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Emirates News Agency – AED 12.4 billion in net profit for “First Abu Dhabi”, 58% growth in 9 months



Emirates News Agency – AED 12.4 billion in net profit for “First Abu Dhabi”, 58% growth in 9 months

Abu Dhabi, October 19, 2020: First Abu Dhabi Bank achieved record performance in the first nine months of 2023, with net profit reaching AED 12.4 billion, up 58% compared to the same period last year. to Magneti in 2022). ); Revenue increased by 38% to 20.5 billion dirhams, reflecting the bank’s continued success in implementing its ambitious growth strategy. Return on fixed equity increased to 18.3%.

In the third quarter of 2023, the bank recorded a net profit of 4.3 billion dirhams, an increase of 46%, the highest in the bank’s history to date. Revenue also increased by 27% to 7 billion dirhams.

Hana Al Rostamani, CEO of First Abu Dhabi Bank Group, said increasing business performance led the group to achieve another record in the third quarter of this year, with net profit reaching 12.4 billion dirhams, an increase of 58% since the beginning. Compared to the same period of the year, in 2022, operating revenue exceeded 20 billion dirhams.

He added: “The confirmation of the bank’s credit rating of “AA-” (or equivalent), financial results and strength of liquidity are without doubt a clear indication of First Abu Dhabi Bank’s strong financial position. The continuous growth of its business in all sectors, these results reflect its tireless efforts. The group aims to strengthen its position as a trusted financial and banking institution in the UAE and the Middle East and North Africa region.

Al Rostamani pointed out that as the importance of financing in support of sustainability initiatives is increasing, First Abu Dhabi Bank has recorded several important achievements in this regard by pioneering the sector by providing green financing along with reducing carbon emissions. It is the first bank from the region and Gulf Cooperation Council countries to join the Net Zero Banking Alliance (NZBA) launched by the United Nations.

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He said: “The company is moving forward in achieving its commitments in the field of sustainability in line with the strategy of the United Arab Emirates and the Emirate of Abu Dhabi, which aims to establish sustainable development in the long term, and the participation of the bank comes. It is a strategic partner for the Conference of the Parties to the United Nations Convention on Climate Change (COP28), which is translating these commitments into the period from November 30 to December 12, 2023.

Al Rostamani concluded that markets see the result of promising economic partnerships that will reflect positively on the region and open up new opportunities for First Abu Dhabi Bank to enhance its position as a regional financial institution and a key gateway for global trade and investment. .

For his part, First Abu Dhabi Bank Group Chief Financial Officer Lars Kramer said: “The bank achieved strong results in the third quarter based on the fundamental growth indicators achieved since the beginning of the year. A very attractive return on firm equity of 18.3% for the first nine months of 2023.

He added: “Operating revenue increased by 38% compared to the same period last year as a result of continued increase in net interest income, improved margins and diversified revenue sources. We continued to invest in talent and transformation processes to maintain business growth and better operational discipline.

Confirming that First Abu Dhabi Bank aims to provide USD 75 billion worth of green financing by 2030, Lars pointed out that in the first nine months it has provided financing for sustainable projects worth more than USD 18 billion, totaling USD 27 billion. Dollars to date (starting in 2022).

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He said the bank sees the green finance sector and sustainable finance as promising growth markets and the “COP28” conference will help highlight the group’s leadership in this sector and demonstrate its potential to accelerate the sector’s growth and potential. First Abu Dhabi Bank Group is well positioned to deliver profitability in 2023 and the years ahead, as it continues to execute on its strategic priorities to achieve sustainable returns for shareholders.

He concluded by saying: “The strong fundamentals experienced by First Abu Dhabi Bank have helped it keep pace with various changes, with interest rates continuing to rise. Despite continuous investments to grow and develop the business, the Group has maintained a good ratio of expenses to revenue, at 25.4% during the period. The top nine Over the months, First Abu Dhabi Bank maintained capital strength and asset quality and continued to improve its capital structure by issuing its first Tier 2 bonds in October, the largest of its kind for conventional bonds in the Middle East and North Africa region.

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The world’s central banks are increasing their reserves… Details in 10 facts



The world’s central banks are increasing their reserves… Details in 10 facts

Books – Islam Saeed

Sunday, December 3, 2023 at 03:00 AM

Central banks around the world continue to demand… Gold In 2023, gold trends for the third quarter of the current year 2023 as per the reports of the World Gold Council show that the demand for gold by banks has increased.

Central banks added 337 tonnes in the third quarter of 2023

The third largest buying level in the quarter reached by central banks

In the third quarter of 2022, banks bought a large amount of 459 tonnes of gold..

Since the beginning of 2023, demand by central banks has increased by more than 14%.

Total bank purchases of gold since the beginning of 2023 have reached a record high of 800 tonnes of gold.

Gold reserves reported by global central banks rose by a net 77 tonnes in September.

Central bank’s gold sale is only 1 ton.

– Fund outflows from gold investment funds continued in October, $2 billion

Since the beginning of the year, the funds’ investments have fallen 6%.

– Total cash outflows from gold-backed global investment funds have hit $13 billion since the start of the year

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Oil loses 2% as investors worry about OPEC plus cuts



Oil loses 2% as investors worry about OPEC plus cuts

Oil prices settled up more than 2% – yesterday, Friday – after a volatile trading week as the market anxiously watched the latest round of OPEC Plus production cuts and a slowdown in global production activity.

Brent crude futures for February delivery were down 2.45% at $78.88 a barrel, while US West Texas Intermediate crude futures were down 1.9% at $74.07.

For the week, Brent posted a decline of about 2.1%, while the West Texas Intermediate posted a decline of more than 1.9%.

On Thursday, oil-producing countries in the OPEC Plus alliance – which includes members of the Organization of the Petroleum Exporting Countries (OPEC) and other countries including Russia – agreed to cut global oil production by about 2.2 million barrels on the world market. per day in the first quarter of next year, including… extending current voluntary cuts by 1.3 million barrels per day from Saudi Arabia and Russia.

The OPEC Plus alliance – which accounts for more than 40% of the world’s oil – is focused on cutting production, with prices falling from around $98 a barrel in late September, amid fears of weaker economic growth in 2024.

A survey showed that the US manufacturing sector is still weak, with the factory employment rate falling last November.

On Friday, talks to extend a week-long ceasefire between Israel and the Palestinian Islamist movement (Hamas) collapsed, leading to renewed fighting in Gaza that could disrupt global oil supplies, Reuters reported.

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A private credit boom leads to a new crisis



A private credit boom leads to a new crisis

If this is a “golden moment” for private lending, where will things go? What are the risks? Higher interest rates and turmoil in regional banks earlier this year have boosted confidence in the recovery of private credit. According to data provider Preqin, the market is expected to grow from $1.6 trillion to $2.8 trillion this year. BlackRock takes a more optimistic view, predicting the market will grow to $3.2 trillion.

Mark Rowan, CEO of private equity firm Apollo, sees “de-banking” in its early stages, while John Gray, chairman of BlackRock, coined the phrase “golden moment” to describe conditions in private capital at the start of the year. .

If the new banking rules under Federal Reserve regulations are considered a catalyst, capital requirements for the commercial banking industry in the US are likely to increase by up to 35%, according to Oliver Wyman, the world’s leading management consultancy. company — and no wonder Jamie Dimon said. , head of JP Morgan, said private lenders would be “very happy.”

How things develop in the market will be a key issue not only for large firms and banks in the private market, but also for traditional asset managers who have begun to use the capabilities of the private market to avoid the extreme rise of passive asset management. . This coincides with at least 26 traditional asset managers buying or launching new private credit units in the past two years.

This shift confirms the extent to which the structure of the financial market has changed. 20 years ago, when I was working at Morgan Stanley, I noted in a research paper that investor flows would split into barbells. On the one hand, investors would flock to passive, exchange-traded funds to get record returns. They are cheap and convenient. On the other hand, investors looking for higher returns will use asset allocation with specialist fund managers who invest in private equity, hedge funds and real estate. For traditional “major” fund managers, caught between the two, they will be pressured to make their investment machines more specialized or merge to increase their size, which has already been achieved.

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According to ETFGI, ETFs have grown from $218 billion in 2003 to $10.3 trillion last October, but what’s surprising is how unbalanced the situation has become in terms of returns, with management fees likely to account for half of the investment sector. to alternative asset managers in 2023 from 28% in 2003.

Central banks are now scaling back their quantitative easing, which was implemented to support economies and markets, which has traditionally supported corporate profits. Without these tailwinds, the pressures on fund managers become more severe. So, how will the transition to private lending proceed?

Currently, Preqin estimates that just 10 companies have received 40% of private credit resources in the last 24 months. There are three reasons why private credit growth has disproportionately favored these large firms.

First, a good amount of growth is expected from the sale of investment portfolios by regional banks, which have to reduce their debt and are forced to sell good assets. The central bank’s new rules signal an inability for big banks to step up. In light of the large portfolio sizes and the speed required for transactions, the acquisition of these assets is a specialized venture that is in the interest of large companies that can underwrite the risks.

Second, a growing number of deals require more money, and August saw a new record for the largest loan, reaching $4.8 billion for fintech firm Finastra. The third and most important reason is that banks prefer to enter into partnerships so as not to lose access to customers. Even though tougher rules mean they have to divest assets, banks want to continue lending and partnering to help manage deal flows, which could benefit larger firms.

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Several major banks have already closed deals and more are expected to follow. Citi is the latest bank to report its intention to launch a new unit in 2024.

A changing interest rate regime will mean loan losses rise as funding costs normalize and exposed weak balance sheets, which will be a source of challenges for private lenders. It may be unwise for new companies to try to exploit the growth. This requires a strong focus on the risks and rewards of selection and contracts, and teams that specialize in reconciliation, which many of the major players in the market have.

Of course, there will be key opportunities, such as hard credit or energy infrastructure credit, that are places that efficient companies can tap into, but they may not be on the scale that traditional companies need to maximize opportunities.

In general, a complete and comprehensive shift in capital allocation awaits us, requiring a major shift towards private credit, as Howard Marks recently argued, but the coming tide will not smooth all boats.

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