MENA Daily Market Report – September 02, 2010

Kuwaiti equities ended Thursday’s session in a booming state, on the back of gains in pivotal stocks. The market reached its highest level since May 15, 2010. The advance was broad-based with six out of the eight sectors inching higher.

Global Bahraini Index ended the last trading session of the week with a negative performance of 0.19 percent to close at 115.23 points, Bahrain All Share Index decreased by 0.21 percent to reach 1,420.14 points. Bahrain Islamic Bank was the top decliner for the day shedding 8.18 percent to close at BD0.15. Two sectors went down today with the Investment Index being the top decliner for today falling 0.31 percent.

 Despite the loses that recorded by the market heavy weight, Ezdan Real Estate Company, Global Qatari General Index managed to end today’s session with a marginal increase of 0.03 percent at 571.09 points. Also QE Index ended today’s session up by 0.76 percent on the back of the good performance witnessed by Industries Qatar and the banking stocks.

 UAE stock markets ended on a positive note today where Dubai Financial Market (DFM) being the top gainer for the day ending the day up 0.76 percent and closed at 1,497.78 points. The Transportation Sector and the Financial & Investment Sector both contributed to the market’s advance by posting gains of 1.62 percent and 1.17 percent, respectively, making them the biggest gainers in the market. Furthermore, the Abu Dhabi Securities Exchange (ADX) also ended the day up by 0.12 percent to close at 2,494.52 points. The Consumer Sector was the top gainer, up 0.89 percent, and therefore contributing to the market’s gain. The Health Care Sector came in second place with a 0.50 percent advance.

 Muscat 30 Index ended today’s session flat at 6,259.95 points (+0.005 percent). The sectors performance was mixed as two sectors ended up and one sector retreated. Muscat Gas share price continued to edge higher adding 5.05 percent to its value and topped the gainers list for today.

 Heavy weight Mobinil was the major player in the EGX 30 components today adding 2.40 percent to its value leading the index to gain 0.51 percent. Also, Orascom Telecom Holding rose by 0.93 percent. On the other hand, EGX 70 Index marginally shed 0.02 percent. Foreigners were net buyers today.

First Gulf Bank appoints Abdulwahed Juma as Head of Corporate Affairs

Abu Dhabi, UAE: First Gulf Bank has announced the appointment of Mr. Abdulwahed Juma as Head of Corporate Affairs. The appointment signifies the Bank’s stated desire to increase focus on its internal and external communications and to recognize the importance of strengthening its brand image.

Reporting directly to FGB’s CEO Mr. Juma’s prime responsibility is to spearhead the deployment of strategies to further enhance the Bank’s profile, visibility and reputation, supporting FGB’s dynamic business growth while expanding internationally.

Juma has built up a broad range of International & Local experience in the UAE, Tunisia, Malta, Pakistan & the Far East. Most recently, he was the Chief Commercial Officer at Arab Media Group, a leading Media organization in the Middle East. Prior to that, Juma led Corporate Communications for Emirates International Telecommunications, an international investment company in the telecommunication chain.

Commenting on the appointment, Mr. Andre Sayegh, CEO of FGB said:”Juma joins FGB at a very exciting time of growth and development regionally and globally. Our Brand and Communications play a vital role in binding us as an organization, whilst delivering our ambitious targets for growth, serving the needs of our stakeholders. I am confident that Juma’s wealth of experience will make a substantial contribution to the delivery of such ambitions in an ever evolving financial landscape.”

Juma holds an M.B.A and a Bachelor of Applied Science in Engineering Management and he is an Industry Advisor at the Higher Colleges of Technology

First Gulf Bank Records Highest Net Profit Ever For the Period AED 1,707 Million 1st Half 2010

Main Highlights:

• Net Profit at AED 787 million in Q2 2010 is higher than Q2 2009 by 2%.

• Net Profit at AED 1,707 million for the first six months of 2010 is 12% higher than the same period of 2009.

• Operating Income at AED 3,126 million for the first six months of 2010 is 19% higher and Operating Expense at AED 514 million is 7% lower than the same period last year.

• Earnings per Share at AED 1.13 for the first six months of 2010 is 23% higher than the same period last year.

• Capital Adequacy Ratio stands at 23.3%, Net Interest Margin at 3.60% and Cost To Income Ratio at 16.4%.

First Gulf Bank (FGB) announced its financial results for the second quarter of 2010, reporting a Net Profit of AED 787 million. This represents an increase of 2% over its Net Profit for the same quarter of last year. For the first half of 2010, the Net Profit amounted to AED 1,707 million which represents a 12% increase over the same period of 2009.

“FGB has maintained its top line momentum for the second quarter of 2010, consolidating its solid start of the year,” said André Sayegh, Chief Executive Officer, FGB.

“The results of our continued focus on efficiently managing both the balance sheet as well as the revenue stream, whilst redeploying resources to optimize growth in our core business, is testimony to FGB board’s vision and strategy”, Sayegh added.

Q2 2010

The Total Revenue of AED 1,467 million for Q2 2010 is 12% higher than Q2 2009. Net Interest and Islamic Financing at AED 1,043 million increased by 9% compared to same period of last year and represented 71% of this revenue. The Corporate and Retail fees, at AED 357 million, increased by 21% and represented 24% of the total revenue generated during the quarter. The core banking business contributed 93% to the Net Profit while the subsidiaries and associate companies contributed 7%. The first quarter’s contribution was 79% and 21% respectively.

“I would like to reconfirm, that our Core Banking business will undoubtedly continue to be of ultimate strategic importance to the Group,” commented Sayegh.

Over the last 12 months ending June 2010, the Total Assets increased by 11%, the Loans by 9% and the Deposits by 12% after excluding the MOF deposits which were converted into Tier II capital by end of the year 2009.

H1 2010

FGB recorded the highest Net Profit ever in the history of FGB for a first half of the year. The Net Profit reached AED 1,707million, an increase of 12% over the first half of 2009. This was mainly driven by an increase in total revenue by AED 494 million (+19%), a decrease of expenses by AED 36 million (-7%) and a safe increase in provisions by AED 348 million (+63%).

The increase in revenue was largely attributed to the Net Interest and Islamic Financing, which increased by 13% from AED 1,833 million in the first half of 2009 to AED 2,080 million in the first half of 2010. The Net Interest Margin for the first six months of 2010 was at 3.60% compared to 3.67% for the full year 2009. Fees and Commissions increased from AED 614 million in the first half of 2009 to AED 704 million in the same period of 2010, realising an increase of 15%.

“The power of revenue generation has a growing momentum” added Sayegh.

A continued focus on managing efficiently the expenses resulted in a decrease of 7% from AED 550 million in H1 2009 to AED 514 million in H1 2010. This has lead to a sizeable decrease of 5 percentage points in the Cost to Income ratio from 21% in June 2009 to 16% in June 2010.

During the first half of 2010, an appropriate and adequate amount of provisions of AED 903 million was booked, compared to AED 555 million in the first six months of 2009. The Non Performing Loans of 2.5% of the total Gross Loans have an excess of Provision Coverage of 126%.

Earnings per Share for the first half of the year at AED 1.13 were 23% higher than the same period of 2009.

“FGB financial results for the 1st half of 2010, culminated in a high Earning per Share, this is a primary objective of our Board and Management. Thus, we will continue on delivering higher EPS and the best returns to our shareholders. We are very pleased to see that FGB EPS is one of the highest in the country, which brings consistent value and return to the shareholders”, added Sayegh.

Balance sheet and ratios

The Bank was able to show solid and healthy balance sheet indicators at the end of June 2010; Total Assets at AED 132 billion were 5% higher than December 2009. The loans increased to AED 94.2billion, a 4% increase over December 2009. The Deposits at AED 88.4billion were 2% higher than December 2009.

The Loan To Deposit Ratio was at 107% by end of June 2010 compared to 105% in December 2009 and the Central Bank Advance to Stable Deposits Ratio which came in at 86%, against a maximum of 100% allowed by the UAE regulatory rules, highlights a comfortable level of liquidity.

With total Shareholders’ Equity at AED 23.6 billion, and total Capital Adequacy Ratio at 23.3% including a Tier 1 ratio of 20% -one of the highest in the world within the banking industry- the bank is very well positioned to cope with future business growth requirements over the coming few years.

“FGB is poised to build on its past successes and current robust financial position to continue on generating more value for its shareholders.” concluded Sayegh.

Main performance indicators

Income Statement Indicators of the second quarter

AED Mn Q2’2010 Q2’2009 Variance

Revenue 1,467 1,313 +12%

Expense 268 257 +4%

Provision 411 280 +47%

Minority Interest & Taxes 1 1 -

Net Profit 787 775 2%

Income Statement Indicators of the first half

AED Mn H1’2010 H1’2009 Variance

Revenue 3,126 2,632 +19%

Expense 514 550 -7%

Provision 903 555 +63%

Minority Interest & Taxes 2 1 -

Net Profit 1,707 1,526 +12%

Balance Sheet Indicators

AED Mn Jun’2010 Dec’2009 Variance (%)

Loans & Advances 94,205 90,386 +4%

Total Assets 131,528 125,473 +5%

Customers’ Deposits 88,428 86,422 +2%

Shareholders’ Equity 23,573 22,903 +3%

Key Ratios

Jun’2010 Dec’2009

Loan to Deposit 107% 105%

Capital Adequacy 23.3% 22.6%

Net Interest Margin 3.60% 3.67%

Cost To Income 16.4% 17.5%

NPL’s to Gross Loans 2.5% 1.6%

Provision Coverage 126% 174%

Bank AlBilad (BBLD) recorded an increase in annual net income by 22.0%

Bank AlBilad (BBLD) recorded an increase in annual net income by 22.0%, which coupled with improved performance in 1Q10, led to semi-annual profitability increase of 74.0% in 1H10. The overall improved performance of the bank can also be attributed to the bank’s improved control over its operating expenses (that also includes impairment charges for financing, investing, & other financial assets). As we await the detailed financial results for more elaborate analysis, we expect the bank to convert net loss of FY09 to a profit of SR120mn in FY10.

The bank’s investment & financing activities resulted in annual operating income increase of 14.3%. For the period of six months, the operating income recorded growth of 20.4% till 1H10. The customer deposit base posted an annual increase of 18.1% and its financing portfolio rose by 14.8% in 2Q10. BBLD’s total assets recorded an annual increase of 15.2% reaching SR19bn in 1H10

Etihad Etisalat Company- Mobily announced its 2Q-2010 results

Etihad Etisalat Company, also known as Mobily announced its 2Q-2010 results. Net profits witnessed an increase of 33.5%YoY in 2Q-2010 to SR901mn while operating profits increased by 29.1%YoY to SR940mn. Sales revenue grew by 24.2%YoY to SR3,972mn in 2Q-2010. The company cited increase in demand for broadband services and increase in post-paid subscriber base as the reason behind the growth in revenues.

Mobily has managed to carve out an effective marketing and promotional strategy to lure high-value post paid customers. The impact of high value post-paid customers is reflected in the increase in EBITDA margins to 34.9% in 2Q-2010 from 32.9% in 1Q-2010. EBITDA grew by 22.8%YoY to SR1,388mn which was attributed to a rise in international inter-connection margin. The improvement came after 1Q-2010 witnessed intense competition on the international front as the incumbent operator embarked on international call price cuts and promotions.

According to the press release, the focus will be on broadband and wholesale revenues which will drive future growth. The company is also investing in TGN Gulf Cable System which is expected to get completed in 2011. The new cable will provide increased connectivity both inside and out of Saudi Arabia and allow speeds upto 1.2 Terabits/second. According to the press release, the company has also completed the trials of HSPA with a speed of 42 Mbps before its launch in the major cities. Mobily currently covers 90.0% of the populated areas in Saudi Arabia with its broadband network.