Business

AMMAN — Arab Bank Group reported net income after tax of $215.2 million for the nine months of 2020, compared to $668.9 million for the same period last year, recording a drop of 68 per cent.

In a statement, the Arab Bank Group attributed the drop to the build up of higher provisions, driven by current and envisaged economic conditions.

According to Nemeh Sabbagh, the increased provisions booked across the Group are in accordance with the guidelines of International Financial Reporting Standard #9, and as per the bank’s internal expected credit loss model, and include general provisions built due to the current economic situation in Lebanon.

The results also reflect the deterioration in the macroeconomic environment in the region and globally, the statement added, in addition to lower revenues because of the impact of the COVID-19 outbreak, lower market interest rates and weakening oil prices.

The Group’s net operating income stood at $808 million, recording a drop of 22 per cent as a result of a decrease in net interest and commission income, in addition to a drop in the profit of the bank’s associates in the Arab Gulf countries.

Customer deposits grew by 8 per cent to $37.5 billion compared to $34.7 billion, while loans grew by 2 per cent to reach $26.7 billion compared $ 26.1 billion, said the statement.

In the statement, Sabih Masri, chairman of the Board of Directors said the pandemic has had, and continues to have, a significant impact on businesses around the world.

Sabbagh added that the global and regional banking sectors will continue to face challenges because of the economic contraction, the higher cost of risk, and lower interest rates.

He noted that growth in the Arab Gulf countries has also declined sharply due to the plunge in oil prices. 

The Group maintains robust capital base with equity of $9.3 billion and with a capital adequacy ratio of 16.7 per cent calculated in accordance with Basel III regulations, it indicated. It enjoys high liquidity with a loan-to-deposit ratio of71.1 per cent, while credit provisions held against non-performing loans continue to exceed 100 per cent.

SAN FRANCISCO — Big Tech is bracing for a tumultuous week marked by quarterly results likely to show resilience despite the pandemic, and fresh attacks from lawmakers ahead of the November 3 US election.

With backlash against Silicon Valley intensifying, the companies will seek to reassure investors while at the same time fend off regulators and activists who claim these firms have become too dominant and powerful.

Earnings reports are due this week from Amazon, Apple, Facebook, Microsoft, Twitter and Google-parent Alphabet, whose combined value has grown to more than $7 trillion dollars.

They have also woven themselves into the very fabric of modern life, from how people share views and get news to shopping, working, and playing.

Robust quarterly earnings results expected from Big Tech will "highlight the outsized strength these tech behemoths are seeing" but "ultimately add fuel to the fire in the Beltway around breakup momentum", Wedbush analyst Dan Ives said in a note to investors.

The results come amid heightened scrutiny in Washington of tech platforms and follow a landmark antitrust suit filed against Google which could potentially lead to the breakup of the internet giant, illustrative of the "techlash" in political circles.

Meanwhile, Senate Republicans have voted to subpoena Jack Dorsey and Mark Zuckerberg, the chief executives of Twitter and Facebook respectively, as part of a stepped-up assault on social media's handling of online political content, notably the downranking of a New York Post article purported to show embarrassing information about Democrat Joe Biden.

CEOs of Twitter, Facebook and Google are already slated to testify at a separate Senate panel on Wednesday examining the so-called Section 230 law which offers liability protection for content posted by others on their platforms.

Business models questioned 

The four giants drawing the most scrutiny — Apple, Amazon, Facebook and Google — have been wildly successful in recent years and have weathered the economic impact of the pandemic by offering needed goods and services.

Google and Facebook dominate the lucrative online ad market, while Amazon is an e-commerce king.

Apple has come under fire for its tight grip on the App Store, just as it has made a priority of making money from selling digital content and services to the multitude of iPhone users.

The firms have stepped up lobbying, spending tens of millions this year, and made efforts to show their social contributions as part of their campaign to fend off regulation. 

"For the most part, tech companies know how to do this dance," said analyst Rob Enderle of Enderle Group.

"They don't spend a lot of time bragging about how well they have done any more."

Ed Yardeni of Yardeni Research said the outlook for Big Tech may not be as rosy as it appears.

"For one, regulators at home and abroad are gunning to rein in some of the largest US technology names," Yardeni said in a research note.

"Also, the COVID-induced tech spending enjoyed over the past six months won't likely be replicated."

Ebbing ads? 

Of interest to the market short-term will likely be whether backlash about what kind of content is left up and what is taken down by online titans causes advertisers to cut spending on the platforms.

Organisers of a Facebook ad boycott vowed early in the third quarter to continue their campaign, saying the social network's top executives failed to offer meaningful action on curbing hateful content.

At the same time, political conservatives have accused Facebook and others of political bias as social platforms step up their content moderation. President Donald Trump has threatened new regulatory measures which could impact the business models of platforms.

Pandemic punch 

Economic and social disruption from COVID-19 also looms over tech firms, which benefitted early in the pandemic as people turned to the internet to work, learn, shop and socialise from home.

"Performance will be best for those providing solutions for people working at home," analyst Enderle said.

Amazon, Google and Microsoft each have cloud computing divisions that have been increasingly powering revenue as demand climbs for software, services and storage provided as services from massive data centres.

Amazon has seen booming sales on its platform during the pandemic, and viewing surge at its Prime streaming television service.

Enderle expressed concern that with COVID-19 cases and a lack of new stimulus money in the US, tech companies could reveal in forecasts that they are bracing for poorer performance in the current quarter. 

"The second wave of the pandemic has got a lot of folks spooked," Enderle said,

"Those stimulus checks aren't going out and people are afraid of what is happening with their jobs; so that cuts spending and buying confidence."

Even though Microsoft is well positioned in a booming video game market with a new Xbox console coming in November, its arrival could be soured if people worried about money cut back on such luxuries.

SHANGHAI — Huawei's revenue growth slowed significantly in the first nine months of 2020, the Chinese telecom giant said on Friday, citing "intense pressure" on operations during the coronavirus and as the US moves to cut off its access to vital components.

Huawei, the leading global supplier of telecoms networking equipment and a top smartphone producer, said it grossed 671.3 billion yuan ($100.7 billion) in revenue in January-September, up 9.9 per cent year-on-year.

That's down from 24.4 per cent growth over the same period last year, while its profit margin fell to 8 per cent from 8.7 per cent last year.

Washington views Huawei, founded in 1987 by former People's Liberation Army engineer Ren Zhengfei, as a Chinese espionage threat and has lobbied allies to shun its gear while attempting to block its access to global semiconductor supplies.

"As the world grapples with COVID-19, Huawei's global supply chain was put under intense pressure and its production and operations saw increasing difficulties," the company said.

It vowed to "do its best to find solutions, to survive and forge ahead". 

The brief announcement made no direct reference to the US pressure, nor did it include a performance breakdown for its various segments, such as smartphone sales. Privately held Huawei provides such details only for half-year and full-year earnings.

But during the online launch of the company's latest smartphone on Thursday, Huawei's CEO of consumer products Yu Chengdong said the company was "suffering" from the escalating US pressure, which he called "unfair".

"For Huawei, nowadays we are in a very difficult time," Yu said.

Bad news has been mounting for Huawei, which the United States alleges is controlled by Beijing. 

Washington says Huawei equipment could contain security holes that China could exploit for spying, but the firm and the Chinese government reject the claim, saying the US has never provided evidence.

Washington has essentially barred Huawei from the lucrative US market and pressured allies to do the same.

Britain in July banned mobile providers from using Huawei equipment in their new 5G networks, giving British companies until 2027 to rip out any existing hardware.

France has also placed heavy restrictions on use of Huawei gear and Sweden this week banned the company and Chinese rival ZTE from its own 5G network.

Writing on the wall 

Much of the full impact from the US measures to cut off access to semiconductors and other components has been postponed so far by the Trump administration's granting of a series of waivers delaying full implementation while it carried out long-running talks on a trade deal with China.

But analysts said the writing is on the wall for Huawei, which may need to make major business adjustments.

US moves to prevent Huawei's access to much of the Google Android system could damage its global market position on smartphones, said Marc Einstein, Chief Analyst at ITR Corporation in Tokyo.

But it should remain strong in China's domestic market, and Huawei maintains a solid foothold in Latin America, the Middle East and Africa, even if more developed markets such as Europe appear to be closing.

"It's completely feasible that if a huge [US-China] trade deal is reached, some of these challenges could recede," Einstein said.

"Huawei is not going anywhere."

Huawei overtook Samsung as the world's top smartphone seller in the second quarter on strong domestic demand, industry tracker Canalys said in July, adding that it was the first quarter in nine years that a company other than the South Korean giant or Apple held the top spot.

Huawei said last month that its nascent homegrown operating system could be available on smartphones from early next year as it rushes to build an alternative app ecosystem.

Phil Marshall, chief research officer with Tolaga Research, said Huawei may "lose some of the edge" that it enjoys in networking gear and 5G technologies, but that it had racked up so many 5G patents over the years that it should remain a global player.

The US pressure also will force Huawei to achieve tech self-reliance by making its own chips.

"We know how successful they have proven to be at developing technology. You just can't rule them out," Marshall said.

FRANKFURT AM MAIN — Greenpeace on Tuesday criticised the European Central Bank (ECB) for "bias" in its bond purchases that favour "carbon-intensive sectors" when the institution is looking for ways to address climate change. 

According to a study by the environmental pressure group and the UK-based think-tank New Economics Foundation, 63 per cent of bonds held by the ECB at the end of July were attached to fossil fuels, energy-intensive manufacturing, non-renewable utilities and carbon-intensive transport.

"The ECB needs a climate-friendly realignment," said Greenpeace economist Mauricio Vargas, arguing that the bank must set "the framework for a green European financial system".

As the bank tees up a wide-ranging strategy review, due to conclude next year, "the ECB now has the chance to listen and to correct its monetary-policy misstep," Vargas says. 

The report recommended that the ECB stop buying bonds issued by fossil fuel and energy-intensive companies, and instead buy bonds from the green and renewable sectors as part of its multitrillion-euro (dollar) asset-purchase programme.

"Its corporate purchases are structurally misaligned with EU commitments to the Paris Climate Agreement and do not adequately reflect climate-related financial risks," the authors said.

The study also argued that the Frankfurt-based institution needs to row back on market neutrality, the principle that guides asset purchases.

Intended to not favour one industry over another, the authors said it instead "hardwires a carbon bias" by in effect subsidising the companies' debt. 

Sectors with a heavy carbon footprint such as energy companies and airlines have benefited from the ECB's bond-purchase policies, the study said. 

Last week, ECB President Christine Lagarde said that the bank might revise its rules on neutrality in its strategy review. 

Implementing these policies would be "in line with the climate emergency that we are currently facing but would also support climate-related financial stability objectives", the report said. 

The move would also encourage more financial institutions to move away from business models that harmed the environment, it added.

The study comes ahead of a crunch monetary-policy meeting at the central bank next week.

The Paris climate pact, signed in 2015, commits countries to keep temperature rises below 2ºC compared with pre-industrial levels by cutting their use of fossil fuels. 

BEIJING — China's super wealthy have earned a record $1.5 trillion in 2020, more than the past five years combined, as e-commerce and gaming boomed during pandemic lockdowns, an annual rich list said on Tuesday.

An extra 257 people also joined the billionaires club in the world's number-two economy by August, following two years of shrinking membership, according to the closely watched Hurun Report.

The country now has a total of 878 billionaires. The US had 626 people in the top bracket at the start of the year, according to Hurun in its February global list.

The report found that there were around 2,000 individuals with a net worth of more than 2 billion yuan ($300 million) in August, giving them a combined net worth of $4 trillion.

Jack Ma, founder of e-commerce titan Alibaba, once again topped the list after his wealth surged a whopping 45 per cent to $58.8 billion as online shopping firms saw a surge in business owing to people being shut indoors for months during strict lockdowns to contain the virus.

He was followed by Pony Ma ($57.4 billion), boss of gaming giant and WeChat owner Tencent who made an extra 50 per cent despite concerns about his firm's US outlook after it was threatened with bans there over national security fears.

First-time list member Zhong Shanshan, 66, best-known for his bottled water brand Nongfu, parachuted into third spot with $53.7 billion after a Hong Kong IPO in September, the report found.

'Never seen this 

much wealth' 

"The world has never seen this much wealth created in just one year," Hurun Report chief researcher Rupert Hoogewerf said in a statement.

This year's list shows China was "moving away from traditional sectors like manufacturing and real estate, towards the new economy", he added.

Wang Xing, founder of food delivery app Meituan, quadrupled his wealth and jumped 52 places to 13th in the list with $25 billion, while Richard Liu, the founder of online shopping platform JD.com doubled his money pile to $23.5 billion.

Healthcare entrepreneurs also moved up the list on the back of the pandemic, with Jiang Rensheng, founder of vaccine-maker Zhifei, tripling his value to $19.9 billion.

China shut down major cities around the country in late January and February to contain the virus that first emerged in Wuhan, causing an unprecedented economic contraction in the first quarter.

With infections appearing to be under control, the country is on track to become the only major economy to expand this year, according to the International Monetary Fund.

On Monday, data showed the economy expanded 4.9 per cent in the third quarter but away from the glittering figures many ordinary workers and fresh graduates are struggling to find jobs.

The urban jobless rate inched down to 5.4 per cent in September, although analysts have warned of higher unemployment than officially reported this year.

NEW YORK — US petroleum giant ConocoPhillips announced on Monday it would acquire Texas-based shale oil rival Concho Resources in a transaction valued at $9.7 billion.

The acquisition comes as global oil giants have struggled in recent months amid the COVID-19 pandemic that caused a slowdown in the global economy and a plunge in the price of crude.

“The leadership and boards of both companies believe today’s transaction is an affirmation of our commitment to lead a structural change for our vital industry,” ConocoPhillips CEO Ryan Lance said in a statement.

Together the two companies will produce 1.5 million barrels a day and become a major player in the Permian Basin area straddling New Mexico and Texas, which is rich in hydrocarbons.

“The combination is remarkable. Just in regards to scale, ConocoPhillips is adding enough Permian production to nip at the heels of ExxonMobil’s massive programme,” Robert Clarke, vice president at Wood Mackenzie, said in an analysis.

After plunging in the pandemic’s early weeks, oil stabilised at around $40 a barrel in the third quarter but that is still below a profitable level for many producers, which have borrowed heavily in recent years and now are seeing profits in the red.

Several companies have filed for bankruptcy or come close, while the sector has seen a wave of acquisitions, with Chevron buying oil and natural gas producer Noble for $5 billion in July, and Devon Energy acquiring WPX Energy in September.

The transaction between ConocoPhillips and Concho is set to close in the first quarter of next year. Under the terms of the agreement approved by both boards of directors, each share of Concho will be exchanged for 1.46 shares of ConocoPhillips stock.

This represents a 15 per cent premium to the closing price on 

October 13.

The two companies have a total of approximately 23 billion barrels in reserve at a cost of less than $40 a barrel.

They expect to be able to make savings of around $500 million per-year by 2022.

WASHINGTON — The US budget deficit surged 218 per cent to a record $3.1 trillion in the fiscal year that ended on September 30 due to a massive increase in spending to help the economy weather the coronavirus pandemic, the government announced on Friday.

That was more than double the previous record deficit of $1.4 trillion hit in 2009 during the global financial crisis.

As spending ramped up and tax receipts fell due to the widespread business shutdowns, the Treasury Department said total government US debt soared to $26.9 trillion — larger than the size of the economy which shrunk in the second quarter to less than $20 trillion.

The budget gap under President Donald Trump already had been on the rise prior to the pandemic and hit $1 trillion this year for the first time since 2012 following the massive tax cut passed in late 2017.

Administration officials tried to put a positive spin on the figures, crediting Trump with acting quickly to deploy resources to ease the economic damage for American businesses and families.

"Under President Trump's leadership, the economy has begun an incredible comeback," Treasury Secretary Steven Mnuchin and White House Budget Chief Russell Vought said in a joint statement.

"The Administration remains fully committed to supporting American workers, families, and businesses and to ensuring that our robust economic rebound continues," Mnuchin added.

Trump's team for weeks has been locked in talks with Democratic leaders in Congress on a new rescue package to follow up on nearly $3 trillion in resources deployed in the early days of the pandemic, including the $2.2 trillion CARES Act.

Officials now acknowledge that it will be difficult to reach a deal before the November 3 presidential election, or to get the funds out even if they manage to agree.

Federal government outlays increased 47 per cent in the fiscal year while outlays declined 1 per cent.

However, the fiscal picture has been helped by borrowing rates near zero, dropping interest payments by 9 per cent or $50 billion.

NEW YORK — US stocks ended the week mixed on Friday as optimism over positive economic data was tempered by a soaring US deficit and the growing realisation a new stimulus package is unlikely anytime soon.

Better-than-expected retail sales data and consumer confidence showed Americans remain willing to spend -- for now -- and shares were boosted by positive news about Boeing's 737 MAX and drugmaker Pfizer.

The benchmark Dow Jones Industrial Average gained 0.4 per cent to finished an up-down week at 28,606.31, while the broad-based S&P 500 was essentially flat, rising just 0.1 per cent to end at 3,483.81.

But declines by industry titans like Amazon, Apple and Netflix reversed early gains in the tech-rich Nasdaq, which lost 0.4 per cent to close at 11,671.55.

US retail sales climbed 1.9 per cent in September, triple expectations, with purchases of cars and parts, clothing and sporting goods increasing dramatically, according to the Commerce Department report released before markets opened.

The data was a reassuring sign of the economy's resilience after key provisions of the $2.2 trillion CARES Act preventing layoffs and providing support to consumers expired in recent months.

Democrats and Republicans have been negotiating on another stimulus package but growing signs that nothing would be approved before the November 3 presidential election has sent indices closing lower in recent days.

However, separate data from the Federal Reserve showed industrial production in September declining for the first time in five months, losing 0.6 per cent as manufacturing and utilities fell.

Peter Cardillo of Spartan capital Securities said that shows the recovery was losing steam and the economy still needs stimulus.

"The market seems to be holding onto hopes that eventually we will get a stimulus plan," he told AFP. 

"I still think there is a possibility that we'll get it before the elections even though it does not appear that way. It would make political sense for both parties to come up with a plan."

There were glimmers of optimism following market close with news Treasury Secretary Steven Mnuchin may yield to some Democratic demands on Covid-19 testing to get a stimulus deal passed.

Pfizer jumped 3.8 per cent and BioNTech rose 4.1 per cent after announcing they would seek emergency authorisation for their Covid-19 vaccine in late November. 

Boeing rose 1.9 per cent after the director of the European Union's aviation safety agency told Bloomberg the grounded 737 MAX aircraft was safe to fly again and could return to the skies by the end of the year.