exports become cheaper due to rupee depreciation.

He predicted that the rupee hitting 19.65 against dirham is quite possible in the next 10 days.

The Indian currency, which has been consistently under pressure, fell to 19.22 last Wednesday and it is reported that rupee will slide below 19.33 in the next few days.

Currencies across emerging markets have been lately subdued due to the global trade war concerns and higher oil prices.

“More dollar is being remitted to India due to growing exports. Plus, Reserve Bank of India is also not intervening and want rupee’s free flow. Hence, rupee hitting 19.65 is quite possible next week or in 10 days,” said Raipancholia.

“At the moment, Reserve Bank of India will not intervene because India needs dollars and exports from India is improving,” he said, adding that customer in the UAE are remitting now.

“There has been 15 to 20 per cent spike in remittances from the UAE over the last 3 months, which is a good sign for the industry,” he added.

However, Raipancholia said rupee depreciation is fuelling inflation in the country which the government needs to look into.

The Indian rupee reversed all the gains made earlier in the day to close at an all-time low of 71.21 per dollar on Monday, tracking a weak trend among its global peers and amid concerns of a wider trade deficit.

On Friday, it settled at 70.99-71, after hitting a low of Rs71 per greenback.

Currencies across emerging markets have been lately subdued due to the global trade war concerns, analysts said.

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