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    Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

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    Egypt’s food industries contribute 24.5% of GDP

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    $36mln contract for construction of Duqm fisheries complex

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    Local, Italian companies partner up to establish food retail chain in Egypt

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      What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

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          Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

          Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

          Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

          Egypt’s food industries contribute 24.5% of GDP

          Egypt’s food industries contribute 24.5% of GDP

          $36mln contract for construction of Duqm fisheries complex

          $36mln contract for construction of Duqm fisheries complex

          Ministry signs agreement to support Oman’s honey industry

          Ministry signs agreement to support Oman’s honey industry

          Local, Italian companies partner up to establish food retail chain in Egypt

          Local, Italian companies partner up to establish food retail chain in Egypt

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            • Digital
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            Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

            Profits at top Saudi banks jump 17.6% in Q1

            Profits at top Saudi banks jump 17.6% in Q1

            GCC can create 600,000 tech jobs and add US$255 billion to GDP by 2030

            GCC can create 600,000 tech jobs and add US$255 billion to GDP by 2030

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            New study reveals that UAE is most competitive economy in the Arab world

            New study reveals that UAE is most competitive economy in the Arab world

            Top 10 listed companies in the Middle East

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            • CES 2017
            • Election Results
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            Oman Construction Equipment Industry to 2028

            Oman Construction Equipment Industry to 2028

            $36mln contract for construction of Duqm fisheries complex

            $36mln contract for construction of Duqm fisheries complex

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            Madayn working on major Oman industrial city projects

            Madayn working on major Oman industrial city projects

            Foundation stone laid for new 700-bed hospital is Salalah, Oman

            Foundation stone laid for new 700-bed hospital is Salalah, Oman

            Iraq set to award new Faw Port deals

            Iraq set to award new Faw Port deals

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            • Energy
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              Suez Canal expects US$3.5 billion in revenues in H1

              Suez Canal expects US$3.5 billion in revenues in H1

              UAE and Egypt’s consortium to buy African renewables firm Lekela Power

              UAE and Egypt’s consortium to buy African renewables firm Lekela Power

              Fitch revises Saudi Aramco’s outlook to positive from stable

              Fitch revises Saudi Aramco’s outlook to positive from stable

              Investments in renewables in Egypt reach LE6 bn: Official

              Investments in renewables in Egypt reach LE6 bn: Official

              Egypt signs 8 gas exploration contracts worth $934mn over 15 months

              Egypt signs 8 gas exploration contracts worth $934mn over 15 months

              JGC lands $3.7bn Iraq refinery upgradation project deal

              JGC lands $3.7bn Iraq refinery upgradation project deal

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                Coronavirus: UAE conducting human trials for Covid-19 vaccine

                Coronavirus: UAE conducting human trials for Covid-19 vaccine

                COVID-19 vaccine could be available by autumn: Oxford University

                GSK to develop plant-based COVID-19 vaccine with Canada’s Medicago

                Egyptian COVID-19 drug to be on market in two weeks: Health Ministry

                Egyptian COVID-19 drug to be on market in two weeks: Health Ministry

                UAE sends medical aid to Iraq to fight COVID-19

                UAE sends medical aid to Iraq to fight COVID-19

                UAE launches phase III trial of inactivated Covid vaccine

                UAE launches phase III trial of inactivated Covid vaccine

                COVID-19 vaccine could be available by autumn: Oxford University

                COVID-19 vaccine could be available by autumn: Oxford University

              • Hospitality

                Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

                Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

                Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

                Saudi to be among world’s big leisure tourism hubs by 2030

                Saudi to be among world’s big leisure tourism hubs by 2030

                Qatar’s hospitality sector peaks despite turbulent 2020

                Qatar’s hospitality sector peaks despite turbulent 2020

                Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

                Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

                Staycations to stimulate Qatar’s hospitality sector

                Staycations to stimulate Qatar’s hospitality sector

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              Abu Dhabi sees tighter liquidity conditions

              OBG

              May 17, 2016
              in Finance
              0

              As with the rest of the banking sector across the GCC region, Abu Dhabi’s financial institutions are seeing liquidity conditions tighten as part of the fallout from weaker energy revenues.

              Loan growth in the emirate is projected to slow this year as a result, coupled with an increase in borrowing costs.

              Energy squeeze
              With public revenues down, governments in the region are increasingly looking to bridge the fiscal gap by tapping deposits and expanding domestic borrowing, a recent report by Abu Dhabi Commercial Bank (ADCB) noted.
                           
              “Domestic funding will remain important for covering the GCC’s fiscal deficit in 2016,” Monica Malik, chief economist at ADCB, told media in April, citing expected drawdowns of government deposits and increased borrowing from banks across the region.

              According to the most recent data from the Central Bank of the UAE (CBU), government deposits were down 13.9% year-on-year (y-o-y) in February at Dh158.3bn ($43.1bn). Combined government and public sector deposits, meanwhile, had fallen by 5% to Dh343bn ($93.4bn).

              “Lower oil revenues are driving tightening of liquidity in the GCC, with overall deposit growth slowing down significantly to around 3% in 2015 from around 10% in 2014,” Nitish Bhojnagarwala, assistant vice-president at Moody’s, told media last month.

              Although this has been partly offset by private sector deposits, domestic and government credit demand has also risen, up 8.1% y-o-y in February, while demand from government-related enterprises (GREs) climbed by 5.5%.

              Liquidity crunch
              Bank liquidity has tightened as a result, particularly in Abu Dhabi, where the local government is a dominant depositor in the financial system.

              The UAE-wide loan-to-deposit ratio – a key measure of banking liquidity – climbed from 87% in June 2014 to 100.9% the end of last year, according to figures from the CBU and the National Bank of Abu Dhabi (NBAD).

              This is already having an effect on other segments of the economy, which are finding it more difficult to get access to affordable credit.

              In the real estate sector, project completions in Abu Dhabi reached a 10-year low in the first quarter, due in part to tighter liquidity and reduced state spending, property consultancy JLL noted.

              Banks’ margins have also felt a squeeze. NBAD, for example, which is one of the principle lenders to the Abu Dhabi government, saw its net profits dip by 11% y-o-y in the first quarter of 2016, following on a 6% contraction last year. ADCB, meanwhile, recorded an 18.4% y-o-y decline in net profits in the first quarter.

              Speaking to media in January, Alex Thursby, group CEO of NBAD, said tighter domestic liquidity conditions have prompted the bank to look beyond conventional lending to generate additional revenue.

              NBAD has sought to tap its international operations and capital markets, as well as its domestic mortgage segment, to supplement earnings.
               
              On notice
              In early March ratings agency Moody’s said it had put Abu Dhabi’s “Aa2” government bond and issuer ratings on review for downgrade, citing a weaker Abu Dhabi government balance sheet due to falling energy revenues. The review is expected to be completed in mid-2016.

              However, plans to reduce public expenditure and broaden the tax base could mitigate the impact on its credit standing, Moody’s said.

              With the agency also citing stress on the banking sector as a credit negative, plans by the Abu Dhabi government to tap international bond markets this year to fund a wider budget deficit could provide some welcome breathing room.

              The emirate’s deficit is projected to increased by 13.9% this year to Dh36.9bn ($10bn), media reported in late April.

              Abu Dhabi plans to cover the gap mainly through bond issuances, with a benchmark-sized international issue expected later this year – the emirate’s first offer in seven years.

              “Despite the drop in crude prices [and] the collapse of the latest oil talks, Abu Dhabi’s new bond issue should manage an attractive price that will set the stage for other GREs to follow,” Apostolos Bantis, a credit analyst at Commerzbank, told media last month.

              While commercial banks could come under continued pressure from falling government deposits this year, the banking system remains resilient and is well placed to weather any negative external shocks, according to Mubarak Rashed Al Mansoori, governor of the CBU.

              “Critical statistics demonstrate that banks operating in the UAE are maintaining high capitalization, stable funding and sufficient liquidity,” he told OBG earlier this year.
              Oxford Business Group
              17 May

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