Earnings of Dubai banks, property firms jump the most

Dubai led GCC corporate earnings growth in 2014 with a robust 47 per cent surge, a new report has noted.

According to a 9-page study released by Kuwait’s Global Investment House, Dubai’s corporate earnings expanded 47 per cent year-on-year (y-o-y) to $7.2 billion (Dh26.42 billion) in 2014 – thanks to a strong performance by banks, real estate, construction, investment and financial services companies in the emirate.

The UAE market recorded robust corporate earnings in 2014, driven by Dubai, which outperformed Abu Dhabi’s corporate earnings growth of 20.8 per cent year-on-year, largely ascribed to higher earnings in banking sector.

The UAE has been the best-performing market in the GCC region during 2014 as the country has witnessed solid recovery on improvement in the banks and investment and financial services sectors, driven by strong investor optimism.

According to Global’s GCC Earnings Review 2014 report, earnings growth in Dubai’s banking sector was driven by Emirates NBD (57.8 per cent y-o-y), Dubai Islamic Bank (65.2 per cent y-o-y), and Mashreq Bank (32.9 per cent y-o-y), which contributed 23.9, 13.3, and 7.6 per cent, respectively, to the sector’s incremental earnings, it said.

Earnings of the real estate and construction sector in Dubai rose to $2.2bn (Dh8bn) in 2014, driven by robust growth in the profit of Damac Properties (189.6 per cent y-o-y), Emaar Properties (28.2 per cent y-o-y), Deyaar Development (49.9 per cent y-o-y), and partly offset by decline in Arabtec Holding (-43.2 per cent y-o-y).

The investment and financial services sector was driven by Dubai Investment (63.1 per cent y-o-y), driven by strong revenue growth and also due to profits on the equity stake sale in its subsidiary Globalpharma.

Dubai Financial Market Co. posted a sharp 166.8 per cent y-o-y increase in profit during 2014, led by growth in revenues due to increase in trading values. Both companies contributed 89.5 per cent to the sector’s incremental earnings growth.

Abu Dhabi’s corporate earnings expanded 20.8 per cent to $10.6bn (Dh38.9bn) in 2014, led by a 15.9 per cent y-o-y rise in the banking sector’s earnings (59.7 per cent of consolidated earnings) to $6.3bn (Dh23.12bn) during 2014. Growth was led by First Gulf Bank (up 18.5 per cent y-o-y), followed by National Bank of Abu Dhabi (17.9 per cent y-o-y), Abu Dhabi Commercial Bank (20.3 per cent y-o-y), and Abu Dhabi Islamic Bank (20.9 per cent y-o-y).

Earnings growth in the telecommunications sector (27.9 per cent y-o-y) was driven by Etisalat, or Emirates Telecommunication Corp. (25.6 per cent y-o-y); this growth was led by higher profits from recently acquired Maroc Telecom and its associates, and Sudan Telecommunication Co. The investment and financial services sector expanded fivefold, supported by Waha Capital, which reported a sharp rise in profit due to income from the sale of the company’s stakes in AerCap Holdings and AerLift.

Among the losers, energy declined the most (-20 per cent y-o-y), followed by Industrial (-13.8 per cent y-o-y), Insurance (-12.8 per cent y-o-y), Real Estate (-0.3 per cent y-o-y). Energy sector declined due to 20 per cent decline in net profit of Dana Gas.

GCC corporate profitability

Corporate earnings in the GCC region rose 9.8 per cent y-o-y to $68.5bn (Dh251.4bn) in 2014, Global Investment House said in the report.

Broadly, all the countries posted gains in the corporate earnings in 2014, except Oman. UAE (30.2 per cent y-o-y), which contributed 6.6 per cent to the incremental rise in earnings, led the overall earnings growth, followed by Saudi Arabia (2.6 per cent y-o-y) and Qatar (6.1 per cent y-o-y) which contributed 1.2 and 1.1 per cent, respectively, to the incremental earnings growth. Bahrain and Kuwait recorded 15 per cent y-o-y and 7.6 per cent y-o-y growth in corporate earnings, respectively; Oman witnessed a 1.6 per cent y-o-y decline in corporate earnings.

Bahrain Stock Exchange’s consolidated earnings rose 15 per cent y-o-y to $2.1bn in 2014, primarily driven by earnings growth in the investment aid Industrial sectors; however, fall in commercial banks and Insurance partially offset the rise.

Kuwaiti listed firms’ consolidated earnings grew 7.6 per cent y-o-y to $4.8bn in 2014, primarily led by banks, which rose 24.6 per cent y-o-y in 2014.

Corporate earnings of Omani corporate declined 1.6 per cent y-o-y to $2.1bn in 2014, due to decline in banks and investment (-2.3 per cent) and services and insurance (-2.3 per cent) sectors.

Qatari corporate earnings rose 6.1 per cent y-o-y to $11.9bn during 2014, driven by the banks and financial services and real estate sectors.

Saudi listed firms’ consolidated earnings expanded 2.6 per cent to $29.9bn in 2014, primarily due to higher earnings recorded by banks, financial services and insurance firms.
 

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