HSBC's lending in the Middle East declined during the first quarter of the year, signalling poor growth prospects for the wider economy.
The biggest international bank operating in the region shrank its total loan book, to individuals and companies, by 0.8 per cent to US$27.3 billion (Dh100.27bn) in the first quarter.
The Middle East was the only region where the bank experienced a shrinkage in its lending, as it boosted credit lines to Asian markets and increased its lending to individuals in Europe.
Worldwide, HSBC's loan book rose by 2 per cent to $978.8bn. HSBC cited a "low level of demand for corporate credit" in the Middle East as it reported lending of $20.7bn to companies in the first quarter, a 2 per cent fall from the same period last year.
European banks have withdrawn lending lines to the region and reduced staff numbers as they are required to keep more money in reserve under new rules known as Basel III. Many locally owned UAE lenders have also cut credit lines and sold loan books after the financial crisis sapped liquidity and led to huge provisioning for bad debts.
"Our view has been that this is going to carry on for some time," said Said Hirsh, a Middle East economist at Capital Economics.
"It's very difficult to see any kind of credit growth returning any time soon," he said. "There's still a lot of cleaning to do of banks' balance sheets."
HSBC's charges on bad debts in the Middle East almost tripled to $111 million in the first quarter, from $38m in the same period a year ago, which the bank attributed to defaulting borrowers in the UAE.
Local banks have complained that new Central Bank regulations capping the amount that they can lend to a single company will stymie their efforts to provide credit, with lenders including National Bank of Abu Dhabi and Emirates NBD lobbying for a softening of the new rules.
The new limits, due to come into effect on September 30, have yet to be reflected in banks' balance sheets, Mr Hirsh said.
HSBC embarked on a cost-cutting programme in the region last year, resulting in two rounds of employee layoffs and the closure of retail banking operations in Kuwait and the bank's retail brokerage in the UAE. The bank also spun off its regional private-equity business.
However, beginning near the end of March, HSBC has bought two of the region's oldest banking brands.
It acquired the onshore banking assets of Lloyds TSB Middle East at the end of March, reducing Lloyds's regional presence of more than 30 years to little more than a private banking branch. Last month, HSBC Oman announced a merger with Oman International Bank.
HSBC generated an underlying pre-tax profit of $6.7bn in the first quarter at a group level, an increase of 25.1 per cent compared with the corresponding period last year. The profit beat analysts' estimates as the bank benefited from booming growth in the Asia-Pacific region.
"Markets remain volatile, with high levels of debt and regulatory and political uncertainty in developed economies, contrasting with an encouraging outlook in faster-growing markets," said Stuart Gulliver, HSBC's group chief executive. "I'm shifting the entire focus so the emerging-market business predominates."
In the Middle East, HSBC reported a first-quarter pre-tax profitof $332 million, 0.9 per cent less than in the same period last year.
HSBC's investment banking division generated most of the group's earnings, accounting for $3.07bn of its pre-tax profit. The bank reported a loss of $997m in Europe, after it set aside $468m to cover charges arising from the mis-selling of payment protection insurance in the United Kingdom.
ghunter@thenational.ae
twitter: Follow and share our breaking business news. Follow us
iPad users can follow our twitterfeed via Flipboard - just search for Ind_Insights on the app.
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Revibe%20%0D%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202022%0D%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Hamza%20Iraqui%20and%20Abdessamad%20Ben%20Zakour%20%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%20%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Refurbished%20electronics%20%0D%3Cbr%3E%3Cstrong%3EFunds%20raised%20so%20far%3A%3C%2Fstrong%3E%20%2410m%20%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EFlat6Labs%2C%20Resonance%20and%20various%20others%0D%3C%2Fp%3E%0A
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
If you go...
Etihad flies daily from Abu Dhabi to Zurich, with fares starting from Dh2,807 return. Frequent high speed trains between Zurich and Vienna make stops at St. Anton.
The bio
Studied up to grade 12 in Vatanappally, a village in India’s southern Thrissur district
Was a middle distance state athletics champion in school
Enjoys driving to Fujairah and Ras Al Khaimah with family
His dream is to continue working as a social worker and help people
Has seven diaries in which he has jotted down notes about his work and money he earned
Keeps the diaries in his car to remember his journey in the Emirates
Mrs%20Chatterjee%20Vs%20Norway
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Ashima%20Chibber%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Rani%20Mukerji%2C%20Anirban%20Bhattacharya%20and%20Jim%20Sarbh%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%202%2F5%3C%2Fp%3E%0A
All or Nothing
Amazon Prime
Four stars
if you go
The flights Fly Dubai, Air Arabia, Emirates, Etihad, and Royal Jordanian all offer direct, three-and-a-half-hour flights from the UAE to the Jordanian capital Amman. Alternatively, from June Fly Dubai will offer a new direct service from Dubai to Aqaba in the south of the country. See the airlines’ respective sites for varying prices or search on reliable price-comparison site Skyscanner.
The trip
Jamie Lafferty was a guest of the Jordan Tourist Board. For more information on adventure tourism in Jordan see Visit Jordan. A number of new and established tour companies offer the chance to go caving, rock-climbing, canyoning, and mountaineering in Jordan. Prices vary depending on how many activities you want to do and how many days you plan to stay in the country. Among the leaders are Terhaal, who offer a two-day canyoning trip from Dh845 per person. If you really want to push your limits, contact the Stronger Team. For a more trek-focused trip, KE Adventure offers an eight-day trip from Dh5,300 per person.
ESSENTIALS
The flights
Emirates, Etihad and Swiss fly direct from the UAE to Zurich from Dh2,855 return, including taxes.
The chalet
Chalet N is currently open in winter only, between now and April 21. During the ski season, starting on December 11, a week’s rental costs from €210,000 (Dh898,431) per week for the whole property, which has 22 beds in total, across six suites, three double rooms and a children’s suite. The price includes all scheduled meals, a week’s ski pass, Wi-Fi, parking, transfers between Munich, Innsbruck or Zurich airports and one 50-minute massage per person. Private ski lessons cost from €360 (Dh1,541) per day. Halal food is available on request.
Key figures in the life of the fort
Sheikh Dhiyab bin Isa (ruled 1761-1793) Built Qasr Al Hosn as a watchtower to guard over the only freshwater well on Abu Dhabi island.
Sheikh Shakhbut bin Dhiyab (ruled 1793-1816) Expanded the tower into a small fort and transferred his ruling place of residence from Liwa Oasis to the fort on the island.
Sheikh Tahnoon bin Shakhbut (ruled 1818-1833) Expanded Qasr Al Hosn further as Abu Dhabi grew from a small village of palm huts to a town of more than 5,000 inhabitants.
Sheikh Khalifa bin Shakhbut (ruled 1833-1845) Repaired and fortified the fort.
Sheikh Saeed bin Tahnoon (ruled 1845-1855) Turned Qasr Al Hosn into a strong two-storied structure.
Sheikh Zayed bin Khalifa (ruled 1855-1909) Expanded Qasr Al Hosn further to reflect the emirate's increasing prominence.
Sheikh Shakhbut bin Sultan (ruled 1928-1966) Renovated and enlarged Qasr Al Hosn, adding a decorative arch and two new villas.
Sheikh Zayed bin Sultan (ruled 1966-2004) Moved the royal residence to Al Manhal palace and kept his diwan at Qasr Al Hosn.
Sources: Jayanti Maitra, www.adach.ae
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
FIXTURES
December 28
Stan Wawrinka v Pablo Carreno Busta, 5pm
Milos Raonic v Dominic Thiem, no earlier then 7pm
December 29 - semi-finals
Rafael Nadal v Stan Wawrinka / Pablo Carreno Busta, 5pm
Novak Djokovic v Milos Raonic / Dominic Thiem, no earlier then 7pm
December 30
3rd/4th place play-off, 5pm
Final, 7pm
