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The new-look Central Bank of Bahrain (CBB) board held its first meeting since it was restructured.

Chaired by Hassan Khalifa Al Jalahma, the panel extended thanks to the outgoing board of directors for their efforts and congratulated the CBB Governor on renewing his term.

The board reviewed the bank’s performance report and developments in the financial sector for the first quarter of 2020, as well as CBB measures to maintain the safety and stability of banking operations and the achievement of financial stability.

The CBB board of directors also approved the adoption of the revised budget for 2020.

 National Commercial Bank, Saudi Arabia’s biggest lender, on Sunday posted a 2.1% rise in quarterly profit despite higher provisions while Samba Financial Group 1090.SE surprised with lower provisions.

Net profit rose to 2.83 billion riyals ($745.5 million) for the quarter to March 31.

That topped the 2.4 billion expected by EFG Hermes analysts but fell short of the 3.28 billion forecast by FAB Securities.

NCB said operating income rose by 7.2% mainly on higher net special commission income which for Islamic lenders is comparable to net interest income.

Its net impairment charges for expected credit losses rose to 396 million riyals from 145 million a year earlier.

NCB’s investment-related income, fees from banking and services and foreign exchange income also rose.

SAMBA PROFIT JUMP:

Samba Financial Group reported a 19.6% jump in first-quarter net profit to 1.27 billion riyals.

That topped the 889 million riyals forecast by EFG Hermes analysts who noted Samba lowered its provisions to 225 million riyals from 321 million a year earlier. EFG had estimated Samba’s provisions at 328 million.

“Provisioning surprised positively,” EFG said in a note.

Samba said the rise was mainly due to an increase in gains on fair value through other comprehensive income debt, exchange income and other operating income.

“On the other hand total operating expenses increased mainly due to an increase in salaries and employee-related expenses, depreciation and other general and administrative expenses,” it said in a bourse filing.

Rating agency Moody’s said this month that Saudi government spending cuts stemming from lower oil prices would weigh on the non-oil sector of the economy where banks do most of their business.

JPMorgan’s credit card customers spent 40% less after Covid-19 hit, according to a study by its internal think tank. That sounds dire for a lender that has one-sixth of its loans out on plastic. In reality, though, it’s not that simple. America’s almost-$1 trillion credit card habit, like the pandemic itself, is a story of haves versus have-nots.

In normal times, serving the rich versus the poor is a trade-off. Simplistically, wealthier customers get lower interest rates – Citigroup’s own-brand cards yield 11% in interest, where its less-elite white-label cards command 18% – and they pay off their balances more regularly. Much of what the wealthy generate in transaction fees also goes back to them as rewards and cashback, which away three-quarters of JPMorgan’s so-called interchange fee income in 2019, and almost all of Citi’s.

But where they fall short on rate, they make up for it in other places. Richer customers have on average more credit card debt in absolute terms, skip payments less often, and also spend more liberally on non-essential things like travel and eating out. That’s problematic for affluence-chasing issuers like Citi, JPMorgan and Bank of America because those activities are now on indefinite hiatus. The JPMorgan Institute study showed card spending fell fastest for the wealthiest customers.

That doesn’t make the rich less covetable. As their spending falls, so will the freebies card issuers lavish on them, reducing the impact on revenue. Meanwhile poorer borrowers may only get less appealing. JPMorgan found that lower-income cardholders rely more on plastic to buy essential items, and the Federal Reserve has shown that their debts are bigger relative to their incomes – suggesting they are more likely to overextend in a crisis. Late fees that help compensate for higher delinquencies are becoming harder to extract, as banks offer to waive penalties for those affected by Covid-19.

Banks are coy when it comes to disclosing the nitty-gritty of credit cards – for example, how much they make in penalty fees in normal times. That’s understandable, since nobody wants to be seen profiteering from a deep recession. But if the lesson issuers take from the crisis is that the rich bounce back while the poor become less profitable, the have-nots will end up with even less.

CONTEXT NEWS

– The average household cut credit card spending by a 40% year-on-year by the end of March as the Covid-19 pandemic hit, according to the JPMorgan Institute, which conducted a study of 8 million families who actively use cards issued by its parent group JPMorgan.

– The study showed a slightly bigger percentage drop in spending for higher-income households. It attributed this in part to a higher weighting of non-essential items, which made up 70% of the wealthiest quartile’s overall spending in April 2019, compared with 61% for the least wealthy.

– Other credit card issuers including Bank of America, Citigroup and Capital One warned at their first-quarter earnings of a steep fall in spending by credit card customers, as they increased their reserves to cover future bad loans.

Egypt’s government will lend EgyptAir 2 billion Egyptian pounds ($127.39 million) due to the impact of the coronavirus on its operations, the finance ministry said.

A member of the Star Alliance led by Germany’s Lufthansa LHAF.DE, EgyptAir halted regular international flights on March 19 when the government closed the country’s airports to combat the spread of the virus.

The government will support state-owned EgyptAir until it returns to 80% of its 2019 operations, the ministry said in a statement.

EgyptAir has continued flying some domestic routes and repatriation flights for citizens stranded abroad.

Egypt is allowing hotels to reopen for domestic tourists on condition they operate at no more than 25% capacity until the end of May.

From June 1, hotels will be allowed to work at up to 50% capacity.

The virus has shut down Egypt’s tourist sector, which accounts for 12%-15% of gross domestic product, leading to losses estimated at $1 billion per month.

 First Abu Dhabi Bank (FAB) has put on hold discussions to acquire the Egyptian assets of Lebanon’s Bank Audi AUDI.BY due to difficult market conditions.

FAB, the United Arab Emirates’ biggest lender, communicated the request a few days ago to Bank Audi, sources with direct knowledge of the matter told Reuters, declining to be identified due to commercial sensitivities.

Neither FAB nor Bank Audi were immediately available to comment. FAB said in February it would decide on the deal in the second quarter.

Bank Audi Egypt has grown from a three-branch operation acquired by Bank Audi in 2005 to 50 branches with total assets of $4.4 billion at the end of September.

One of the sources said the timing of the deal, which the source said was worth $700 million, was not right due to the need to support the UAE economy in light of the coronavirus pandemic.

The UAE central bank has launched $70 billion worth of capital and liquidity measures to support the economy during the crisis.

FAB said last month it was among the first UAE lenders to launch relief measures for customers, including the postponement of loan repayments and the suspension or reduction of fees and charges across a wide range of financial products.

FAB’s move came after Kuwait Finance House last month agreed to postpone finalising its acquisition of Bahrain’s Ahli United Bank, one of the biggest cross-border banking deals for years, until December due to the coronavirus outbreak.

Lebanese banks are trying to strengthen their finances as the country endures its worst financial crisis since the civil war.

Morgan Stanley struck a buy call on emerging markets sovereign debt, citing cheap valuations, the prospect of significant policy support and the fact that sell-offs in recent months have created a space for investors to move into.

The U.S. investment bank said EM (emerging market) sovereign credit spreads had stabilised at cheap levels, especially against U.S. credit, fund outflows have stopped and issuance has resumed, suggesting that markets have priced in much of recent COVID-19 “shock”.

“While we don’t dismiss the risk of another leg down, we see many factors as supportive,” Morgan Stanley analysts said.

So-called ‘high-yield’ countries with lowly credit ratings were “the only place to go” they added, recommending Argentina, Bahrain, Ghana and Pakistan.

Pemex (Mexico’s state oil firm) also remained a top pick. However, they said they we’re not adding Egypt to the buy list as it was already “priced to perfection”. They also moved Ukraine down to a “dislike.”

National Investment Bank (NIB) agreed to increase the capital of Arab Investment Bank (aiBANK) by EGP 800 million, Hala el Said, Egypt’s planning minister and chairman of NIB, announced in a statement.

The authorized capital of aiBANK will become EGP 2 billion following the increase, while its paid-up capital will stand at EGP 1.84 billion.

aiBANK is a subsidiary of NIB, which will have a share of EGP 731.4 million from the capital hike process.

El Said noted that an updated strategic plan has been approved for aiBANK for the period from 2019 until 2022. The plan includes offering new banking products, as well as improving the internal work environment.

The coronavirus pandemic has had a negative impact on the startup ecosystem across the Middle East and North Africa, a recent research report showed.

The report showed that the pandemic has negatively impacted 71 percent of startups in the region with 50 percent of the respondents confirming they have a cash runway of less than six months.

The survey was conducted by Wamda, the regional ecosystem enabler, and Arabnet, the event, insights, and innovation program organizer. Findings are based on data collected from 247 startup founders, with the UAE representing the largest share (24.7 percent) followed by Lebanon, Saudi Arabia and Egypt.

For e-commerce startups, 54.2 percent reported having a cash runway of less than six months, while a third of logistics startups said they have between one and two months of runway left. For healthtech startups, 43.8 percent of respondents said they have less than two months of runways.

Just 12 percent of startups reported having a runway of more than 12 months.

According to the report, founders have started putting aside talks of growth and expansion in favor of prioritising product development and adjusting business models to sustain operations while the pandemic persists.

Two thirds are now working remotely, while 8.6 percent said they introduced salary cuts of 50 percent or more and 15.9 percent said they reduced their number of employees.

“The survival factor for over half of the startups in the region is getting new investment or grants. Financial aid whether in the form of investment, loans or bill waiver are necessary to support the region’s startup ecosystem,” the report said.

As for funding rounds, 49.6 percent said that their funding round has been affected by the pandemic, while 29.5 percent said that they are not looking to fundraise, 11 percent said they will still receive funding as planned and 9.8 percent reported that their funding environment has improved.

UAE fintech startup Ziina, which raised a $850,000 funding, has launched a mobile-to-mobile payment service for instant money transfer to friends and family in the country.

Users can complete the transaction just by submitting a phone number and without details such as IBAN, SWIFT code.

“Currently, the app is available only to UAE residents with a UAE bank account. At a later stage, Ziina will launch in Saudi Arabia,” a spokesperson said.

Customers will need to install the Ziina app on their mobile phones to start sending money. They will be required to connect their bank account to the digital tool in order to access their personal funds or receive money transfers.

The maximum amount that users can send is 11,000 UAE dirhams. Transferring amounts as low as one dirham would be possible for most banks, although there are at least two banks in the country that have set a minimum limit of 100 UAE dirhams per transaction.

Ziina was founded by Faisal Toukan, CEO; Sarah Toukan, chief product officer, and Andrew Gold, VP for engineering.

Ziina’s advisory board includes Samih Toukan, the co-founder of Maktoob, Souq and Jabbar Internet Group, and Emre Tok, the ex-Careem VP of growth.

Faisal said they want to redefine the way people in the Middle East think of, interact with and experience financial services.

The UAE has a huge potential for companies like Ziina to expand, considering that it has one of the highest percentages of smartphone penetration in the world, at 91 percent of the population.

During Ramadan, the use of social media increases even more, with 95.2 percent of people who celebrate the holy month in the UAE using their mobile phones, according to Facebook’s research data.

The new firm also said it is also looking to introduce other services, such as QR code integration, prepaid cards and utility payments, among others.

“We want to democratize access to financial services by placing one platform in the hands of every individual. For example, we want to make it possible for anyone who wishes to invest to do so easily by integrating third-party robe-advisors to Ziina’s platform. We will prioritize use-cases based on customers’ largest pain points and add them product by product,” said Sarah.

By the end of 2019, a new virus from the Corona family has emerged from Wuhan province and spread worldwide. Within few months hundreds of thousands of people got infected, confusing governments and threatening economies.

Despite the catastrophic damage this virus has caused at various levels, no one can deny that it has had unexpected positive repercussions as well; because of this virus, we have come to realize what is essential and important: our health, our family and our diet…

Pollution and carbon emissions decreased, and the planet began to recover and everyone realized that working from home is possible. We also recognized that health workers are the true heroes.

And just like any country around the world, this virus has reached Lebanon and infections have started to appear in some Lebanese regions, which sometimes led to panic. As a result, the Lebanese banking sector, like other sectors, had to adopt some flexible measures in order to face this imminent danger on one hand, and to continue providing the urgent banking services for clients and access to their money on another hand.

Since the first days of the crisis, and with the first cases of the new Corona virus registered in Lebanon, the AM bank took the necessary measures to ensure the safety of everyone, both employees and customers. Even before the declaration of a health emergency, we implemented a complete sterilization process for buildings, offices and branches, in addition to providing sterilization materials to employees and customers within the branches.

With the increase in the number of injuries and the decision to declare a state of health emergency, we adhered to the decisions of the Lebanese government and the Association of Banks in Lebanon, so we chose carefully to open a number of branches spread geographically to cover the largest possible area of ​​Lebanese territory, and therefore we continued to serve our customers and secure urgent banking operations related to food security and medical supplies and Cards issuing and delivering. We have worked to fill in our ATMs systematically and periodically and ensured that they are always ready for service. In addition to that, we have made our online banking platform customer friendly, so that customers could conduct transactions, make inquiries and submit orders. Payment of domiciled salaries continued and coordination with the Central Bank didn’t stop with regards to clearing services.

AM Bank gave high priority to its employees’ safety as well as clients visiting the bank’s branches. Instructive boards with important preventive measures were installed within branches in addition to disinfectants. Moreover, the bank was keen to secure protective clothing that covers the entire body worn by employees and plastic insulator were installed on the counters to protect those in the branch. Add to that, part of the social distancing measures, only a certain number of clients were allowed to enter a branch at the same.

AM Bank has never lost contact with its customers and we have been keen to stand beside our larger family (clients) at this precise time. Our customer service center is ready around the clock to receive calls, answer questions and fulfill requests in the best way possible. On social media, triggered by our social responsibility, we made sure to spread awareness, prevention and positivity, and were always available to answer customer inquiries.

Despite commitment to a health emergency, AM Bank employees have acted responsibly to ensure business continuity and provide the necessary banking services. The bank has implemented a deliberate shift system that guarantees the safety of both employees and the smooth running of work. As for departments that can work remotely, they continue to function normally from home.

In conclusion, there is no doubt that life after the Coronavirus will not be the same as before, this pandemic has taught highlighted the fragility of our lifestyles and systems. It has also emphasized the importance of flexibility for institutions and individuals in order to adapt to any situation that may arise. We are convinced that surviving in this ever-changing world will.