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29 March 2024

UAE firms’ profits grew 88.6%

Impairments will decline in 2011 (File)

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By Staff

Aggregate net profit of UAE corporate reached $9.27 billion (Dh34 billion) by the end of 2011, up by 88.6 per cent year-on-year.

The UAE companies’ results were the second after Bahrain corporate results which jumped by 175 per cent last year, Global Investment House said in its latest report.

In Abu Dhabi Stock Exchange, a total of 51 companies, covered in this report, reported an aggregate net profit of $7.1 billion for 2011 compared to a net profit of $3.1 billion achieved in 2010, a growth of 129.3 per cent. On the other side, a total of 33 companies listed on Dubai bourse, that were covered in the report, posted an increase of 19.3 per cent in their net profit, to $2.16 billion compared to $1.81 billion achieved in 2010.

“Looking to big companies in UAE market, Emirates NBD’s bottom line for the full year was in line with our expectations and so was the top-line, however variations exist within line items from non-interest income, provisions and minority interest. Income from forex was down by 25 per cent YoY and varied significantly from our expectations of an increase. Moreover while we expected a loss of Dh59 million from investment properties, the actual was much higher at Dh288m,” said Faisal Hasan, Head of Research; and Sohail Jaberi, Senior Financial Analyst, in the report.

“A positive surprise came from fee & commission income which, though stagnant YoY, was nine per cent higher than what we had projected, on a pickup in trade finance activity and banking fee. As for losses and impairments from associates (primarily Union Properties), our estimates which were highly conservative, were on the higher side against the actual. We had estimated loss of Dh204m from associates, however Dh59.5m was seen in actual. Impairments for associates (again Union Properties) was largely in line, however a bit lower (8 per cent) than our projections. Both Islamic financing and deposits were up, possibly on consolidation of Dubai Bank while conventional loans and deposits declined further from previous quarter. For the time being we remain neutral on the bank’s results and await the analyst conference later today, to make a more detailed assessment,” the analysts said.

Overall, GCC corporate managed to post good financial results in FY2011. Aggregate net profit of all GCC listed stocks stood at $52.21 billion in 2011, up by 29.8 per cent YoY. With exception of Oman and Kuwait, the aggregate profitability of all GCC countries increased.

By country, all GCC stock markets managed to enhance their bottom lines by the end of 2011, barring the Omani and Kuwait markets, with its corporate profitability declining by 5.5 per cent and 4.7 per cent YoY respectively.

The Bahrain market had the best performance amongst its regional peers, with its corporate profitability increasing by 175.3 per cent YoY. “However, if we exclude Gulf Finance House profit and loss figures from the calculation, Bahrain’s corporate profitability increased by 36.5 percent YoY in 2011,” the analysts said.

By sector, 2011 aggregate net profits for GCC Banking sector increased by 15.4 percent YoY. Industrial sector was also a notable gainer, with its aggregate net profit increasing by 47.9 per cent YoY by the end of 2011. On the negative side, aggregate net profit of GCC Insurance stocks retreated by 20.4 percent YoY, as it dropped from $799.4m in 2010 to $636.1m in 2011.

 

Country              Number of      2011              2010               %

                        Companies      (USD mn)       (USD mn)        change

Bahrain              40                 2,454.5          891.6              175.3%

Kuwait               91                 4,300.3          4,510.6            -4.7%

Oman                95                 1,428.6          1,511.2            -5.5%

Qatar                 34                 9,843.2          7,651.0            28.7%

Saudi                 144                24,911.1         20,744.9          20.1%

UAE                   84                 9,270.1          4,914.0            88.6%

Total                488                 52,207.7        40,223

Source: Global Investment House