UBS, Switzerland's biggest bank, today reported a net profit of 4.2bn Swiss francs (€3.5bn) for 2011, down 44% on the previous year, and the bank said it expects a tough first quarter due to the economic crisis.
In the fourth quarter of 2011, net profit fell to 393m francs, compared to 1.7bn francs in the same time period in 2010.
CEO Sergio Ermotti, who took over from Oswald Gruebel following the discovery of a $2.3bn loss from rogue trading in September, is shrinking the investment bank as stricter capital requirements and the European sovereign debt crisis hits profitability. UBS announced plans in November to reduce fixed-income businesses and cut risk-weighted assets at the division under Basel III rules almost by half.
Santander, the Spanish banking giant that is the biggest Eurozone bank by market capitalisation, announced today that it would book an extra €2.3bn in provisions against property related loans this year.
A statement said the bank is required to increase its capital by €6.1bn. It booked €3.18bn in provisions booked in late 2011.
British oil giant BP reported today that net profits hit $23.9bn (€18.2bn) in 2011, as it recovered from the US Gulf of Mexico oil spill disaster in 2010.
BP had reported a loss of $4.9bn in 2010.
Glencore International Plc, the world’s largest publicly traded
agreed to buy Xstrata Plc for £39.1bn pounds ($62bn) in the biggest mining takeover.
Toyota reported today that its 9-month net profit fell 57.5% to ¥162bn ($2.12bn), blaming March 2011 earthquake, Thai floods and a strong yen.
The company said operating profit also plunged by 72.3% to ¥117bn in the 9 months to December, with revenue down more than 10% to ¥12.88trnr.
Germany: Real earnings, that is, the price-adjusted gross monthly earnings of full-time employees are expected to have increased by an average 1.0% in Germany in 2011 on the previous year. In comparison, they had increased by 1.5% in 2010 and declined by 0.4% in 2009. Destatis, the federal statistics office reported and according to the results available so far, nominal earnings are expected to have increased by 3.3% in 2011 on the previous year, while consumer prices were up 2.3% in the same period.
Economic View 1: Another deadline missed in Greece; Dermot O'Leary,
chief economist of Goodbody comments -- "Given our discussion of missed deadlines in the ongoing Greek saga yesterday, it
should come as no surprise that yet another deadline was missed, with talks
between the leaders of the main Opposition parties on planned austerity measures
being pushed out to today. As we pointed out in that comment, Greek leaders have
little or no choice in the matter, something that euro-area leaders, including
Merkel and Sarkozy, highlighted again yesterday. Speaking after a meeting with
Merkel, Sarkozy’s statement was pretty clear: “We say to our Greek friends that
they must now decide. No funds will be released until these decisions are
taken”. Sarkozy is referring to a series of austerity measures that must be
introduced before a second aid package is agreed and also indicates that
patience has run out.
Greece negotiations pass another deadline: Conall Mac Coille, chief economist at Davy comments -- "Negotiations between creditors and the Greek government continued last night, well beyond yesterday's self-imposed 11.00 deadline, and with no agreement apparent this morning. Prime Minister, Lucas Papademos, is scheduled to meet Greek political leaders today to discuss the implementation of cuts worth 1.5% of GDP and whether further measures can be implemented to meet demands by international creditors.
Reports this morning suggest that any new funding agreement will include a ring-fenced account to meet fund future bond payments. Thus, by prioritising debt repayments, the immediate threat of default may be removed and the onus placed on the Greek government rather than international creditors should spending cuts and revenue measures fail to be implemented.
The immediate issue for markets is whether a new funding package will be put in place in time for Greece to meet a €14.5bn bond redemption on March 20th. Yesterday, officials hinted that the real deadline for a new funding package is February 13th, to ensure sufficient time for legal and transactional details to be completed before the bond redemption. However, if agreement is secured beyond February 13th, it is highly likely that European authorities will ensure that the funding is in place to meet the March 20th payment rather than risk a disorderly default by Greece.
In a slow day for macroeconomic data, the market's focus is likely to remain on the negotiations in Greece. That said, this morning's poor British Retail Consortium's figures for like-for-like sales in the retail sector reinforce the view that UK consumer spending is likely to fall back in Q1 following a strong performance in December. Germany's industrial production figures for December, released later today, will most likely confirm that output in the sector contracted in the final quarter, thus reinforcing the view that euro area GDP will decline in the final quarter of 2011. So today's macroeconomic data could reduce some of the optimism in markets on the outlook for growth."
On Monday in New York, the Dow fell 17 points or 0.13% to 12 815.
The S&P slid 0.04% and the Nasdaq slipped 0.13%.
The MSCI Asia Pacific Index climbed 0.2% Tuesday.
Japan's Nikkei 225 fell 0.13%; China’s Shanghai Composite Index declined 1.68%. South Korea's Kospi index gained 0.40%. Australia's S&P/ASX 200 dipped 0.51% and the Bombay Stock Exchange Sensex 30 index in Mumbai slid 0.52%.
India's government today downgraded its economic growth forecast for the current fiscal year to below 7%, reflecting weakness in Asia's third-largest economy.
The Indian economy is expected to grow by 6.9% in the year to March, below the 7.25-7.75% range given by the government in its December forecast.
In Europe, the Dow Jones Stoxx Europe 600 is down 0.32% in early trading Tuesday.
The ISEQ dipped by 1.08% in Dublin.
United Drug rose 2.58%.
Goodbody's Dónal O'Neill commented:"United Drug has released a positive and upbeat trading statement this
morning, indicating that most business divisions have performed ahead of
expectations as profit for the group came in ahead of the same period last year.
Continuing growth in the non-Irish operations has seen profit contribution from
these businesses increase to 70% from 65% previously, while cash generation has
also come in ahead of forecasts.
The euro is trading at $1.3126 and at £0.8306.
For live currency updates, check the right-hand column of the Finfacts home page.
The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.
The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.
On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.
On Monday this week, the BDI rose 1 point or 0.66% to 648 - - a 25 year low but the first positive trading session in more than a month.
Freighter Oversupply Weighs on Shipowners and Banks - - Jan 26, 2012: The New York Times says vessels bought during the global commodity boom are only now being delivered, putting pressure on the European banks that financed the purchases.
The skyscrapers and immaculate beaches of Singapore's seaport look out on one of the world’s largest parking lots: mile after mile of empty cargo ships, as far as the eye can see.
Similar fleets bob at anchor, with empty cargo holds, off the coasts of southeast Malaysia and Hong Kong. And dozens of newly built ships float empty near the giant shipyards of South Korea and China, their owners from all over the world reluctant to accept delivery during one of the worst markets ever for the global shipping industry.
As recently as six weeks ago large freighters that can carry bulk commodities like iron ore or grain were fetching charter rates of $15,000 a day. Now, brokers and owners say, the going rate is $6,000 a day. If any customers can even be found.
Crude oil for February 2012 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $96.66 down 25 cents from Monday's close. In London, Brent for February delivery is trading on the International Commodities Exchange at $115.94. The North Sea benchmark accounts for two-thirds of the global market.
The margin between the US benchmark WTI (West Texas Intermediate) used on the New York Mercantile Exchange and Brent is over $19 - - The Globe and Mail says that for the past 10 months, Canadian producers - - whose prices are tied to WTI - - have been taking steep discounts for their oil compared with international crude prices that are benchmarked against North Sea Brent, which can be shipped more readily. In the past, WTI tended to trade at a small premium to Brent, because it is easier to refine.
That spread hit a peak of $28.08 (US) on Oct. 14, but has fallen dramatically since then. After plans for more pipeline capacity at Cushing, Oklahoma, the differential narrowed.
The spot price of an oz of gold is trading in New York at $1,722.70 up $2.80 from Monday's close in New York.
Gold had hit a record high of $1,921.05 a troy ounce on Sept 6.
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