October 2014

UAE tops billionaire wealth growth

BILLIONAIRE wealth in the UAE surged to $132 billion this year from $45 billion in 2013, marking a worldwide record increase of 193 per cent, a report said.

The number of billionaires in the UAE also increased to 46 from 37 in 2013, added the Wealth-X and UBS Billionaire Census 2014 released by Wealth-X, the definitive source of intelligence on the ultra-wealthy.

Meanwhile, Saudi Arabia saw a decline of 18.6 per cent in its billionaire wealth, down to $166 billion in 2014, as against $204 billion last year, according to the report, which noted that the kingdom claimed the 10th spot globally for its count of 57 billionaires.

The Middle East experienced a decline in its billionaire population over the past year.

Africa is the only other region that saw a decrease in its number of billionaires.

Nonetheless, the remaining billionaires, as well as some of the region’s new billionaires, have seen their total wealth increase. Only 6 per cent of the Middle East’s billionaires are female, the smallest share of any other region.

Only 10 per cent of the region’s billionaires fully inherited their wealth. Work, entrepreneurialism and family businesses are the most significant factors behind the growth of the region’s billionaire wealth, the report said.

Asia, however, boasted the largest billionaire wealth increase, with the region’s billionaires’ fortunes growing by 18.7 per cent over the past year. The region is responsible for 30 per cent of the net increase in global billionaire wealth in 2014. Asia’s billionaire population grew by 10 per cent in 2014, with 52 new entrants into the billionaire club – 33 are from China.

The US maintains its position as the world’s top billionaire country with a population of 571 billionaires in 2014, followed by China (190) and the UK (130), which took the third spot from Germany (123) on the Top 40 Billionaire Countries/Territories list.

Europe is home to more than a third of the world’s billionaire population.

The billionaire population in the Middle East shrank by 1.9 per cent, but total billionaire wealth in the region rose by 16.7 per cent.

 There are 2,039 male billionaires in 2014, accounting for 87.7 per cent of the world’s total billionaire wealth of $7.3 trillion.

There are 286 female billionaires in 2014, accounting for a 12.3 per cent share of global billionaire wealth.


Gulf banks show solid growth

GULF banks have shown healthy earnings growth over the last year and a half despite historically low interest rates, according to a new Standard & Poor’s (S&P) Ratings Services report.

The report titled ‘Economic Recovery Spurs Solid Growth for Gulf Banks,’ said banks in the GCC countries have experienced lower net interest margins, but improving asset quality and falling credit losses have generally offset this.

The declining credit losses will continue to support GCC banks’ earnings throughout 2014, although this effect is expected to be less visible than in the last year, it said.

Timucin Engin, S&P’s analyst, said: “Prospects for economic growth in the Gulf region remain healthy for the next few years. We expect most Gulf banks to continue to benefit from robust corporate activity and consumer consumption over the next 18 to 24 months. The many infrastructure projects planned in the Gulf should translate into sustained streams of corporate lending.”

Over the past three years, strong liquidity flows into the Gulf’s deposit markets have supported the region’s banks, which traditionally rely on local deposits for the bulk of their funding, said the report.


Petchem firms boost corporate earnings

THE combined net profits of Saudi Arabia’s leading companies are expected to rise 17 per cent this year and a further 11 per cent in 2015, largely on the back of petrochemical producers and banks, although a number of companies in other sectors also promise strong growth.

The figures are based on average forecasts from analysts surveyed by Reuters for 81 companies which accounted for 99 per cent of the total profits of constituent companies in Saudi Arabia’s main equities index last year.

The outlook puts Saudi Arabia roughly on a par with Qatar, where profit growth is set to average 13 per cent this year and next, and Abu Dhabi, which is expected to average 17 per cent.

It’s a big improvement from Saudi Arabia’s zero profit growth in 2012 and a six per cent increase last year. That poor performance was almost entirely due to weak profits at petrochemical firms, which saw product prices sag because of the economic slump in Europe.

Strong earnings will not necessarily translate into further fast rises for Saudi stock prices, which are already up 28 per cent year-to-date, having surged since the market opening plan was announced in July; many fund managers think the market is no longer cheaply valued.

But the earnings picture does ensure that the market opening is likely to attract heavy investor activity.


UAE residents ‘save outside the country’

NEARLY half of UAE residents choose to save their money in bank accounts outside their country of residence, a report said.

More than 48 per cent of respondents of an annual survey conducted by compareit4me.com, a UAE-based finance comparison website, said they are more confident with banking systems in their home countries.

Jon Richards, CEO of compareit4me.com, said the results indicate that UAE financial institutions may be missing out on an opportunity and need to do more to keep residents’ savings onshore.

“When you look at the results, a significant number or 65.5 per cent of the survey respondents claimed to be saving between 10 per cent and over 50 per cent of their salary every month. With millions of dirhams leaving the country every year, there appears to be huge potential for UAE banks to attract regular savers,” Richards added.

The banks need to work with the UAE Central Bank to look at initiatives that will incentivise expat workers to keep money earned here in the country. At present, many expats feel more comfortable saving with banks in their home country as they understand the system and feel comfortable with banking regulations. Accounts in the Isle of Man are protected by the Compensation of Depositor Regulations.

Despite the large number of residents sending money abroad, renewed economic confidence in recent years has seen UAE banks flush with liquidity. According to the UAE Central Bank, total bank deposits of UAE banks climbed by 1.4 per cent year-on-year in June to Dh1.4 trillion ($381 billion).

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