Sun, Oct 14, 2012 - Page 15 News List

World Business Quick Take

Agencies

UNITED STATES

US deficit plunges

The US budget deficit fell sharply in the just-ended fiscal year to US$1.1 trillion, the Treasury said on Friday, as the Obama administration claimed success in cutting spending and raising fresh revenue. However, the deficit, topping $1 trillion for the fourth year in a row, remained excessively high and a lightning rod for the president as he fights to retain his job in next month’s election. The fiscal shortfall for the year that ended Sept. 30 was down 16 percent, or US$207 billion, from last year’s deficit, helped by a US$75 billion surplus for last month. Overall, the deficit remains at a level economists consider unsustainably high over the long run: it was equivalent to 7 percent of gross domestic product, though that was down from 8.7 percent in the last fiscal year.

INVESTMENT

Banks post record profits

JPMorgan Chase & Co posted a record quarterly profit on Friday as falling interest rates and a recovering housing market brought big increases in mortgage lending. The mortgage market, long a drag on bank results, is starting to lift lenders’ earnings again, and JPMorgan Chief Executive Jamie Dimon said he was hopeful about the outlook for US residential real estate. “We believe the housing market has turned the corner,” Dimon said in a statement. JPMorgan suffered only modest losses in the latest quarter from the “London whale” trades that brought it US$5.8 billion of losses in the first half of the year, signaling that it is moving on after the scandal. In fact, a US$993 million increase in total mortgage fees neatly offset an US$831 million decrease in net interest income.

INDUSTRY

Strike impacts revenues

The world’s top platinum producer Anglo American on Friday announced US$126 million in lost revenue due to a month-long illegal strike, as ratings agency S&P downgraded South Africa over the mining unrest. Anglo American also declared a force majeure in its chrome deliveries as a result of the wildcat strike by thousands of its workers. The strike “will adversely affect the company’s delivery obligations regarding the supply of chrome ore and as a result force majeure notices have been issued to its chrome customers,” the company said in a statement. Its ability to deliver other metals including platinum and paladium “remains unaffected at this stage.” The group has over the past four weeks lost 67,000 ounces in production of platinum, the equivalent of about 1.1 billion rand (US$126 million, 97 million euros) in revenues. Meanwhile, Standard and Poor’s slashed South Africa’s sovereign debt rating on Friday by one notch from BBB+ to BBB, citing the strikes affecting Anglo American and other mining companies.

BANKING

Santander dismisses deal

Spain’s Santander dramatically pulled out of its £1.65 billion (US$2.65 billion) deal to buy 316 UK branches from Royal Bank of Scotland late on Friday, dealing a sharp blow to the state-backed British bank. More than two years after the deal was struck, it collapsed because the process of carving out the business proved more complex and difficult than had been expected. Santander said it was unwilling to again extend the deadline when it became clear that it would not be completed this year.

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