UAE corporate earnings jump 31% to 33bn in H1

UAE corporate earnings grew 31.2 per cent year-on-year to $9 billion (Dh33 billion) during the first half of this year compared to $6.86bn in the same period last year, registering the best growth among the GCC corporates.

According to Kuwait-based Global Investment House, the robust earnings were driven by Dubai (up 50.7%), which outperformed Abu Dhabi’s corporate earnings growth of 22 per cent YoY. The increase is largely ascribed to higher earnings in the Banking and Investment & Financial Services sectors.

Dubai post highest earnings growth

Global said Dubai’s corporate earnings expanded 50.7 per cent YoY to $3.3bn (Dh12.1 billion) in H1 2014, led by Banks (43.2%), Real Estate & Construction (71.8%), and Investment & Financial Services (160.9%). Earnings growth in the Banking sector was driven by Dubai Islamic Bank (90.9%), Emirates NBD (30%), and Mashreq Bank (40.1%), Global analysts said in the report.

Earnings of the Real Estate & Construction sector rose 71.8 per cent YoY to $800 million in the first half, driven by robust growth in the profit of Union Properties (423.2%), Emaar Properties (40.6%), and Arabtec Holding (55.1%), owing to continued overall recovery in the sector.

The Investment & Financial Services sector was driven by Dubai Financial Market Co., which posted a sharp 384.5 per cent YoY increase in profit to Dh467.6m during H1 2014, led by 208 per cent YoY growth in revenues as trading values rose 303 per cent YoY. The sector also benefitted from Dubai Investment Co. (118%), owing to profits on the equity stake sale in its subsidiary Globalpharma, combined with higher profit on the fair value of its investments.

Abu Dhabi corporates earnings up 22%

Global report said Abu Dhabi’s corporate earnings expanded 22 per cent YoY to $5.7bn in H1 2014, driven by a 13.4 per cent YoY rise in the Banking sector’s earnings (55.1 per cent of consolidated earnings) to $3.2bn during H1 2014.

Growth was led by First Gulf Bank (up 21.1%), followed by Abu Dhabi Commercial Bank (18.4%), National Bank of Abu Dhabi (7.9%), and Abu Dhabi Islamic Bank (21.7%).

The Investment & Financial Services sector expanded nine fold, supported by Waha Capital Co., which reported a sharp rise in profit due to income from the sale of the company’s stakes in AerCap Holdings and AerLift.

Telecommunication also contributed significantly during H1 2014, with earnings increasing 19.2 per cent YoY. Growth was led by Emirates Telecommunication Corp., driven by higher profits from recently acquired Maroc Telecom and its associates.

Improvement in the Energy sector (up 207.6%) was led by Abu Dhabi National Energy Co., which reported a profit of $140 million vis-à-vis a loss of $18 million. This profit was ascribed to a 24 per cent YoY rise in oil and gas production, healthy natural gas prices in North America, and improved operational efficiencies.

Growth in Services (up 59.4%) was driven by Abu Dhabi National Hotels and National Corporation for Tourism & Hotels. Abu Dhabi National Hotels expanded 116.1 per cent YoY to Dh194.4 million, whereas National Corporation for Tourism & Hotels reported a profit of Dh89 million in H1 2014 compared with Dh61.1 million in H1 2013.

In contrast to the other sectors, Real Estate’s earnings declined 31.8 per cent YoY during H1 2014 due to a 31.8 per cent YoY decrease in Aldar Properties’ earnings. The contraction was attributed to the absence of one-time gains from the merger with Sorouh in H1 2013. The sector’s earnings, excluding gains from the merger, rose 105.6 per cent YoY.

GCC earnings

Corporate earnings in the GCC region rose 14.5 per cent YoY to $34.9bn (Dh128 billion) in H1 2014, Global said.

Bahrain, Qatar and Kuwait corporate earnings in the first half declined while other regional countries registered rise.

Bahrain corporates’ consolidated earnings declined 0.5 per cent YoY to $1.1bn in H1 2014, primarily due to decline in the earnings of Commercial Banks and Industrial sectors; however, growth in Investment sector partially offset the fall.

Kuwait Stock Exchange’s consolidated earnings fell 2.4 per cent YoY to $2.9bn in H1 2014, primarily led by the Real Estate (-30.8%) and Financial Services (-23%) sectors, which together contributed 6.6 per cent to the total decline. Apart from these two sectors, Consumer Services plunged 28.9 per cent YoY, Oil & Gas declined 12.1 per cent YoY, and Industrial fell 5.6 per cent YoY. Among key positive performers, Technology sector’s earnings rose 20.4 per cent YoY, followed by Basic Materials (17.2%), Banks (16.6%), Consumer Goods (10.1%), and Insurance (8%) sectors.

Corporate earnings in Oman rose 6.7 per cent YoY to $1.1bn in the first six months of this year, driven by the Banks & Investment (9.6%) and Services & Insurance (5.5%) sectors. Growth in Banks and Investment was supported by Bank Muscat (36.8%), followed by National Bank of Oman (22.5%), Bank Sohar (35.1%), and Bank Dhofar (15.1%).

Growth of the heavyweight Bank Muscat (contributed 42.2 per cent to the sector’s total earnings) was driven by no exceptional losses and higher non-interest income. Earnings of National Bank of Oman (which accounted for 2.3 per cent of the sector’s consolidated earnings growth) rose due to higher operating income and decline in impairment losses during H1. Bank Sohar’s profits rose, led by 9.6 per cent YoY increase in net interest income and 69.8 per cent YoY growth in other operating income.

Qatar’s corporate earnings decreased 1.9 per cent YoY to $5.6bn during H1 2014, mainly dragged by the Industrial and Insurance sectors. Of the seven sectors, four posted gains, while three reported a decline in earnings during the period. The overall decline was led by Industrial (-21.2%) and Insurance (-35.3%), which accounted for 6.3 per cent and 2.1 per cent of consolidated earnings fall, respectively.

Saudi consolidated earnings rose 18.6 per cent YoY to $15.2bn in H1, primarily due to higher earnings recorded by the Petrochemical Industries (15.8%), Telecommunication & Information Technology (40.6%) and Energy & Utilities (206.3%) sectors. Heavyweight Banks & Financial Services registered a 6.8 per cent YoY growth in earnings, contributing 2.2 per cent to the bourse’s incremental earnings.

In absolute terms, Petrochemical Industries and Banks & Financial Services recorded consolidated earnings of $4.9bn and $4.5bn, respectively.

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