DUBAI : The world economic crunch has hit the Middle East too, but is not deterring many Muslims from throwing traditional banquets to break the fast each dusk during the holy month of Ramazan, even if it means cutting back on other expenses. But for some, such as in the Gaza Strip, the crushing weight of poverty and an Israeli blockade is too much for even the most determined. In the oil-rich Gulf region, supermarkets have been crammed with customers since Ramazan began last week, shopping for food and drinks in preparation for the banquet, or iftar, sometimes served in lavish tents or hotel ballrooms. Some are making an exception and running budget deficits, because Ramazan is not only a time for prayer and spiritual reflection but also for social bonding over meals with family and friends. This is the only month when families get together for banquets. They do not care about the crisis; people forget about their worries during those get-togethers, Emirati housewife Umm Saeed said in Dubai. People are inviting each other over for food more often during this month. It is as if they are competing against each other for who buys the most things and cooks the most food. Mashael Mekki, a Sudanese living in Dubai said: Food is food no matter if there is an economic crisis; people are buying and cooking the same quantities as last year. It s Ramazan; people are hungry. I am buying the same things as I did last year, she said, adding that the same people who have invited us last year are also inviting us this year. The same sentiment was shared by people in neighbouring Qatar. Mohammed al-Sada, a 32-year-old government clerk, said cutting back on spending is unthinkable because Ramazan has a special status.

There is merchandise that should be bought during Ramazan as is the case every year even if I have to depend on the credit card. Perhaps I will economise after the month is over in order to compensate for the budget deficit, but we are not ready to change our habits during Ramazan. Customers throng cafes and restaurants, staying up late, smoking shishas (water pipes), drinking tea or eating sweets and delicacies while chatting and exchanging news. But in the Gaza Strip, where an Israeli offensive killed hundreds and flattened vast swathes of the territory at the new year, Ramazan reminds people of the severe poverty they live in as a result of an Israeli blockade. Rashad Abu Aisha said this is the worst Ramazan her family has ever seen, with widespread shortages and skyrocketing prices at the local market. The war has added so much to our grief; it s more than we can bear, he said. Even those whose homes and loved ones were spared by the fighting have faced rolling shortages and the highest prices in memory, as they have had to rely on goods smuggled in through tunnels from Egypt. As a result, the festive Ramazan lamps that line the streets of cities across the Muslim world are, in Gaza, largely confined to store-fronts. Sami, a 40-year-old father of seven, says the little money he is able to scrape together will have to go for supplies for the coming school year. People in Gaza never know when the next disaster is going to come and how they are going to deal with it, he says. Most people are without work and without a source of income. Shopowners, meanwhile, say that while they are able to fill their shelves with smuggled goods they have few customers. Generally speaking, consumers in the region have complained of higher prices of even basic foods. I have noticed an increase in the prices of staple foods, the foods we use in our everyday meals, such as rice, vegetables, bread and meats. They are raising the prices on things that we need the most, said Umm Khalifa in Dubai. I think the rise in prices is unjustified since they know that during Ramazan we consume more so this way they are creating more pressure on households. This is common every Ramazan and is, in part, due to higher demand. And as always, this prompts governments to take measures to clamp down on price hikes.

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KARACHI - NIB Bank and Bank Alfalah have announced their financial results for the first half of 2009 (1HCY09), whereas, National Bank of Pakistan is expected to its results for 1HCY09 on Saturday (today). According to the results, NIB has declared consolidated profit before tax of Rs1.5b, while Bank Alfalah posted a significant decline of 39pc in its net earnings. On the other hand, NBP is likely to post profit after tax (PAT) of Rs7.1b (EPS Rs6.60). For the first half of 2009, NIB Bank earned a consolidated profit before tax of Rs1.5b and a consolidated profit after tax of Rs 1.04b. On a standalone basis, profit before tax was Rs1b and profit after tax was Rs 580m. Mark up earned by NIB Bank in the first six months of 2009 at Rs 9.4b was Rs 2.2b; higher than for the first six months of 2008. This was a result of a growth in the loan book of the bank as well higher loan yields. The bank also achieved an appreciable reduction in its cost of funds for the current financial year, which helped contain the increase in mark up expense to Rs 1.9b. Fee income in the first half of 2009 also increased by 9pc over the first half of 2008. While recording a strong growth in its balance sheet, the bank succeeded in reducing administrative expenses by 9pc in the first half of 2009 compared to the first half of 2008.
This was achieved despite high inflation and rising utilities costs, given the very strong focus placed by the Bank on improving operating efficiency. During the second quarter of 2009, the Bank commenced the rollout of its new Core Banking with 77 branches already converted and a plan to complete the migration to the new banking platform before the end of 2009. Similarly, Bank Al-Falah has announced its 1H2009 results. The bank posted a significant decline of 39pc in its net earnings at Rs1.1b (EPS Rs0.82) versus Rs1.8b (EPS Rs1.35) in the similar period of last year. Both net interest income (NII) and non-interest income remained lower at 1pc and 5pc respectively. Interestingly, non-interest income was higher than the expectations due to above anticipated income from dealing in foreign currency and capital gain income. Moreover, the bank s Net Interest Income (NII), during 1H2009 stood at Rs5.3b (1pc lower on YoY basis). In 2Q2009, NII dropped by 5pc over the same quarter of last year at Rs2.5b; mainly due to squeezing margins. The decline in NII is also evident on sequential quarter basis and 2Q2009 interest based income is 6pc lower than 1Q2009. The bank s non interest income also dropped by 5pc to Rs 2.7b. Decline is largely attributable to lower fees, commission and brokerage income; however, this is 15pc higher than our estimate of Rs 2.4b. In our opinion, the deviation in estimate is primarily due to higher income from dealing in foreign currencies and above than expected realized gain on sale of securities , said Kamran Rehmani at FCEL. Moreover, one of the leading blue-chip banks of Pakistan economy, National Bank of Pakistan Ltd (NBP) is scheduled to announce its results for 1HCY09 on Saturday (today) and the Board of Directors of the bank will be meeting today. NBP is expected to post a PAT of Rs7,105m (EPS Rs6.60), translating into a decline of 10pc on YoY basis.

Despite significant increase in fund cost, we expect bank s NII to grow by 6pc YoY on the back of 38pc YoY increase in interest income , said analyst Abdul Shakur at InvestCap Research. On QoQ basis, the bottomline is expected to decline by 31pc YoY to Rs2.89b (EPS Rs2.69) in 2QCY09. Provisions, which remain the concerning factor for NBP as being the public sector entity, are expected to increase by 12pc YoY with further deterioration in the asset quality. NPLs are expected to increase by 20pc in 1HCY09 (NPLs to loan ratio expected at 14.1pc). Moreover, provision for Dewan group would further suppress bank s bottomline as estimated exposure of Rs5bn of Dewan s group is expected to be provided going forward. Due to lower dividends and equity gains, the non interest income of the bank is expected to remain dry, to decline by 2pc YoY. Admin charges are expected to grow by 27pc YoY resulting in inflating cost to income ratio to 42pc compared to 30pc in 1QCY09. No cash of stock dividend with the result is expected according to the experts.

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Islamic banks assets up sharply

Monday, August 31, 2009

Islamic banking fuses principles of sharia or Islamic law and modern banking. Islamic funds are banned from investing in cos associated with tobacco, alcohol or gambling. Iranian banks were the biggest players in the global Islamic banking sector, holding seven out of the top 10 rankings and 12 out of the 100, but Saudi Arabian lenders were more profitable, the report said. Saudi Arabia s Al Rajhi Bank had the highest net income of $1.74b, which is more than five times the earnings of Bank Tejarat, Iran s most profitable lender. Iranian banks also took up 40 percent of the total assets of the top 100 banks, with the UAE, Malaysia, Saudi Arabia and Kuwait accounting for a combined 40pc. Smaller banks in 10 other markets accounted for the rest. Outside of the Middle East, two Islamic banks in Britain made it to the top 100, according to the report. Asian and North African banks are still very small compared with the Middle Eastern players, it said, adding that only Malaysian and Bangladeshi Islamic banks have a significant amount of assets . Indonesia, the world s most populous Muslim nation, had only two banks on the list, Pakistan had three, while regional financial centre Singapore and the Malay Islamic kingdom of Brunei had one each.

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Monday, August 31, 2009

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According to the results, the total cash payout stood at 39pc versus 2-year historical average payout of 55pc mainly due to persisting circular debt trap in the energy chain. The growth in company s bottom line was mainly supported by 35pc revenue growth. Though oil revenues (crude oil +NGL+ condensate) of PPL dropped by 9pc amid lower realised crude oil prices (approx. $58 per barrel compared to $85 per barrel in FY08), gas revenues rose by significant 43pc on the back of improved wellhead gas prices of Sui and Kandhkot fields (higher by 56pc YoY). Thus, sharp decline in oil prices during FY09 did not affect the overall revenues due to higher share of gas in its hydro-carbon as gas prices are fixed for 6-months (time lag impact). Secondly, 20pc devaluation of Pakistani rupee against dollar which improved rupee based revenues. During FY09, though oil production remained flat, however, gas sales dropped by 3pc (average 955mmcfd) mainly due to decline in production from its famous Sui gas field. Interestingly, the affect of higher field expenditure was mitigated through increase in other income.


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Friday, August 28, 2009

KARACHI: The rupee moved both ways on the currency market on Thursday amid rising demand for the greenback, money analysts said. On the interbank market the rupee fell by 13 paisa against dollar for buying and selling at 82.88 and 82.93, experts said.

In the fourth Asian trading yen rose broadly as investors fretted that a rally in risk assets since March may have run ahead of a recovery in the global economy and on worries about the outlook for Chinese shares.

OPEN MARKET RATES: The rupee did not move any side in relation to dollar for buying and selling at 82.70 and 82.80, dealers said. The rupee, however, managed to gain modestly against the euro rising 55 paisa for buying at Rs 117.10 and it also gained 65 paisa for selling at Rs 117.60, they said.



Open Buying Rs 82.70 Open Selling Rs.82.80



Interbank Closing Rates: Interbank Closing Rates For Dollar On Thursday.


Buying Rs.82.88 Selling Rs.82.93



(BRecorder)



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Friday, August 28, 2009

LONDON: The interbank cost of borrowing euros hit new lows on Thursday with liquidity still abundant, but data showed money was still not reaching the real economy and central bankers continued to warn of an uncertain outlook. Benchmark sterling and dollar rates also marked new lows, with the latter remaining below equivalent yen rates, a market anomaly seen this week for the first time in 16 years.

Despite around 160 billion euros of excess liquidity in the system, loans to eurozone households and businesses fell in July to record their slowest annual growth ever, the European Central Bank said on Thursday. "The key thing is that there is little sign that the ECB's liquidity provisions are encouraging banks to lend to the wider economy," said Ben May, an economist at Capital Economics.

Meanwhile, ECB Governing Council member Mario Draghi was the latest central banker to sound a cautionary note, saying the global financial and economic crisis is easing but the outlook remained uncertain. His comments echo those of other policymakers in recent days, which have supported government bonds and interest rate futures in the eurozone.

"There doesn't appear to be any final demand behind the positive indicators we're seeing, it's more an inventory cycle thing going on at the moment," said Nordea's chief analyst Niels From.

Benchmark three-month euro Libor rates were almost a basis point lower at 0.8025 percent, with the dollar equivalent just over a basis point lower at 0.36036 percent. The premium that dollar Libor trades over a risk-free benchmark, Overnight Index Swap rates - a gauge of stress in the banking sector - fell to 18 basis points, a level seen in August 2007 just as the credit crisis erupted.


(Reuters)

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KARACHI - Pakistan Petroleum Limited (PPL) top line registered a growth of 34.7 per cent to Rs 61.6 billion on year-on-year basis; primarily owing to a surge in gas wellhead prices by 30pc YoY in FY09. According to the financial report of the PPL, the increased gas wellhead price mitigated the effect of accumulated decline of 5pc YoY in oil and gas production (as per company management). Oil production surged by 2pc YoY benefiting from improved production from Mela (23pc YoY), while gas production marginally slid by 3pc YoY main culprit being Sui (-6pc YoY), Sawan (-10pc YoY) and Makori (-18pc YoY) fields. Furthermore, royalty payment surged by 35.3pc YoY in the resonance of the increase in the top line. On one hand, according to the reports the field expenditure inflated by 23.1pc YoY to Rs 7.5b on account of expensing out of 5 exploratory dried wells. While on the other hand, inflationary impact on other major heads of field expenditure, as per the company management. Other noticeable change from last year was the surge in financial cost by 40.5pc YoY to Rs 93.6m, early pointers towards encompassment of E&P sector towards circular debt. In this regard, according to news reports, PPL receivables from gas distribution companies stand at Rs 16.2b while WAPDA has to pay Rs 5.8b.

Tax-to-operating profit also slid by 138bps YoY to 33.9 pc in FY09 benefiting from lower tax liability due to unsuccessful drilling activities during the year. PPL s bottomline witnessed a mammoth growth of 40.6pc YoY to Rs 27.7b (EPS Rs33.37) in FY09. In addition, company also declared cash divided of Rs 3/share which translates into a full-year payout of Rs13/share along with 20pc bonus shares. According to company notice, PPL s board of directors has recommended an increase in authorised ordinary share capital to Rs 15.0b (1,500m ordinary share at Rs10 par value) from Rs 10.0b (1,000m ordinary share at Rs10 par value). The increase is deemed to be a direct outcome of PPL s announcement of 20pc bonus shares which will increase it s paid up capital to Rs 9.9b. Therefore, this rise in authorised capital would provide room for future enhancement of paid-up capital in the form of bonus shares or secondary offerings. However, this change is of natural and would not have any impact on company s valuations. The borated international crude oil prices in 2HFY09 would render into 27pc HoH reduction in Sui and Kandkot (combined contribution 79pc in PPL s gas production) wellhead gas prices, which is expected to suppress company s FY10 earnings. However, increased gas production from Hala and Manzalai fields coupled with resurgence in international oil prices (currently at $70/bbl) will more than offset the aforementioned impact and will provide impetus for future growth. Furthermore, company plans to drill 10 wells in FY10, which would also augment company s oil and gas production.


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Friday, August 28, 2009

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Tax-to-operating profit also slid by 138bps YoY to 33.9 pc in FY09 benefiting from lower tax liability due to unsuccessful drilling activities during the year. PPL s bottomline witnessed a mammoth growth of 40.6pc YoY to Rs 27.7b (EPS Rs33.37) in FY09. In addition, company also declared cash divided of Rs 3/share which translates into a full-year payout of Rs13/share along with 20pc bonus shares. According to company notice, PPL s board of directors has recommended an increase in authorised ordinary share capital to Rs 15.0b (1,500m ordinary share at Rs10 par value) from Rs 10.0b (1,000m ordinary share at Rs10 par value). The increase is deemed to be a direct outcome of PPL s announcement of 20pc bonus shares which will increase it s paid up capital to Rs 9.9b. Therefore, this rise in authorised capital would provide room for future enhancement of paid-up capital in the form of bonus shares or secondary offerings. However, this change is of natural and would not have any impact on company s valuations. The borated international crude oil prices in 2HFY09 would render into 27pc HoH reduction in Sui and Kandkot (combined contribution 79pc in PPL s gas production) wellhead gas prices, which is expected to suppress company s FY10 earnings. However, increased gas production from Hala and Manzalai fields coupled with resurgence in international oil prices (currently at $70/bbl) will more than offset the aforementioned impact and will provide impetus for future growth. Furthermore, company plans to drill 10 wells in FY10, which would also augment company s oil and gas production.



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