PARIS: BNP Paribas on Thursday signaled lower revenue at its cash cow French retail operation as it feels the pinch from low interest rates and declining product fee income.
Chief Executive Jean-Laurent Bonnafe said France's biggest bank will adapt in line with other retail banks that are trying to boost efficiency and develop digital strategies.
Bonnafe said those retail banks which depend on making a margin by taking deposits and passing them on as loans face trouble in the current environment.
"Banks today that operate in such activities are already almost non-profitable, they can fall into losses. There are geographies where some banking systems will fall into losses," Bonnafe said, adding that BNP has a bigger market share in Europe in consumer credit than in deposits.
BNP Paribas nevertheless reported higher than expected second-quarter net income, as stronger corporate and institutional banking (CIB) revenues and a lower cost of risk offset weakness in retail.
Like other banks in Europe, BNP Paribas has been hampered in its bid to boost retail banking revenue by low rates that have eaten into margins, and by a decline in financial fees as customers balk at investing in weak equity markets.
BNP Paribas says its strength is in its diversified and integrated business model that shows resilience in changing environments, as no business unit accounts for more than 16 percent on allocated equity.
RESILIENT PERFORMANCE
Its shares rose as much as 2.4 at the opening, but later backtracked to trade down 0.8 percent versus a 1.2 percent decline in Europe's banks as a whole.
Bonnafe said it expects French retail revenue to decline by between 2 and 3 percent this year, compared with its previous guidance of stable revenue in the business.
Pretax income in domestic markets covering France, Italy and Belgium fell 2.1 percent in the second quarter despite an 11 percent fall in the cost of risk, a measure which reflects how much is set aside for bad loans.
"Resilient performance in retail banking, decent CIB revenue and progress on capital should reassure the market particularly given the currently low valuation," UBS analysts said in a note.
In France, BNP Paribas' retail banking revenue fell 3.6 percent and pretax income dropped 10 percent.
It posted a 0.2 percent rise in net profit to 2.56 billion euros ($2.8 billion) during April to June, including exceptional items such as the sale of Visa Europe shares.
Excluding exceptional items, the bank said net profit fell 4.8 percent to 2.19 billion euros.
Analysts in a Reuters poll had forecast on average a 1.4 percent fall in net profit to 2.52 billion euros.
BNP Paribas set out plans earlier this year to cut costs and shed low-yielding CIB assets, reinvesting in activities that tie up less capital, as it seeks to keep its return on equity at 10 percent beyond 2016.
CIB revenue rose 1.4 percent in the second quarter, thanks to a pick-up in client volumes in its global markets division.
BNP Paribas signals lower retail revenue in France
BNP Paribas signals lower retail revenue in France
Saudi Arabia strengthens cybersecurity leadership at Black Hat MENA
RIYADH: Saudi Arabia reinforced its commitment to cybersecurity by hosting the Black Hat Middle East and Africa conference and exhibition this week. The event, held from Nov. 26-28, highlighted the Kingdom’s efforts to advance digital security and technological innovation as part of its broader Vision 2030 goals.
Organized by the Saudi Federation for Cybersecurity, Programming, and Drones in partnership with Tahaluf, Informa Global, and the Events Investment Fund, Black Hat MENA brought together global experts to discuss critical cybersecurity issues and share insights on protecting digital infrastructures, the Saudi Press Agency reported.
One day before the gathering, Mutab Al-Qunai, CEO of the Saudi Federation for Cybersecurity, told SPA that the event aims to foster innovation and collaboration in digital safety
The conference included a series of technical sessions and workshops centered on the role of cybersecurity in safeguarding emerging technologies. The Kingdom’s efforts to cultivate local talent and align with international cybersecurity standards were key themes. Notably, the event featured a drone challenge zone, aimed at engaging Saudi youth in drone technology and the cybersecurity challenges it presents.
Experts such as Nikhil Shrivastava, an Indian security researcher, and Bianca Lewis, founder of Girls Who Hack, contributed to discussions on the evolving landscape of cybersecurity threats and solutions.
Black Hat MENA also featured five national pavilions, with representatives from the US, Canada, India, Egypt, and Pakistan, alongside 43 exhibitors. The event hosted over 300 speakers, 450 exhibitors, and 350 workshops covering a wide array of cybersecurity topics.
The Activity Zone, sponsored by Haboob, presented cybersecurity challenges with prizes totaling more than SR2 million ($532,000). These included tests on smart home security, medical device hacking, and infrastructure vulnerabilities. The Capture the Flag tournament also took place, awarding SR790,000 in prizes, including SR90,000 for Saudi teams.
Faisal Al-Khamisi, chairman of the Saudi Federation for Cybersecurity, emphasized that hosting Black Hat MENA aligns with Saudi Arabia’s goal to lead in cybersecurity. He said the event demonstrated the Kingdom’s commitment to innovation, collaboration, and developing the cybersecurity skills necessary to protect the digital future.
Saudi Arabia’s efforts to strengthen its cybersecurity infrastructure and cultivate talent position the Kingdom as a growing hub for technological innovation in the region.
FMCG and tech drive UAE spending to $3.7bn in Q3 2024
RIYADH: UAE consumer spending saw robust growth in the third quarter of 2024, with total expenditures reaching $3.7 billion across fast-moving consumer goods, technology, and durable products, new data showed.
This represents a 4.8 percent year-on-year increase, reflecting the market’s resilience and evolving consumer habits, according to the latest NielsenIQ Retail Spend Barometer, powered by GfK intelligence. The index provides quarterly insights into UAE spending across FMCG and technical consumer goods.
The FMCG sector spearheaded growth, achieving $2.1 billion in sales during the third quarter, a 6.4 percent rise compared to the same period in 2023. Meanwhile, the technology and durable goods sector contributed $1.5 billion, marking a 2.5 percent year-on-year increase.
Strong back-to-school sales
The quarter’s performance was bolstered by back-to-school promotions, the expansion of convenience retail, and the ongoing rise of digital shopping platforms. QuickCommerce services and online grocery delivery gained traction, especially among younger, tech-savvy consumers.
David Cantatore, retail lead NIQ Middle East, said: “In the third quarter 2024, we’ve witnessed sustained growth in UAE’s retail landscape, with strong consumer spending driven by targeted promotions and increased demand in both FMCG and tech sectors.”
He added: “The growth of new communities is fueling convenience retail, while online grocery shopping is reshaping the landscape, especially among younger and busy professionals. This digital evolution demonstrates the market’s appetite to adapt and thrive in response to changing consumer preferences.”
FMCG outpaces tech
The FMCG sector demonstrated a strong recovery, with year-on-year growth rising from 3.2 percent in the third quarter of 2023 to 6.4 percent a year later. This resurgence followed a notable slowdown earlier in the year, when growth declined from 9.4 percent in the first quarter of 2023 to 3.5 percent in the corresponding period of 2024.
In contrast, the tech and durable goods sector faced a significant slowdown, as growth dropped from 7.7 percent in the third quarter of 2023 to 2.5 percent in 2024. However, back-to-school promotions and new product launches, such as the Samsung Galaxy S24, helped sustain consumer interest.
Retail evolution
The rise of new residential communities across the UAE has driven the expansion of convenience retail, encouraging more frequent but smaller shopping trips. This trend aligns with an increasing preference for sustainable and healthier products, supported by the rapid adoption of digital grocery platforms.
“The positive growth we’re seeing across both sectors reflects the UAE’s dynamic retail environment and strong consumer confidence,” Cantatore said.
He added: “As we continue to witness the evolution of shopping behaviors and the rise of digital solutions, the retail sector remains well-positioned for sustained growth and innovation.”
Digital trade in the UAE is expected to grow at an annual rate of 12.3 percent between 2023 and 2028, fueled by the increasing adoption of “buy now, pay later” models and advanced fintech systems.
A joint report released in May by the Ministry of Economy and the Abu Dhabi Chamber of Commerce highlighted that over 40 percent of UAE consumers rely on innovative payment solutions, underscoring the nation’s rapid shift toward digital commerce.
Oil Updates – prices slip on US gasoline stocks buildup
SINGAPORE: Oil prices drifted lower on Thursday after a surprise jump in US gasoline inventories, with investors focusing on this weekend's OPEC+ meeting to discuss oil output policy, according to Reuters.
However, the OPEC+ oil alliance later announced that the 57th Joint Ministerial Monitoring Committee meeting and the 38th OPEC and non-OPEC Ministerial Meeting have been rescheduled to Dec. 5. The group cited the Gulf Cooperation Council Summit, set to take place in Kuwait on Dec. 1, as the reason for the postponement.
Brent crude futures fell by 20 cents, or 0.27 percent, to $72.63 per barrel by 10:17 a.m. Saudi time, while US West Texas Intermediate crude futures were down 21 cents, or 0.29 percent, at $68.52 a barrel.
Trading is expected to be light due to the US Thanksgiving holidays starting on Thursday.
Oil is likely to retain its near-term bearish momentum as the risks of supply disruption fade in the Middle East and US gasoline inventories stood higher than expected, said Yeap Jun Rong, a market strategist at IG.
US gasoline stocks rose 3.3 million barrels in the week ending on Nov. 22, the US Energy Information Administration said on Wednesday, countering expectations for a small draw in fuel stocks ahead of record holiday travel.
Slowing fuel demand growth in top consumers China and the US has weighed heavily on oil prices this year, although supply cuts from OPEC+ have limited the losses.
OPEC+, which pumps about half the world’s oil, will meet on Sunday. Two sources from the producer group told Reuters on Tuesday that members have been discussing a further delay to a planned oil output hike due to have started in January.
A further deferment, as expected by many in the market, has mostly been factored into oil prices already, said Suvro Sarkar, energy sector team lead at DBS Bank.
“The only question is whether it's a one-month pushback, or three-month, or even longer,” he said.
“That would give the oil market some direction. On the other hand, we would be worried about a dip in oil prices if the deferments don't come.”
OPEC+ had previously said it would gradually roll back oil production cuts with small increases over many months in 2024 and 2025.
Brent and WTI have lost more than 3 percent each so far this week, under pressure from Israel’s agreement to a ceasefire deal with Lebanon’s Hezbollah group. The ceasefire started on Wednesday and helped ease concerns that the conflict could disrupt oil supplies from the Middle East region.
Market participants are uncertain how long the break in fighting will hold, with the broader geopolitical backdrop for oil remaining murky, analysts at ANZ Bank said.
Oil prices are undervalued due to a market deficit, the heads of commodities research at Goldman Sachs and Morgan Stanley warned in recent days.
They also pointed to a potential risk to Iranian supply from sanctions that might be adopted under US President-elect Donald Trump.
Saudi Arabia boosts R&D spending to $6bn in 2023 amid Vision 2030 push
RIYADH: Saudi Arabia ramped up its research and development spending to SR22.61 billion ($6.02 billion) in 2023, marking a 17.4 percent increase from the previous year, according to official data.
The General Authority for Statistics reported a rise in R&D personnel, with the workforce reaching 49,337 by the end of 2023, up 12.2 percent year on year. Researchers accounted for 36,832 of this figure, representing a 22.1 percent annual growth.
The Kingdom is prioritizing R&D across sectors like energy, technology, and sustainability as part of its Vision 2030 strategy to diversify its oil-dependent economy.
“The percentage distribution of employees in the field of R&D at the level of different sectors indicates that the number of employees in higher education reached 37,540 employees, representing 76.1 percent, followed by the private sector, with 8,810 employees, at 17.9 percent, then the government sector, with 2,987 employees. at 6.1 percent,” GASTAT noted.
The authority also revealed that Saudi Arabia had 32,209 researchers in higher education by the end of 2023. The private and government sectors employed 2,790 and 1,883 researchers, respectively.
In terms of funding, the government sector accounted for the largest share of R&D spending at SR12.12 billion in 2023, representing 53.6 percent of the total. The private sector contributed SR9.31 billion, while the higher education sector received SR1.17 billion.
When it comes to expenditure, the private sector led with SR8.70 billion spent on R&D, followed by the government sector at SR8.66 billion and the higher education sector at SR5.24 billion.
In August, energy giant Saudi Aramco announced a $100 million commitment to fund research and development at King Abdullah University of Science and Technology over the next decade.
The partnership aims to accelerate innovation in Saudi Arabia and develop commercially viable solutions that support the global energy transition and sustainability goals, according to a press statement.
The agreement will focus on areas including energy transition, sustainability, materials science, upstream technologies, and digital solutions.
Saudi Arabia’s Industrial Development Fund injects $3.19bn into the sector, minister confirms
RIYADH: The Industrial Development Fund provided SR12 billion ($3.19 billion) in financing to the Kingdom in 2024, boosting its global competitiveness, according to leading minister.
Speaking during a panel discussion at the Budget Forum 2024, Saudi Minister of Industry and Mineral Resources Bandar Alkhorayef highlighted the vital role of financing in driving industrial development.
“The Industrial Development Fund alone financed projects worth SR12 billion for 2024, but the total value of these projects exceeds SR60 billion,” Alkhorayef said.
He continued: “We have key indicators for the industrial sector: First, there are the licenses, which have seen significant growth. By the end of this year, more than 1,100 opportunities have been issued, and 900 factories have entered production. This is a very important key indicator.”
The minister went on to say: “The second key indicator is financing. Financing is a crucial driver for the industrial sector. The third key indicator is infrastructure. It is unimaginable to have a thriving industrial sector without properly developed industrial lands, primarily provided by the government.”
These key indicators are of great importance because they ensure the continued flow of investments into the sector, he added.
Alkhorayef also pointed to the Kingdom’s focus on promoting exports and supporting new sectors.
“Exports grew from SR458 billion in 2023 to SR528 billion this year, a 15 percent increase. This growth is largely driven by non-traditional sectors, showcasing the diversification of our economy beyond petrochemicals,” he said.
The minister highlighted the broader integration of industries, particularly between the industrial and mining sectors.
He praised Saudi Arabia’s streamlined approach to mining licenses, reducing wait times from eight to 10 years in advanced economies to just six months in the Kingdom, with plans to further reduce this to 90 days.
Alkhorayef emphasized the long-term vision of transforming Saudi Arabia into a hub for mining services and technology companies.
“Our investment in geological surveys has increased the estimated value of the Kingdom’s mineral wealth from $1.3 trillion to $2.5 trillion. This achievement positions the Kingdom as a future leader in mining and industrial innovation,” he added.
The industrial and logistics sectors have experienced significant momentum, with the government’s efforts driving a surge in private and foreign investment.
By aligning with Vision 2030, these initiatives aim to create a thriving, diversified economy that maximizes the nation’s geographic and resource advantages.
Transport sector achieves record growth and job creation
The Minister of Transport and Logistics Services Saleh Al-Jasser underscored the transport industry’s role as a key enabler of economic activity. He revealed that the sector achieved a 17 percent growth rate in just two years.
“International indicators also confirm this progress, such as the Logistics Performance Index, which saw an improvement of 17 ranks, as well as indicators for air connectivity, maritime connectivity, and road service quality,” Al-Jasser said.
He added: “Among other significant indicators is the reduction in fatalities and severe accidents on roads, achieved through an integrated national effort with other government entities. There is no doubt that progress has also been made across different modes of transport.”
The minister also highlighted that Saudi Arabia’s aviation sector is undergoing significant improvements, with a 50 percent increase in the number of international and domestic destinations connected to the Kingdom compared to pre-pandemic levels.
This reflects the sector’s rapid growth and its role in enhancing connectivity and economic activity.
A key goal of Vision 2030 is to create jobs and provide dignified employment opportunities for citizens.
“Saudi Arabia’s transport sector is at the core of our economic diversification efforts, providing critical infrastructure for all other industries,” Al-Jasser said.
He continued: “Investments exceeding SR447 billion have been made in the sector since the launch of the strategy. This includes more than 300 new aircraft ordered by national airlines, the highest in the Kingdom’s history, alongside significant expansions in logistics zones, maritime infrastructure, and other key areas.”
Al-Jasser highlighted the sector’s role in creating jobs, with 122,000 new employment opportunities generated by the third quarter of this year compared to the same period in 2023.
Additionally, women’s participation in transport has risen to 29 percent, a notable increase in a traditionally male-dominated field.
“The focus on developing local content has been equally impactful,” he emphasized. “The transport system has increased local content from 39 percent to 50 percent, putting us on track to achieve our Vision 2030 target of 60 percent.”
During the same session, the Minister of Communications and Information Technology Abdullah Al-Swaha highlighted Saudi Arabia’s rapid progress in the technology sector, attributing this success to investments in artificial intelligence-native companies and digital transformation.
“Today, companies like Mozn and Amplify are leading the charge in AI and innovative solutions. The Kingdom is positioning itself as a global powerhouse for tech-driven growth,” Al-Swaha said.
He continued: “The next phase will focus on technology manufacturing and exports. With the support of His Royal Highness the Crown Prince, we will further strengthen our National Program for Technology Development to ensure Saudi Arabia’s technological sovereignty and prosperity.”
Al-Swaha emphasized the Kingdom’s commitment to leveraging resources and infrastructure to build a globally competitive tech economy.
“This is a clear message to all tech professionals: we are ready to lead,” he concluded.
