Banks' push for Libor substitute gains pace as new Sonia debuts

LONDON, April 24 — Tarred by a fixing scandal that struck at the height of the financial crisis, bankers and investors for years have been grappling with finding a replacement for the Libor benchmark used to set borrowing rates on trillions of…

UOB Malaysia’s profit up 4pc to RM1.14b in 2017

KUALA LUMPUR, April 24 — United Overseas Bank (M) Bhd recorded a four per cent increase in profit after tax to RM1.14 billion for the financial year ended Dec 31, 2017. In a statement today, the bank said total operating income…

Digi may return to Shariah-compliant list

KUALA LUMPUR, April 23 — Telecommunications provider Digi is strongly expected to be reinstated to the Securities Commission's Shariah-compliant list by May this year, Kenanga Research said today. The research house said the group has already…

IMF unveils new corruption policy for member states

WASHINGTON: The International Monetary Fund will systematically address corruption and its impact on economic growth with all its member countries under new guidelines launched on Sunday.

The stricter new policy also aims to tackle how rich countries contribute to corruption in the developing world by failing to prevent bribery and money laundering or by allowing anonymous corporate ownership.

“We know that corruption hurts the poor, hinders economic opportunity and social mobility, undermines trust in institutions and causes social cohesion to unravel,” IMF Managing Director Christine Lagarde said in a statement.

“We have now adopted a framework for enhanced engagement on governance and corruption that aims for a more systematic, evenhanded, effective and candid engagement with member countries.”

Corruption and poor governance sap economic growth and exacerbate inequality, according to the IMF, and the new policy framework attempts to ensure the institution will hold all members to the same standards — something the fund said it had not always done.

The new policy comes as Ukrainian authorities work to implement stringent new anticorruption reforms at the behest of the IMF, which has held up the latest instalment of a US$17.5 billion, (RM68 billion) aid package.

The revised good governance guidelines, which take effect on July 1, follow a recent review of the IMF's 20-year-old policy framework which concluded the fund had sometimes employed euphemisms when discussing corruption in member states — leaving local officials unclear about IMF concerns.

'More intrusive'

And IMF analysis sometimes failed to apply the same standards evenly to all members.

Under the new guidelines approved by the IMF board on April 6, the fund will discuss good governance concerns in all annual economic reviews of member countries.

IMF officials however say they do not expect the policy will lead to more stringent conditions on loans, which go to a minority of the fund's 189 members and which already include anti-corruption provisions.

The fund also will rely on the findings of outside transparency campaigners who have criticized the existence of tax and corporate havens in advanced economies as a conduit for illicit financial flows to and from poorer countries.

However, the IMF will not investigate specific instances of corruption.

Rather, it will focus on the strength of key economic institutions: fiscal and central bank governance, market regulation, the rule of law and policies on money laundering and countering terrorism financing.

IMF analysis suggests falling 25 notches on a corruption index could shave as much as 0.5% points off a country's annual growth — amounting to tremendous economic losses over multiple years.

In unveiling the new policy on Sunday at the close of the IMF-World Bank spring meetings, Lagarde said the fund's board supported a “more intrusive” approach to member state evaluations.

“Because it is a macroeconomic issue, the IMF is really perfectly legitimate in acting, especially when we have a programme in a country,” she said. — AFP

Scandals, bad debts at India banks threaten economic outlook

MUMBAI, April 23 — Scandals, bad debts, ATM cash shortages — India’s banking system has experienced them all in recent months and the bad run is starting to have repercussions for both the broader economy and Prime Minister Narendra Modi….

World Bank edges near capital boost as US drops objection

WASHINGTON, April 22 — The World Bank won support from its member countries for a US$13 billion (RM50.6 billion) capital increase, with the US dropping its objection as the lender imposes measures that would potentially reduce loans to China. The…

Centeno says sides closer as Greece’s creditors mull debt relief

BRUSSELS, April 21 — Greece’s creditors are getting closer on a deal to ease the country’s debt burden, according to Eurogroup President Mario Centeno. Greece’s €86-billion (RM413.2-billion) bailout programme is set to run out in August,…

General Electric shares rise despite 1Q loss on hefty legal charge

NEW YORK: Slumping industrial conglomerate General Electric won a reprieve on Wall Street Friday after reporting strong results in some divisions even as it suffered a quarterly loss due to a hefty legal charge.

GE, which has been hurt by weakness in its power and oil and gas businesses, reported a first-quarter loss of US$1.2 billion, due to US$1.5 billion in reserves to cover legal settlements connected to a subprime lending unit it exited.

However, investors took heart after GE reaffirmed its full-year financial targets and avoided fresh negative surprise announcements that have plagued recent results.

Revenues increased 6.7% to US$28.7 billion.

“The first quarter is a step forward in executing on our 2018 plan and we are seeing signs of progress,” said chief executive John Flannery.

GE has been signaling for months that its encumbered power division would be an earnings vulnerability for some time to come, but Flannery said Friday that the outlook was even worse than previously thought.

The company now expects the overall market for new gas turbine orders to be less than 30 gigawatts, compared with the prior estimate of 30 to 34. Factors driving the weakness include the rising share of renewable energy, energy efficiency efforts and some delays in orders, Flannery said.

Since Flannery became CEO last summer, GE has trimmed costs, streamlined its board, cut its dividend and revamped employee compensation. The company also has announced plans to sell US$20 billion in industrial assets.

Flannery reaffirmed he is open to further overhauling GE, raising speculation of a breakup of the company.

“There's no sacred cows,” he said during a conference call with analysts. “We're reviewing a number of structures. We're working through this right now in great detail with the board, including new board members.”

GE was the biggest gainer in the Dow, rising 3.9% to US$14.54.

Oil rebound?

GE's other problem division of late, oil and gas, could be poised for a turnaround in the foreseeable future due to strengthening oil prices. Major producers including Saudi Arabia and Russia signaled Friday they plan to extend a production accord to defend higher oil prices.

Baker Hughes, an oil services company in which GE holds a majority stake, offered an upbeat outlook when it reported results Friday, saying “market fundamentals remain supportive” due to stable oil prices.

GE scored higher profits compared with the year-ago period in four divisions, including healthcare and aviation, which have been the strongest businesses.

GE has previously signaled that it expected additional legal costs connected to WMC.

In a February US securities filing, the company said it believed the US Department of Justice would assert the company violated US law “in connection with WMC's origination and sale of subprime mortgage loans in 2006 and 2007.”

GE chief financial officer Jamie Miller said the company set aside the US$1.5 billion in reserves “based on our discussions with the DOJ and a review of settlements by other banks.”

CFRA Research analyst Jim Corridore praised some aspects of GE's performance and noted that it exceeded its cost-cutting targets. But he cut his earnings estimate and share price target.

“Given the severity of the downturns at oil & gas and power, and ongoing losses from GE Capital, we do not think it's worth wading into the shares despite the below-market valuation,” Corridore said in a note.

JPMorgan Chase analyst Stephen Tusa also cautioned against euphoria over the results.

“Bottom line, unlike the past several quarters that were undeniably weak, this has something for everyone so there will be more debate, but we don't see a turn in fundamentals as supporting upside,” he said in a note.

“There is plenty to play out here including the ongoing potential for downside to 2018 expectations and degree of dilution from ongoing asset sales.” — AFP

US$1 = RM3.90

End of Sorrell’s reign heralds change for big ad empires

LONDON, April 20 ― Martin Sorrell’s departure from the world’s biggest advertising company heralds change for his sprawling WPP empire and may accelerate a shake up of the big ad groups that followed his lead. WPP and its major rivals Omnicom,…

CIMB Thai’s Q1 earnings jump 39.3% on higher operating income

PETALING JAYA: CIMB Thai Bank PCL’s net profit jumped 39.3% to THB 168.9 million in the first quarter ended March 31, 2018 from THB 121.2 million in the previous corresponding quarter.

The group said in a statement that it was mainly attributed to an 8.1% growth in operating income and a 4.5% drop in provisions, offset by a 10.6% increase in operating expenses.

On a year-on-year basis, its operating income rose to THB 3,382.2 million from an increase of 5.4% in net interest income and 11.1% in net fee and service income arising from higher fees from insurance, hire-purchase and mutual funds.

Additionally, it said other operating income also rose by 30.1% from the gain on sales of available for sale securities.

However, it said operating expenses increased by 10.6%, mainly from higher expenses from properties for sale and personnel cost, partially offset by lower expenses from premises and equipment.

This resulted in a higher cost to income ratio of 57.2% during the three months period compared to 55.8% previously.

Meanwhile, its net interest margin over earning assets stood at 3.98% within the same period from 3.77% a year ago, from more efficient funding cost management.

As at March 31, 2018, the group's total gross loans, which includes loans guaranteed by other banks and loans to financial institutions, stood at THB 213.7 billion, an increase of 0.3% from Dec 31, 2017.

Its gross non-performing loans (NPL) stood at THB 11.4 billion, with an equivalent gross NPL ratio of 5.2% from 4.8% as at Dec 31, 2017. The increase was attributed to the sale of NPLs in 2017.

CIMB Thai's loan loss coverage ratio decreased to 92.3% as at March 31 from 93.2% as at Dec 31, 2017.

Total consolidated capital funds, meanwhile, stood at THB 40.7 billion as at March 31. Bank of International Settlement ratio stood at 16.4%, of which 12.4% comprised Tier-1-capital.

CIMB Thai said it continues to exercise high credit risk underwriting standards and risk management policies. It also focuses on improving productivity, monitoring collection and managing all accounts closely and effectively.