rise in rents seen Abraaj Capital drops Citadel transaction Markaz gets buyback nod
.A specialized economic report expected on Wednesday In response to market speculation, Abraaj Capital However these discussions were of an initial Central Bank of Kuwait (CBK) approved, on
a rise in prices of real estate property rents between confirmed Wednesday that following a review, it nature to evolve a framework, deal terms and 26/7/2011, the request of Kuwait Financial Centre
eight to 15 percent by the end of this year and early next is no longer currently exploring a transaction with mechanics that could be workable for both parties. (Markaz) to extend the period for repurchasing 10%
year due to expected increase in the number of residents Citadel Capital, a private equity firm based in As no agreement has been reached to date maximum of issued shares for additional six months
in Kuwait. Cairo and listed on the Egyptian Exchange. This between the two parties, Abraaj Capital feels it is as of July 23, 2011.
The report, issued by the Kuwait Financial Center does not preclude Abraaj Capital from exploring appropriate to disclose this fact to the respective
(Markaz) that the vacant apartments for rent currently such a transaction in the future should perform- stakeholders in order to quell further speculation on Markaz should comply with CBK’s buyback regula-
amount to only six percent despite the entry of about ance, deal terms and/or circumstances change. this matter. tions and rules, in addition to the provisions of Article
5,500 new apartments to the market in 2011 and this Abraaj Capital confirmed that it had been in Abraaj Capital is the leading private equity and No. 115 bis of Corporate Law. It should also abide by
clearly demonstrates that the market for apartments is exploratory discussions regarding a potential alternative asset management group in the the provisions of the Ministerial Decree No. 10/1987
safe from what is called (excess supply) until now and transaction with Citadel Capital senior manage- Middle East, North Africa and South Asia and its amendments by virtue of the two Ministerial
the foreseeable future. (KUNA) ment for the past two months. (MENASA). Decrees No. 11/1988 and 273/1999.
Market Movements 27-07-2011
Points Closing pts Points Closing pts
SOUTH KOREA - KOSPI +5.61 2,174.31 GERMANY - DAX -96.77 7,252.68
FRANCE - CAC 40 -53.81 3,734.07
AUSTRALIA - All Ordinaries - 33.70 4,612.60
HONG KONG - Hang Seng -30.39 22,541.69
INDIA - Sensex -85.97 18,432.25
JAPAN - Nikkei 225 -50.53 10,047.19
PHILIPPINES - PSE -31.44 8,492.50
AUB records KD 19.1 mln H1 net profit
Results reflect strong financial position: Al-Marzouq
Kuwait: Partnership potential
KUWAIT CITY, July 27: Al-Marzouq added that Ahli United
Bank, after conversion into a fully
Ahli United Bank records fledged Sharia compliant Bank exerts all
high rate of profitability in efforts to introduce diversified Islamic Oxford Business Group
the first half of 2011 with net banking products & services and enhance
the quality level of customer service.
profit of KD 19.1 million, Al-Marzouq said that AUB returns on
representing an increase of the investment deposits have significant-
50.1 percent over the same ly exceeded the returns on similar
deposits in the market as of first half of
Private sector expected to play major role
period of last year. 2011 being the highest returns in the State
This profit has been achieved
through operating income of KD 37.2
million. Earnings per share reached
of Kuwait. Based on the Bank’s results
for the second quarter in 2011, the profit
distribution on annual deposits in
Kuwait set to meet electricity demand
18.9 fils per share compared to 12.6 Kuwaiti Dinar has reached 3.11 percent
fils per share for the same period in on “Al-Yousr Plus” and 2.33 percent on By Oliver Cornock
2010. This demonstrates the solid “Al-Yousr”, the return on the investment
financial position & the ability to
maintain sustainable operating profit.
deposits for three months in Kuwaiti
Dinar “Bashayer Al-Duha” reached 1.54
percent, and the rate of return on the
W ith the recent addition of a
new 1400-MW power plant,
Kuwait appears ready to meet the
Customer deposits have increased by Hamad Abdul Al-Mohsen Al-Marzouq,
AUB Chairman and Mng Director quarterly investment savings accounts in increase in electricity demand that
15 percent. Kuwaiti Dinar “Al Safa” reached 1.62 occurs every summer.
Commenting on the positive results services and products. He also highlight- percent. The Bank distinguishes its Government authorities are also
achieved by the Bank, the Chairman and ed that the next period would be full of investment depositors by announcing the
the managing Director of the Bank, planning to bring additional
challenges especially in light of the rapid profit quarterly thus securing their profit capacity on-line over the next few
Hamad Abdul Al-Mohsen Al-Marzouq, changes taking place worldwide. based on the declared profit rates at each
mentioned “these results are due to period. This has enriched the customers’ years, with the private sector
Al-Marzouq affirmed that the Bank
adopting a prudent policy, implementing continues to implement its prudent policy confidence in the Bank. expected to play a major role in
the best practices and principles of corpo- and distinct management approach. Many As for the Financial Statements during this expansion.
rate governance within a comprehensive neutral international rating agencies have the current year and the potentials of According to estimates from the
matrix in all local and regional markets. commended the bank’s solid and stable profitability, Al-Marzouq said that - by Ministry of Electricity and Water
This has enabled the Bank to overcome financial standing future as well as the the grace of Allah - the Bank would (MEW), peak demand for power is
the global financial crisis that hit the mar- quality of its assets. He also highlighted accomplish more achievements during
kets and have had an adverse direct expected to increase at a rate of 6-
that “the Bank’s Risk Management sup- the current year. Ahli United Bank has 8% per annum over the next few
impact on credit and finance activities. ports the stable credit rating according to become one of the distinguished Islamic Oliver Cornock, Regional Editor, GCC, Oxford Business Group
Hamad Al-Marzouq added that the banks, and is well prepared to acquire a years, reaching 14,256 MW by
Fitch Report. The Fitch Report has com-
generated profit was mainly due to the mended the quality control and the significant share in Kuwaiti market, 2014. Peak demand usually occurs and maintained by General the country’s first independent
growing performance at all levels due to improved asset quality in 2010. The high deriving its strength and high solvency in the summer, when heavy use of
the diversity of sources of income, the Electric for a period of seven years water and power project (IWPP).
credit rating reveals the successful con- from a deep-rooted banking history dat- cooling systems can strain the from the commencement of full Although the IWPP model is
expansion of activities, the proper risk version of Bank’s operations to be ing back to 70 years ago. Over this hon- power grid. According to some
diversification and the continues cus- commercial operations. used extensively elsewhere in the
Sharia’a compliant commenced in April orable history, the Bank was, several estimates, air conditioners account
tomer satisfaction in meeting their finan- times, placed as one of the best banks as Beyond Sabiya, a number of Gulf, it is new in Kuwait, where
2010, which rendered AUB as the ideal for around 70% of Kuwait’s peak
cial needs through introducing innovative choice for customers’ banking needs. per global banking standards. other plants are in the works. Al all water and power generation
power demand. Otaibi told local press in March capacity is currently owned by
However, no electricity short- 2011 that some KD2bn ($7.3bn) the state.
ages are expected this summer. In would be spent on power produc- The private sector strategic part-
March the assistant undersecretary tion projects that will be complet- ner for the plant has not yet been
of planning and training at the ed within the next three years, determined, but the government
MEW, Mishan Al Otaibi, told the including new plants at Al Zour tendered for the project on March
audience at the second Kuwait and Khairan. According to MEW 24. In an interview with
Electricity Conference and projections, the country’s installed Bloomberg in late March, Eyad Ali
Exhibition, “Although we expect capacity will increase from 14,593 Al Falah, the assistant undersecre-
the increase of power consumption MW in 2011 to nearly 17,000 MW tary for technical services at the
to be about 9% compared to last in 2014. MEW, said that 11 companies had
year, there will not be a shortage. prequalified to bid.
Last year electricity consumption Expansion He added that the government
reached 11,000 MW and it is Moreover, the government is would hold no more than 24% of
expected to reach 12,000 MW this eager to involve the private sector the shareholding company, while
summer. By the beginning of June in this expansion. As Al Otaibi said the strategic investor would own
the new power station will be during his opening remarks at the no less than 26%. The balance of
operating according to our work event in March, “The MEW is shares would be sold to the public
plan.” keen on joining the private sector in an initial public offering.
Indeed, in late June the first in building and developing these The plant will have a capacity of
phase of the new power plant at new power stations, as the private 1500 MW, and is expected to
Sabiya, around 100 km north of sector is very important in become operational in 2014.
Kuwait City, came on-line. Six Kuwait.” Authorities eventually plan to
gas-powered turbines have been Indeed, the public-private part- locate four power plants in the Al
activated, which will be able to nership (PPP) model appears to Zour area, with a combined capac-
generate 1400 MW of electricity, be the route the government will ity of 4800 MW.
equivalent to roughly 10% of use to develop these plants. In As the country’s first PPP
Kuwait’s current total capacity. March 2011 Adel Al Roumi, the power plant, the project will no
The plant is expected to enter its head of the Partnerships doubt be followed closely by for-
full combined-cycle commercial Technical Bureau - the organisa- eign investors. If successful it
operations in 2012, at which point tion responsible for issuing and could generate substantial inter-
its total capacity will be around overseeing PPP projects - told est from the international invest-
2000 MW. A combined-cycle plant the state news agency that all ment community, and with the
is more efficient because waste preparations had been completed government planning significant
heat is recovered and converted for the establishment of the capacity expansion in the future,
into steam, which is then used to Northern Al Zour Power there will almost certainly be
drive a steam turbine to produce Generating Company, the share- additional opportunities for pri-
additional power. Owned by the holding firm that will be respon- vate sector involvement in the
state, the facility will be operated sible for building and operating sector.
Food prices fall 0.6 pct in June, Transport up 1 pct
Kuwait annual inflation slows to 10-month low
KUWAIT CITY, July 27, (RTRS): global commodity prices, a weak dol- In the nearby United Arab
Kuwait’s annual inflation slowed to a lar and increased government spend- Emirates, annual consumer price
ten-month low of 5 percent in June ing following popular unrest in the growth has hovered close to 1 per-
helped by a fall in food prices, data Arab world. cent for most of 2010, but analysts
showed on Wednesday, but generous But slow lending growth and ongo- expect average inflation in the coun-
government spending is expected to ing weakness in the property sector try to reach 2.5 percent this year.
keep levels above those of neighbors in parts of the region are seen keep- In Bahrain, consumer prices fell by
this year. ing consumer price growth well 2.1 percent year-on-year in June, the
Inflation in the world’s fourth- below the record peaks seen in most fourth consecutive month of falls,
largest oil exporter has been hovering Gulf states in 2008, despite oil prices data showed last week.
above 5 percent since the beginning above $90 per barrel . Last month, Kuwait’s parliament
of this year, well below double-digit In Kuwait, food costs — which approved a 19.4 billion dinar ($71
levels seen in 2008. It stood at 5.4 account for 18 percent of the con- billion) state budget for the 2011/12
percent year-on-year in May, after sumer basket — fell for the first time fiscal year, the biggest since at least
climbing to a nearly two-year peak of in four months, by 0.6 percent 2003.
6 percent in December. month-on-month, the data showed. Kuwait announced in January
On a monthly basis, consumer “Kuwait has one of the highest plans to spend nearly $5 billion, or
prices in the OPEC member — inflation rates in the GCC for the more than 4 percent of its GDP, on
where civilian protests in recent year. But it’s still not anywhere near cash grants and free food rations.
months were more limited than those of what we saw three years ago,” said Transport prices, which makes up
in Bahrain and Syria — grew 0.2 per- Nancy Fahim, Standard Chartered 16 percent of the CPI basket,
cent in June, according to data from economist in Dubai. increased by 1 percent month-on-
the Central Statistics office. “One of the big drivers of inflation month in June after remaining
That was below a 0.3 percent rise this year is government spending and unchanged for three consecutive
in May. their cash packages that they have months, the data showed.
Inflation in the Gulf, the world’s provided their citizens, which should Analysts polled by Reuters in June
top oil exporting region, is expected be driving overall headline infla- expect average inflation of 5.1 per-
to creep higher this year on robust tion.” cent in 2011.