Dubai firms' earnings surge 55% in 9 months

Led by the UAE companies, GCC corporate earnings in the first nine months of 2014 rose 13 per cent to $52 billion (Dh191 billion) year-on-year (yoy), according to Global Investment House figures.

The UAE has been the best-performing market in the GCC region during first nine months of 2014, led by solid recovery on improvement in the banks and investment and financial services sectors and strong investor optimism, it said.

Amongst UAE, Dubai’s corporate earnings growth was led by banks, real estate and construction, and investment and financial services sectors; whereas, Abu Dhabi’s earnings growth was supported by banks, Global analysts said in 9-month report.

Broadly all the Gulf countries posted gains in the corporate earnings during 9 months. UAE (33.5 per cent yoy), which contributed 7.3 per cent to the incremental rise in earnings, led the overall earnings growth, followed by Saudi Arabia (10.4 per cent yoy), which contributed 4.7 per cent to the incremental earnings growth.

Qatar (3.8 per cent yoy) accounted for 0.7 per cent of GCC earnings growth in 9 months. Bahrain and Oman recorded lower corporate earnings growth of 1.6 per cent yoy and 0.4 per cent YoY, respectively.

Dubai leads UAE corporate earnings

The UAE market recorded robust corporate earnings in 9 months, driven by Dubai (up 55.5 per cent yoy), which outperformed Abu Dhabi’s corporate earnings growth of 22.8 per cent yoy. The increase is largely ascribed to higher earnings in banking and real estate sectors, Global analysts said.

Abu Dhabi’s corporate earnings expanded 22.8 per cent yoy to $8.3bn (Dh30.46 billion), led by a 15.1 per cent yoy rise in the banking sector’s earnings (56.3 per cent of consolidated earnings) to $4.7bn (Dh17.25 billion) during 9M14.

According to Global, growth was led by First Gulf Bank (up 20.7 per cent yoy), followed by National Bank of Abu Dhabi (14.7 per cent yoy), Abu Dhabi Commercial Bank (17.7 per cent yoy), and Abu Dhabi Islamic Bank (21.1 per cent yoy). First Gulf Bank’s profits improved due to strong growth in non-interest income and lower provisions. National Bank of Abu Dhabi reported robust growth in the bottom-line, mainly due to strong increase in non-interest income and huge decline in provisions. Abu Dhabi Commercial Bank’s profit growth was supported by significant decrease in provision expenses.

Earnings growth in the Telecommunications sector (24.8 per cent yoy) was driven by Etisalat (20 per cent yoy); this growth was led by higher profits from recently acquired Maroc Telecom and its associates, and Sudan Telecommunication, which reported Dh108.5m profit in 9 months compared to a loss of Dh127.6m. The investment and financial services sector expanded sevenfold, 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.

Improvement in the Energy sector (108.8 per cent yoy) was led by Abu Dhabi National Energy Co., which reported a profit of Dh620m in 9 months vis-à-vis Dh80m. This profit was ascribed to a rise in oil and gas production, healthy natural gas prices in North America, and improved operational efficiencies.

Growth in the services sector (49.3 per cent yoy) was driven by Abu Dhabi National Hotels and National Corporation for Tourism & Hotels. Abu Dhabi National Hotels expanded 180.4 per cent yoy to Dh165m, while National Corporation for Tourism & Hotels reported a profit of Dh108.5m in 9M 2014 compared with Dh75.6m in 9M13.

In contrast to other sectors, earnings in the real estate sector declined 16.7 per cent yoy during 9M 2014 due to 33.1 per cent yoy and 0.2 per cent yoy fall in the earnings of Eshraq Properties and Aldar Properties, Global analysts said.

Dubai corporate earnings

Dubai’s corporate earnings expanded 55.5 per cent yoy to $5.1bn (Dh18.71 billion) in 9 months of 2014, led by banks (48.8 per cent yoy), real estate and construction (47.4 per cent yoy), and investment and financial services (125.2 per cent yoy).

Earnings growth in the sanking sector was driven by Emirates NBD (51.4 per cent yoy), Dubai Islamic Bank (72.2 per cent yoy) and Mashreq Bank (35.3 per cent yoy), which contributed 22.3 per cent, 13.8 per cent, and 7.7 per cent, respectively, to the sector’s incremental earnings. Emirates NBD’s higher earnings can be ascribed to lower provision expenses and higher non-interest income. Dubai Islamic Bank reported significant expansion in earnings owing to higher net and non-interest incomes. Expansion in the net profit of Mashreq Bank was driven by growth in net interest income and net fee and commission income.

Earnings of the real estate and construction sector rose to $4.9bn (Dh18 billion), driven by robust growth in the profit of Emaar Properties (37.4 per cent yoy), followed by Union Properties (171.6 per cent yoy), Deyaar Development (121.5 per cent yoy), and Arabtec Holding (20.8 per cent yoy).

Emaar Properties and Union Properties together contributed 36.6 per cent to the sector’s incremental earnings. Growth in Emaar Properties (comprises 51.3 per cent of the sector’s total earnings) was supported by a robust increase in revenue of Emaar’s mall, hospitality, and retail businesses; expenses declined as Emaar took impairment charge on its home finance unit Amlak Finance last year, which is being restructured by Dubai’s government. Notably, net profit of Emaar Malls Group grew 33.1 per cent yoy in 9 months.

Expansion in Union Properties’ earnings was ascribed to profit from the sale of investment properties and gains in property valuation. Net profit of Arabtec Holding improved due to a robust rise in revenues, coupled with expansion in gross margin.

The Investment & Financial Services sector was driven by Dubai Investment Co. (87.5 per cent yoy), owing to profits on the equity stake sale in its subsidiary Globalpharma, combined with higher profit on the fair value of its investments. Dubai Financial Market Co. posted a sharp 246.4 per cent yoy increase in profit during 9M14, led by growth in revenues due to rise in trading values. Both companies contributed 121.3 per cent to the sector’s incremental earnings growth.

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