Saudi National Bank reports 1.4% increase in first-quarterly profit after merger

Saudi National Bank was created through the merger of NCB and Samba in April. (Reuters)
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Updated 06 August 2021

Saudi National Bank reports 1.4% increase in first-quarterly profit after merger

  • Second-quarter net profit was SR2.12 billion ($565 million)
  • Bloomberg analyst consensus was SR4.1 billion

RIYADH: Saudi National Bank saw its net profits increase by 1.4 percent in the second quarter from a year ago, missing analyst estimates in its first quarterly earnings report since its formation through the merger of National Commercial Bank and Samba Financial Group in April.

Saudi Arabia’s biggest retail lender, also known as Al Ahli, posted a second-quarter net profit after zakat and income tax of SR2.12 billion ($565 million), the company said in a filing to the Tadawul stock market, compared with the Bloomberg analyst consensus of SR4.1 billion. Alrajhi Bank’s second-quarter net profit was 3.61 billion riyals, with an increase of 47 percent from a year ago.

“The merger took place in April, which is only 3 months ago, so although the result is somewhat supportive, one has to realize that the full energy and cost savings and the synergy between the banks following the merger take time to be realized, given the different management cultures of the two organizations,” Mohammed Ramady, an independent Saudi economist, told Arab News.

In the six months to the end of June, Al Ahli posted a 12.3 percent increase in net profit after zakat and income tax to SR5.53 billion. Al Ahli assets climbed to SR896 billion at the end of June from SR557 billion a year earlier, while the total shareholders’ equity without minority rights jumped by 120 percent to SR159 billion riyals.

The bank’s financing and advances portfolio rose to SR503 billion from SR316 billion, while customer deposits were SR588 billion compared with SR380 billion a year earlier.

“Our first financial results after the completion of the merger process reflect the strength of the financial entity that we aspired to establish,” said Al-Ahli Chairman Ammar bin Abdul Wahed Al-Khudairi.

The Saudi National Bank (SNB) second quarter results include the results of the National Commercial Bank for a period of six months and Samba Financial Group for a period of only three months from the date of the official completion of the merger process on April 1, 2021, and the provisions for credit losses related to the merger, according to the statement.

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Bitcoin slips from record high as ETF mania subsides

Updated 22 October 2021

Bitcoin slips from record high as ETF mania subsides

  • JPMorgan analysts doubted whether the ETF will attract much new money into bitcoin

RIYADH: Cryptocurrencies declined on Friday following an ETF-fueled rally that saw it reach a record $67,016 on Wednesday, as investors questioned whether the new investment vehicle will attract as much new money to the assets as some have speculated.

Bitcoin, the world’s largest cryptocurrency, was trading at $63,498.16 as of 3:36 p.m. in Riyadh, a drop of 2.5 percent over the previous 24 hours. Ethereum, was 2.0 percent lower at $4,125.40 after approaching its all-time high of $4,380 from May.

Bitcoin’s recent rally — six-months after its previous top of $64,895 — was fueled by the debut of the ProShares Bitcoin Strategy ETF.

A dozen other futures-based bitcoin ETFs could launch in the coming months, with The Valkyrie Bitcoin Strategy ETF set to begin trading on Friday under the ticker BTF. The VanEck Bitcoin Strategy ETF expected to begin trading next week under the ticker XBTF.

Investors have bet the long-awaited launch of bitcoin ETFs will lead to greater investment from both retail and institutional investors, but analysts at JPMorgan suggested in a note that the ProShares ETF could have limited effect on investment volumes because there are so many options for investors already.

The ProShares ETF has created a significant shift in the balance of power among cryptocurrency exchanges. The Chicago Mercantile Exchange (CME), host to the ETF, has replaced Binance as the world’s biggest bitcoin futures platform this week.

As of 2 p.m. Riyadh time, the CME accounted for 22 percent, or $5.68 billion, of the total global futures open interest of $25.7 billion, while Binance contributed $5.66 billion, CoinDesk reported.

The value of funds held in CME-based futures contracts have tripled this month, with more than $1.5 billion flowing into the market after ProShares’ bitcoin ETF went live on Tuesday, CoinDesk said.

Elsewhere in the cryptoverse, Worldcoin said yesterday it raised $25 million from investors including Andreessen Horowitz, CoinBase Ventures and Digital Currency Group, valuing it at $1 billion.

The rather unique proposition is that coins are distributed in exchange for staring into an orb, which takes a scan of your retinas.

Based in Berlin, Worldcoin was founded by former Y Combinator President Sam Altman. It currently has 70 employees and 30 orbs, which it takes out into the world to offer worldcoins. It plans to ramp up orb production to 4,000 per month from November.

So far, about 130,000 people have stared into the orb, has a cap of 10 billion coins with the aim of giving one to every person on earth with the remaining 2 billion set aside for the Worldcoin Foundation and investors.

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China coal prices dive as govt plans intervention to ease power crunch

Updated 22 October 2021

China coal prices dive as govt plans intervention to ease power crunch

  • China thermal coal prices plunge 12.8 percent

BEIJING: China’s thermal coal futures sank about 13 percent on Friday, extending their losses since Tuesday when Beijing said it would intervene to cool surging prices https://www.reuters.com/world/china/china-liberalize-thermal-power-pricing-tackle-energy-crisis-2021-10-12 of the commodity to help electricity producers out of a widespread power crunch.
The most-active thermal coal futures on Zhengzhou Commodity Exchange, for delivery in January, tumbled to 1,384 yuan per ton by 1130 Beijing time (0329 GMT) — down more than 30 percent since Tuesday’s all-time peak of 1,982 yuan per ton.
Coking coal was down 9.91 percent and coke futures fell 7.42 percent on the Dalian Commodity Exchange in morning trade, having fallen by the maximum 12 percent in day-time trade on Thursday.
A widening power crisis in China caused by shortages of coal led to record high fuel prices amid booming post-pandemic industrial demand as the country shifts to greener fuels.
China has halted production at factories which has dragged on factory gate inflation.
China is pushing miners to ramp up coal production and increasing imports so that power stations can rebuild stockpiles before the winter heating season, but analysts say shortages are likely to persist for at least another few months.
“We’re now seeing the fruits of China’s supply response, as the government has given miners carte blanche to produce at full tilt — even permitting the relaxation of safety inspections in some cases,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
“The parabolic pricing action largely represented the fear of buyers being unable to source sufficient volumes to feed power plants and coke ovens,” Widnell said.
“Therefore, we can expect prices to fall almost as fast as they’ve risen now that a wave of supply is inbound,” he added.

MEASURES TO TAME RUNAWAY PRICES
China’s state planner, the National Development and Reform Commission (NDRC), said this week that it was studying ways to lower coal prices and would take all necessary steps to bring them into a reasonable range.
The NDRC said on Friday it would send teams of inspectors to major coal producing regions to probe the costs of coal production and circulation.
It added that it had met with the China Coal Industry Association and key firms, and was looking at steps to prevent coal companies from seeking excessive profits.
China’s securities regulator has said it would ask futures exchanges to raise fees, restrict trading quotas and crack down on speculation in response to high coal prices.
The NDRC “has concluded that the unbridled soaring of coal prices is partly driven by those hoping to hit the jackpot by taking advantage of the power supply falling short of actual need,” Chinese state media outlet China Daily wrote on Thursday.
There should be “zero tolerance to the hoarding of coal,” the newspaper added. “It is of the utmost importance to rein in coal prices as they will pose a threat to people’s daily lives when winter sets in.”
Due to cold winds and rain, temperatures in most parts of central and eastern China are currently lower than normal, the National Meteorological Center said.


How AI and Robotics will help deliver The Saudi Green Initiative

Updated 22 October 2021

How AI and Robotics will help deliver The Saudi Green Initiative

  • Saudi Green Initiative (SGI) Forum to be held in Riyadh on 23-24 October
  • Saudi Arabia plans to plant 10 billion trees

RIYADH: The forthcoming Saudi Green Initiative (SGI) Forum, to be held in Riyadh on 23-24 October, is set to be a milestone in the historic effort to transform the oil-based economy of Saudi Arabia into a cleaner and more sustainable one.
In addition to planting 10 billion trees (covering 30 percent of total land area), the SGI aims to create vast protected zones, conserve marine life around the coasts and encourage alternative forms of agriculture. One key aspect of this sea change will be the contribution of technology to the greening of Saudi Arabia.
A leader in the realm of agritech is Dr. Nahid Sidki, chief technology officer with Research Products Development Company (RPDC), a PIF-owned not-for-profit resource for the commercialization of Saudi-based research and breakthrough technology.
With a 30-year background in Silicon Valley, where he was executive director at the Stanford Research Institute, Dr. Sidki is an authority on robotics and artificial intelligence (AI).
“The SGI is a great initiative that can produce a clean future, reduce carbon emissions and impact climate change,” Dr. Sidki told Arab News. “AI and robotics can play a major role in this, not only here in Saudi Arabia but across the Gulf region.”
But how exactly does hi-tech have anything to do with planting trees and growing crops? The answer lies partly in the sheer volume of what the SGI envisions.
“To plant 10 billion trees in a country like Saudi Arabia, one has to ask how they will be monitored and how their health will be sustained for decades to come. We cannot rely on just hoping for the best. We need to look to the ultimate goal and then work backwards in terms of the development and implementation of technology. It’s like a closed-loop ecosystem: planting, monitoring, irrigating and harvesting the trees.”
A primary consideration of the SGI is the use (and misuse) of water, a precious resource in the desert kingdom. Conventional irrigation methods often lead to significant wastage.
Smart dust
“AI can play a crucial role here via smart, efficient irrigation systems that utilize sensors and data analytics to monitor climate conditions and soil moisture,” Dr. Sidki said. “If every tree and every plant had sensors to monitor the condition of the soil surrounding the roots, this could determine exactly when it requires water and exactly what amount.”
Such AI-based solutions are already being put into practice, for example in the form of “smart dust,” nanoparticles that communicate with each other, enabling complex data collection and efficient decision-making in all aspects of agriculture.
“Land health monitoring is also very important,” said Dr. Sidki. “Throughout the life cycle of crops, drones can enable precision spraying and maximize seed pollination, and the same kind of sensor technology can be used for livestock monitoring, crop spraying and smart harvesting.”
These technologies, combined with local and global advances in genetic engineering, could soon turn the parched landscape of Saudi Arabia into an agricultural powerhouse with many verdant oases. Having said that, the greening of Saudi Arabia will require not just the conservation but also the production of potable water.
Some 60 percent of the Kingdom’s fresh water is currently supplied by energy-intensive seawater desalination plants reliant on polluting fossil fuels, an unsustainable solution in view of the SGI. But new desalination and water filtration techniques are emerging quickly, positioning the KSA as a hub for proprietary green technology.
In one RPDC-assisted project called the Red Sea Farm, a group of KAUST researchers have successfully grown tomatoes using a mix of 75 percent seawater and 25 percent freshwater, a scalable method that was recognized and lauded by the United Nations General Assembly in September.
“The idea is to develop smart technology to reduce the cost of desalination,” said Dr. Sidki. “Imagine if we could utilize solar energy for desalination. We would have unlimited fresh water from the ocean, which we are surrounded by in the KSA.”
The SGI represents one aspect of Saudi Arabia’s broader 4th Industrial Revolution (4IR), the fusion of AI, robotics, Internet of Things (IoT), genetic engineering and quantum computing, blurring the boundaries between the physical, digital and biological worlds. This is a highly collaborative movement involving numerous government bodies, PIF-owned companies (both commercial and not-for-profit), academic institutions, corporations, startups and SMEs.
“Robotics and AI will be playing a major role in every sector of society,” said Dr. Sidki. “And here in Saudi Arabia we have huge public and private funds to build capabilities.”
Innovation largely comes down to talent and education, and Dr. Sidki is again optimistic in this regard. “Saudi Arabia has a population of about 35 million, 70 percent of which is 25 or younger. And the percentage of those with a higher degree is very high compared to most other countries. In terms of PhD-holders the KSA probably ranks the highest in the region.”
Saudi Arabia is on the cusp of a major transformation that will involve a great deal of hard work and a lot of imagination.
“There’s an endless list of ways that new forms of technology can improve the quality of our daily life,” Dr. Sidki said. “People need to be very passionate about what they’re doing, and to be aware of the contributions they can make to their society, in order to have a huge impact. I think the combination of education and passion, and that impact, are the ingredients for a society to successfully achieve whatever it wants to do.”

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Electrified cars hit almost a fifth of EU Q3 vehicle sales

Updated 22 October 2021

Electrified cars hit almost a fifth of EU Q3 vehicle sales

  • Battery electric vehicle sales jumped nearly 57 percent to more than 212,000 units

LONDON: Nearly one in five vehicles sold in the European Union in the third quarter was an electrified model as sales continued to soar while fossil-fuel cars slumped, according to sales data released on Friday by a trade organization.
The European Automobile Manufacturers’ Association, or ACEA, which represents major European car, truck, van and bus makers, said that battery electric and plug-in hybrid model sales across the European Union made up just under 19 percent of all sales.
Battery electric vehicle sales jumped nearly 57 percent to more than 212,000 units, while plug-in hybrid models rose nearly 43 percent to more than 197,000 units.
This is a slower pace of growth than in 2020 when sales almost trebled from a low base.
But it compares with a 35 percent drop in sales for petrol cars — which still are the biggest sellers and account for nearly 40 percent of overall sales — and a more than 50 percent drop for diesel cars during the quarter.
Less than a decade ago, diesel cars made up more than 50 percent of sale in the EU, but accounted for under 18 percent of all cars sold in the third quarter.
As well as having to meet stringent new EU carbon emissions targets, car makers and consumers have benefited from government subsidies for electric vehicles.
The European Commission has also proposed an effective ban on fossil-fuel vehicles from 2035, aiming to speed up the switch to zero-emission electric vehicles as part of a broad package of measures to combat global warming.

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China Evergrande lines up funds for interest payment to avert default — source

Updated 22 October 2021

China Evergrande lines up funds for interest payment to avert default — source

  • Company faced end of 30-day grace period for payment on Oct. 23
  • Next 30-day grace period expires Oct. 29 for Sept. 29 payment

HONG KONG/SHANGHAI: China Evergrande Group has supplied funds to pay interest on a US dollar bond, a person with direct knowledge of the matter told Reuters on Friday, days before a deadline that would have seen the developer plunge into formal default.
The person said Evergrande remitted $83.5 million to a trustee account at Citibank on Thursday — as earlier reported on Friday by state-backed Securities Times — allowing it to pay all bondholders before the payment grace period ends on Oct. 23.
News of the remittance will likely bring relief to investors and regulators worried about a default’s wider fallout in global financial markets, adding to reassurance from Chinese officials who have said creditors’ interests would be protected.
Still, the developer, saddled with $300 billion in liabilities, will need to make payments on a string of other bonds, with the next major deadline to avoid default only a week away and little known about whether it is in a position to pay those debts.
“They seem to be avoiding short-term default and it’s a bit of a relief that they have managed to find liquidity,” said a Hong Kong-based debt restructuring lawyer representing some bondholders, who did not want to be identified.
“But still, Evergrande does need to restructure its debt. This payment might be a way for them to get some sort of buy-in with stakeholders before the heavy work needed on the restructuring.”
It was not immediately clear how cash-strapped Evergrande was able to raise funds for paying the bondholders or whether any bondholders have already received the money.
Evergrande did not respond to Reuters’ request for comment. Citibank declined to comment. The person with knowledge of the matter was not authorized to speak with media and so declined to be identified.
News of the remittance comes a day after financial information provider REDD said Evergrande had secured more time to pay a defaulted bond it guaranteed, issued by Jumbo Fortune Enterprises. “This is a positive surprise,” said James Wong, portfolio manager at GaoTeng Global Asset Management, who had expected a default.
The news would boost bondholders’ confidence, he said, as “there are many coupon payments due ahead. If Evergrande pays this time, I don’t see why it won’t pay the next time.”
Evergrande missed coupon payments totalling nearly $280 million on its dollar bonds on Sept. 23, Sept. 29 and Oct. 11, beginning 30-day grace periods for each.
Subsequent non-payment would result in formal default and trigger cross-default provisions for its other dollar bonds.
Evergrande’s next payment deadline is Oct. 29 with the expiration of the 30-day grace period on its Sept. 29 coupon.

TEMPORARY RELIEF
Evergrande’s dollar bond prices surged on Friday, with its April 2022 and 2023 notes jumping more than 10 percent, data from Duration Finance showed, though they still traded at deeply distressed levels of around a quarter of their face value.
Its shares rose as much as 7.8 percent, a day after trade resumed following a more than two-week halt pending the announcement of a stake sale in its property management unit, which was scrapped this week.
Evergrande’s woes have reverberated across the $5 trillion Chinese property sector, which accounts for a quarter of the economy by some metrics, with a string of default announcements, rating downgrades and slumping corporate bonds.
In the latest such move, Fitch Ratings on Thursday cut Sinic Holdings (Group) Co. Ltd’s long-term foreign currency issuer default rating to “restricted default” from “C” as the developer failed to repay its $250 million notes due Oct. 18.
Still, the Evergrande news helped the Hang Seng mainland properties index surge more than 4 percent versus a gain of 0.25 percent in the broader Hang Seng index.
It also helped Evergrande’s smaller peer Kaisa Group Holdings Ltd, whose dollar bonds surged in price.
Kaisa was the first Chinese developer to default back in 2015 and the Evergrande crisis has put it back in the spotlight.
In mainland markets, the CSI300 Real Estate index jumped as much as 6.5 percent, and an index tracking the broader property sector was eyeing its biggest gain in nearly two months.
When asked whether it will step in to help its rival to ease its liquidity crisis, Chairman Yu Liang of the nation’s third-biggest developer, China Vanke Co. Ltd, said developers needed to ensure their own safety first.
“Everyone feels the chill as ‘winter’ arrives for the sector... Whether we can pass this winter safely is still unknown,” Yu told a company forum on Friday.

FREEWHEELING
Evergrande’s woes had been snowballing for months. Dwindling resources set against more than $300 billion of liabilities had wiped out 80 percent of its value.
Founded in Guangzhou in 1996, the developer epitomised a freewheeling era of borrowing and building. But that business model has been scuttled by hundreds of new rules designed to curb developers’ debt frenzy and promote affordable housing.
Analysts said any prospect of demise would raise questions over what would happen to the more than 1,300 real estate projects Evergrande has ongoing in over 280 cities, and any impact the wider property sector.
Bank exposure to developers is also extensive. A leaked 2020 document, branded a fake by Evergrande but taken seriously by analysts, showed the company’s liabilities extending to more than 128 banks and over 121 non-banking institutions.
“Given that we have little clarity on how bank financing is going for stalled real estate projects, but we know that project pre-sales are down a lot, the onshore business is unlikely to be supplying cash to Evergrande near-term,” said analyst Travis Lundy at Quiddity Advisers in Hong Kong.

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