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British PM May says Honda plant closure can’t be blamed on Brexit

LONDON (Reuters): British Prime Minister Theresa May said Honda’s announcement that it would close its factory in England in 2021 was deeply disappointing, but could not be blamed on the country’s upcoming departure from the European Union.

“The decision this week by Honda is one that is deeply disappointing. They have made absolutely clear this is not a Brexit-related decision. This is a decision about the change that is taking to the global car market,” May told lawmakers.

Honda said on Tuesday that the move was not related to Brexit and that it needed to focus manufacturing in regions where it expects to sell most cars, after struggling in Europe.

But the announcement about the plant in Swindon in southern England comes after a series of warnings from Japan that it would pull investments if they are no longer economically viable after Britain leaves the bloc.

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NEPRA increases power tariff

F.P. Report

ISLAMABAD: NEPRA has scaled up once again power tariff on Wednesday.

According to media reports, power tariff has been increased by RS 1.80 per unit. Power tariff has been enhanced under fuel price adjustment for the month of January.  The enhancement in tariff will shift financial burden of Rs 13.50 billion to the shoulders of consumers.

According to NEPRA power produced by furnace oil in January was costly.

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SECP to facilitate traders

F.P. Report

KARACHI: Chairman Securities and Exchange Commission of Pakistan (SECP) Farrukh Sabzwari has said that the Commission will take all possible measures to facilitate the business community by removing the regulatory impediments.

For the purpose, Farrukh Sabzwari has initiated dialogue with leaders of business associations to have their perspective on the practical impediments faced by the corporate sector in implementing the Companies Act, 2017.

He along with his senior officials, on Wednesday held separate meetings with representatives of the Pakistan Business Council (PBC), American Business Council of Pakistan (ABCP) and Overseas Investors Chamber of Commerce and Industry.

The SEC Policy Board and the Commission unanimously agreed on the need for creating a far less onerous regulatory environment. The consultative meetings with leaders of the corporate world were aimed at identifying systematic bottlenecks and regulatory anomalies that stakeholders feel are an impediment to the ease of doing business.

The Chairman SECP also took this opportunity to exchange views on issues related to the capital markets, Islamic finance, SME and Insurance sector. “The SECP has a lot of work cut out for it ? encouraging new listings, introducing new products across asset classes, increasing the investor base plus creating an enabling environment for more start-ups to prosper are high on the Commission’s list”, affirmed Sabzwari.

These meetings were part of a broader and proactive consultation process that the SECP has initiated to promote ease of doing business via addressing the concerns of the corporate sector.

As representative bodies of key local and foreign businesses, the PBC, OICCI and ABCP are playing an important role in attracting new investments, inculcating best corporate practices and protecting the interests of investors. The sessions concluded with the resolve to increase interaction and mutual cooperation to improve the business environment and corporate regulation.

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UBL declares profit of Rs.25b for full year 2018

F.P. Report

KARACHI: UBL has posted a standalone Profit Before Tax (PBT) of Rs. 25 billion for Full Year 2018. Excluding a one-off extraordinary pension charge for prior years, PBT reached Rs. 31.6 billion, one of the highest in the industry. The Bank maintained its strong payout, declaring dividends of Rs. 13.5 billion (Rs. 11 per share) in total to shareholders during the year. The Bank remains well capitalized as the Capital Adequacy Ratio (CAR) improved from 15.4% in Dec’17 to 17.7% in Dec’18.

UBL is deeply embedded across core segments, serving over 5.3 million customers through its network of 1,364 countrywide branches, 1,451 ATMs and 36,000 branchless banking agents. During the year, UBL launched its banking app, “UBL Digital”. The app is equipped with enhanced security and unique features such as QR code payments, facial recognition and augmented reality. This year the Bank also launched ‘digital client on-boarding’. With this facility, customers can request to open a UBL bank account anytime, anywhere through the UBL Digital App. The app has received a positive response as the subscriber base stood at 300,000 at the end of the year.

Building on the strong momentum of its domestic branch banking franchise, UBL added 586,000 new current accounts during the year. Current deposits closed at Rs. 508 billion at Dec’18 with 15% growth over last year. Resultantly, current to total deposits ratio improved from 43% in 2017 to 46% in 2018. Domestic deposits reached Rs. 1.1 trillion at Dec’18, a 9% growth over last year.

The Corporate Banking segment remained a very active participant in public and private sector expansion projects. As a result, gross advances for the Bank have grown by 16% this year. The asset build up also remained strong within Consumer lending, led by autos where the portfolio increased by 48%. The Bank remained committed to providing easy access to financing for SMEs. In line with this commitment, average SME lending grew by 25%. The agri-portfolio also grew by 59%, on an average basis, over the previous year.

In order to enhance the capital base and support the growth trajectory of the Bank, UBL has also successfully completed the process of issuing Additional Tier 1 Term Finance Certificates amounting to Rs. 10 billion.

The highlight of 2018 was UBL being declared the ‘Bank of the Year 2018 – Pakistan’ at ‘The Banker’ Awards in London. The Banker, an affiliate of the Financial Times UK, is the world’s leading financial publication. The most prestigious title in the global banking industry, the Banker Awards recognize excellence in performance, adding customer value, innovation and leadership in society. UBL won the award on the back of its contribution in expanding the scope of financial services in Pakistan and spearheading innovation in the local banking industry.

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MCB Bank announces financial results

F.P. Report

LAHORE: The Board of Directors of MCB Bank Limited, met under the Chairmanship of Mian Mohammad Mansha, on February 20, 2019 to review the performance of the Bank and approve the financial statements for the year ended December 31, 2018.

Unconsolidated Profit Before Tax (PBT) of the Bank for the year ended December 31, 2018 increased by 3% and was reported at Rs. 32.06 billion as compared to Rs. 31.01 billion for 2017, whereas Profit After Tax (PAT) for 2018 was reported at Rs. 21.36 billion.

During the calendar year 2018, the changing macro-economic factors made the operating environment more challenging with discount rate registering a steep increase of 425 bps in absolute terms. Based on the anticipated interest rate movement, the Bank focused on asset base with shorter maturities, resulting in 8% increase in net interest income over last year. On the gross markup income side, the Bank reported an increase of Rs. 9.2 billion over last year. Analysis of the interest earning assets highlights that income on advances increased by Rs. 10 billion, primarily on account of improved average advances volume of Rs. 83 billion coupled with increased yield of 92bps. On the investment side, gross markup income decreased by Rs. 2.2 billion, due to decreased average volume of Rs. 66 billion. On the interest bearing liabilities side, the cost of deposits increased by 69bps over last year, to corroborate to the increasing interest rates. The Bank increased its average deposits by Rs. 123 billion when compared with last year. Average borrowings volume registered a significant decline of Rs. 84 billion over last year.

The non-markup income block of the Bank was reported at Rs 17.2 billion with major contributions coming in from fee, commission income and income from dealing in foreign currencies. Fee income increased by 10% with major contributions from card related fee, remittances, commission on trade and bancassurance. On the capital market front, the Bank recorded capital gains amounting to Rs, 1 billion as compared to Rs. 3.8 billion in last year. Foreign exchange income reflected a healthy increase of Rs. 1.8 billion (+109%) over last year.

On the administrative expenses side excluding pension fund, despite the surge in inflationary pressures coupled with significant devaluation and increase in operational outreach, the Bank was able to contain the growth percentage to 10%. The increase includes the premium cost amounting to Rs. 559 million on account of deposit protection premium, which was effective from July 01, 2018. Barring the impact of deposit protection premium, the increase in operating cost was only 8.27%.

On the provision side, the bank reversed provision amounting to Rs. 2.9 billion on advances whereas the Bank recorded gross charge of 2.8 billion on equity portfolio in 2018.

On the financial position side, the total asset base of the Bank on an unconsolidated basis was reported at Rs. 1.5 trillion depicting a significant increase of 12% over December 2017. Analysis of the asset mix highlights that net investments have increased by Rs. 92.4 billion (+14%) whereas advances have increased by Rs. 34.2 billion (+7%) over December 31, 2017. Investment mix continued to shift from long-term PIBs to the short-term T-Bills during the year in the wake of rising interest rate scenario. Resultantly investment in T-Bills increased by Rs. 194 billion whereas investment in PIBs decreased by Rs. 95 billion.

The Non-performing loan base of the bank almost remained static with marginal increase of Rs. 203 million and was reported at Rs. 48.9 billion. The coverage and infection ratios of the Bank were reported at 88.26% (Dec 2017: 93.74%) and 8.95% (Dec 2017: 9.47%) respectively.

On the liabilities side, the deposit base of the Bank registered a significant increase of Rs. 81 billion (+8%) over December 2017. The increase of Rs. 81 billion is net of the deposits amounting to Rs. 22 billion transferred to MCB’s wholly owned subsidiary MCB Islamic Bank Limited under the scheme of demerger sanctioned by the Lahore High Court.

Earnings per share (EPS) for the year ended December 31, 2018 was Rs. 18.02 as compared to Rs. 19.56 for 2017. Return on Assets and Return on Equity were reported at 1.5% and 15.5% respectively, whereas book value per share was reported at Rs. 117.74.

While complying with the regulatory capital requirements, the Bank has paid the highest cash dividend per share in the industry with regular interim dividends and remains one of the prime stocks traded in the Pakistani equity markets. Bank’s total Capital Adequacy Ratio is 18.13% against the requirement of 11.90% (including capital conservation buffer of 1.90%). Quality of the capital is evident from Bank’s Common Equity Tier-1 (CET1) to total risk weighted assets ratio which comes to 16.02% against the requirement of 6.00%. Bank’s capitalization also resulted in a leverage ratio of 7.09% which is well above the regulatory limit of 3.0%. The Bank reported Liquidity Coverage Ratio (LCR) of 178.70% and Net Stable Funding Ratio (NSFR) of 130.6% against requirement of 100.

The Bank enjoys highest local credit ratings of AAA / A1+ categories for long term and short term respectively, based on PACRA notification dated June 27, 2018. Moreover, PACRA has maintained TFC rating of MCB Bank Limited at AAA, through its notification dated June 27, 2018.

The Board of Directors declared final cash dividend of Rs. 4.0 per share for the year ended December 31, 2018, which is in addition to Rs. 12.0 per share interim dividends already paid to shareholders.

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Oil slips away from 2019 highs as surging US supply undermines OPEC cuts

SINGAPORE (Agencies): Oil prices slipped away from 2019 highs on Wednesday, with surging U.S. supply and slowing economic growth tempering upward pressure from supply cuts led by producer club OPEC and from Washington’s sanctions on Iran and Venezuela.

U.S. West Texas Intermediate (WTI) crude oil futures hit 2019 highs of $56.39 per barrel on Wednesday but had slipped back to $56.15 per barrel by 0523 GMT, which was slightly above their last settlement.

International Brent crude futures were at $66.33 per barrel, down 12 cents, or 0.2 percent, from their last close, though still not far off their 2019 high of $66.83 per barrel from Monday.

Oil prices have been supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).

OPEC-member and top crude exporter Saudi Arabia is expected to reduce shipments of light crude oil to Asia in March as part of the effort to tighten markets.

OPEC, as well as some non-affiliated producers such as Russia, agreed late last year to cut output by 1.2 million barrels per day (bpd) to prevent a large supply overhang from swelling.

Because of the cuts, BNP said it expected oil prices “to rally through Q3 2019”, with Brent to average $73 per barrel by then and WTI to average $66.

Another key oil price driver has been U.S. sanctions on oil exporters Iran and Venezuela.

Despite the sanctions, Iran’s crude exports were higher than expected in January, averaging around 1.25 million bpd, according to Refinitiv ship-tracking data.

Many analysts had expected Iran oil exports to drop below 1 million bpd after the imposition of U.S. sanctions last November.

Standing against the supply cuts and sanctions is U.S. crude output, which soared by more than 2 million bpd in 2018 to a record 11.9 million bpd, thanks to booming shale oil production, which the Energy Information Administration on Tuesday said was expected to keep rising.

BNP Paribas said surging U.S. output would feed into lower oil prices toward the end of the year, with Brent to dip to an average of $67 a barrel by the fourth quarter and WTI to average $61.

“U.S. oil production growth, driven by shale, will be increasingly exported in greater volumes to international markets while the global economy is expected to witness a synchronized slowdown in growth,” the bank said.

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India becomes biggest buyer of Venezuelan oil after US sanctions

NEW DELHI (Sputnik): India has emerged as Venezuela’s biggest crude buyer in February after US imposed sanctions on Latin American nation’s oil giant PDVSA, NDTV news channel reported.

India has been importing 620,000 barrels of Venezuelan crude oil a day since early February, up 66 percent from the previous month, the NDTV news channel reported.

Overall Venezuelan exports fell to 1.1 million barrels a day this month, or 9.2 percent since January when Venezuelan oil shipments to the United States were called off in the wake of the sanctions.

The United States blocked around $7 billion in assets belonging to Venezuela’s state oil firm PDVSA and began transferring control over them to Venezuelan opposition leader Juan Guaido, who on January 23 proclaimed himself as Venezuela’s interim president.

Venezuelan President Nicolas Maduro, backed by China, Mexico and Russia, accused Guaido of acting at the instructions of the United States and claimed that Washington was plotting together with the opponents of his government to overthrow him and get hold of Venezuela’s oil assets.

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India faces economic woes amid rising trade deficits, higher tax costs

NEW DELHI (Sputnik): India’s government said that the nation’s trade deficit widened last month amid an increase in imports and the mounting fiscal and structural challenges facing the country’s exporters, while international trade tensions appear to have come at the detriment, rather than benefit, of the Indian economy.

Kristian Rouz — The Indian economy is facing mounting challenges, posing a political risk for Prime Minister Narendra Modi ahead of a national election, as imports rise, exports remain low, and higher tax costs put additional pressure on smaller private-sector companies.

Modi finds himself under pressure for not having done enough to increase the nation’s role in international trade over the past five years.

According to a report from the Commerce Ministry, India’s trade deficit rose to $14.73 bln last month, up from $13.08 in December. The nation’s imports increased due to a rise in gold imports, while exports posted a modest expansion, contributing to the widening trade gap.

For their part, India’s small exporters — which contribute roughly 35 percent to the nation’s overall exports — are facing rising fiscal risks after the disorderly launch of the national sales tax back in 2017. India’s exports in textiles, engineering products, and agricultural goods were impacted by the lack of bank financing of private-sector exporters, as well as protraction of refunds in the goods and services tax.

“Exports by small companies could have done much better if supported by flow of bank credit”, Ajay Sahai of the Federation of Indian Export Organisations said.

The Commerce Ministry said that in January goods exports rose 3.74 percent to $26.36 bln, while imports increased 0.01 percent to $41.09 bln. Gold imports alone jumped a massive 38.16 percent to $2.31 bln.

A separate report from the Reserve Bank of India’s Centre for Advanced Financial Research and Learning (CAFRAL) in Mumbai also found the government’s statistic could be insufficiently representative of the state of affairs in the Indian economy. Experts believe the real macro fundamentals could be worse than they appear in governmental statistics.

“We have an unhappy situation where markets, agencies, and foreign investors are all making their own assumptions”, CAFRAL’s Amartya Lahiri said.

Economists say India’s foreign trade could have been impacted by the ongoing tensions in international trade. The nation’s trade deficit in the first 10 months of the 2018-2019 fiscal year increased to $156 bln compared to $136 bln over the same period of the previous year.

“Global trade growth is slowing down and global economies including China and South East Asian nations are also facing contraction in manufacturing, worsening the fragile global situation”, Ganesh Kumar Gupta of the Indian Export Organisations said.

Indian exports could face additional pressure in the 2019 calendar year, and experts believe the nation’s trade deficit could increase further.

India’s exporters also said that the nation has not benefited from the disruptions in the US-Chinese trade, while countries like Bangladesh and Vietnam have increased their own exports to the US market amid the elevated friction. India has largely failed to take over China’s share of exports to the largest international markets, and PM Modi is facing rising criticism for the inefficient trade policies.

This as India’s exports to the US rose 10.5 percent between last April and December, compared to 11.8-percent growth over the same period of 2017. However, imports from the US increased a whopping 35 percent last year, hardly contributing to the profitability of Indian trade.

Officials in New Delhi said they are in the middle of talks with US trade representatives to increase bilateral cooperation in aerospace and defence, as well as biopharmaceuticals and energy sectors. This as India has faced criticism from US President Donald Trump, who said that the nation’s tariffs are too high, while some local taxes prevent the expansion of US companies into the Indian market.

However, Indian experts say that deeper cooperation with the US might not necessarily benefit the Indian economy due to its slowing exports and rising imports from the US. However, stronger US ties could help bring foreign investment to India, albeit possibly at the cost of a deeper trade deficit.

The “country… needs foreign capital inflows to the tune of nearly $100 billion every year”, CAFRAL’s Lahiri said.

For its part, the International Monetary Fund (IMF) said India’s GDP could grow 7.5-7.7 percent in 2020-21, making it the fastest-growing economy in the world.

This outlook, however, happens to be at odds with the Indian government’s nominal GDP growth projection of 11 percent — yet again raising a question of how accurate India’s official data is.

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Turkey: External loan burden on private sector falls

ANKARA (AA): Outstanding loans of Turkish private sector received from abroad dropped in December, the country’s Central Bank announced Tuesday.

Private sector’s short-term loans — excluding trade credits — amounted to $15.2 billion, falling a $3.3 billion on a yearly basis.

According to the official figures, nearly 75 percent of the amount consists of liabilities of the financial institutions.

As of end of 2018, long-term loans went down $10.9 billion year-on-year to $210.6 billion.

According to the bank, non-financial institutions’ share in long-term loans was 51.1 percent.

“Regarding the currency composition, of the total long-term loans in the amount of $210.6 billion, 59.5 percent consists of US dollar, 34.9 percent consists of euro, 4.2 percent consists of Turkish lira and 1.4 percent consists of other currencies.

“… And of the total short-term loans in the amount of $15.2 billion, 43.9 percent consists of US dollar, 34 percent consists of euro, 21.7 percent consists of Turkish lira and 0.4 percent consists of other currencies.” it said.

For the next 12 months, principal repayments of the private sector’s total outstanding loans received from abroad amounted to $64.8 billion.

Official figures also revealed that the top three multilateral creditors are the European Investment Bank, the European Bank of Reconstruction and Development, and the International Finance Corporation.

Meanwhile, Turkey plans to invest 122 million Turkish Liras in 2019, equivalent to around $23 million, for the land section on Turkish soil of the TurkStream natural gas pipeline, according to the government’s 2019 investment plan released on Monday.

According to the official announcement, the Turkish government will spend a total of 217.91 million liras for the project on Turkish soil.

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Sustainable development indicators released

ANKARA (AA): Turkey’s sustainable development indicators for the 2010-2017 period were released by the country’s statistical authority on Tuesday.

“As a result of inventory study, 83 indicators and definitions including global indicators identified as currently available and also additional indicators considered as appropriate to measure relevant target are published,” TurkStat said.

The institute noted that a set of 232 global indicators were constituted to monitor achieving the goals and targets stated during the UN Sustainable Development Summit in 2015.

Within the framework of 2030 agenda for sustainable development, a total of 17 main goals and 169 targets were determined. One of the most remarkable improvements was recorded in net official development assistances in 2010-2017.

“The total amount of net official development assistance made by Turkey as donor country increased by over eight times to $8.12 billion in 2017.

“While net official development assistance as a proportion of GDP was 0.13 percent in 2010, it increased to 0.95 percent in 2017,” TurkStat said.

Relative at-risk-of-poverty-rate falls

TurkStat said that the relative at-risk-of-poverty-rate fell 3.4 percentage points from 16.9 percent in 2010 to 13.5 percent in 2017.

“While at risk of poverty rate for individuals under 15 years of age was 24.8 percent in 2010, this rate realized as 21.3 percent in 2017.

“Poverty rate for young population representing the 15-24 age group was 18.5 percent in 2010 and decreased to 15.8 percent in 2017,” it said.

Over the same period, the proportion of the young people neither in employment nor in education or training declined to 24.2 percent, down from 32.3 percent.

Research and development expenditures up

TurkStat stated that research and development expenditures/GDP ratio rose from 0.80 percent to 0.96 percent in the 2010-2017 period.

In the same period, fixed internet broadband subscriptions per 100 inhabitants increased to 14.7 from 9.6.

“While the proportion of individuals using the internet was 37.6 percent in 2010, it was 64.7 percent in 2017,” the institute said.

As of 2017, share of population with access to electricity was 100 percent, while 59.8 percent of households have natural gas subscription.

Official figures showed that 28.6 percent of Turkey was forestland in 2017, up from 27.2 percent in 2010.

Maternal mortality and under-five mortality rate down

“While maternal mortality ratio was 16.4 per hundred thousand live births in 2010, this ratio decreased to 14.6 in 2017.

“Under-five mortality rate was 11.2 per thousand live births in 2017, compared to 15.5 in 2010,” the institute said.

Neonatal mortality rate — probability of dying during the first 28 days of life — dropped from 7.6 to 5.8 per thousand live births.

TurkStat said proportion of births attended by skilled health professional reached 98 percent in 2017, up from 91.6 percent in 2010.

“In the same period, number of physicians per hundred thousand population increased from 167 to 186,” it added.