Dubai leads UAE's Q1 corporate earnings, up 8.3% to Dh6.24bn

Dubai’s corporate earnings expanded 8.3 per cent year-on-year to $1.7 billion (Dh6.24 billion) in Q1 2015, led by the banking sector (up 38.4 per cent), according to a new report by Kuwait’s Global Investment House.

The banking sector contributed 17.5 per cent to the bourse’s incremental earnings.

This was partly offset by another index heavyweight, the real estate and construction sector (-24.1 per cent y-o-y), which accounted for 20.2 per cent of the consolidated earnings of the bourse.

The growth in the earnings of the banking sector was driven by Emirates NBD (up 60.3 per cent y-o-y), Dubai Islamic Bank (up 33.4 per cent y-o-y), and Emirates Islamic Bank (up 106.2 per cent y-o-y), which contributed 23.4 per cent, 7.9 per cent, and 3.7 per cent, respectively, to the sector’s incremental earnings.

Emirates NBD reported strong bottom-line growth owing to a double-digit growth in the top line due to a favourable shift in the asset mix (retail and Islamic business); a rise in current account savings account deposits; and a contribution from Egypt.

The earnings of the real estate and construction sector declined 24.1 per cent y-o-y in Q1 2015, negatively affecting the earnings growth of the sector by 6.9 per cent y-o-y.

Heavyweight Arabtec Holding was the biggest loser (-302.9 per cent y-o-y) and contributed 24.6 per cent to the accumulated fall in the sector’s earnings.

A slowdown in the construction sector and lower oil prices led Arabtec, the largest listed contractor in the UAE, to end in the red with a surprise loss in Q1 2015. This was partially offset by a 31.6 per cent y-o-y rise in the earnings of Emaar Malls Group and a 7.2 per cent y-o-y increase in the earnings of Emaar Properties.

The investment & financial services sector’s earnings loss (-25.1 per cent y-o-y) was driven by Dubai Financial Market Co. (-68.5 per cent y-o-y). The Telecommunication sector reported an earnings loss owing to a fall in the revenues of Emirates Integrated Telecommunications Co. (-0.6 per cent y-o-y).

Abu Dhabi

Global Investment House said in its quarterly note that Abu Dhabi’s corporate earnings increased 5.6 per cent y-o-y to $2.8 billion (Dh10.276 billion) in Q1 2015. This was due to a 9.8 per cent y-o-y rise in the banking sector’s earnings (which accounted for 60.3 per cent of consolidated earnings) to $1.7bn in Q1 2015.

The rise in the sector’s earnings was led by Abu Dhabi Commercial Bank (up 30.9 per cent y-o-y), Union National Bank (up 20 per cent y-o-y), and First Gulf Bank (up 6.5 per cent y-o-y), which contributed 5.2 per cent, 1.8 per cent, and 1.5 per cent, respectively, to the incremental growth of the sector’s total earnings.

ADCB reported stellar bottom-line growth for Q1 2015. This was single-handedly driven by the top line, which increased 19 per cent y-o-y on a rise of 25bps in net interest margin. ADCB further reduced cost of fund and increased asset yield. UNB reported robust bottom-line growth for 1Q15, attributable to a significant increase in net interest income (14 per cent y-o-y) and non-interest income (37 per cent y-o-y). FGB reported stable growth in 1Q15 bottom line, led by higher non-interest income and lower provisions.

The growth in the earnings of the telecommunications sector (7.6 per cent y-o-y) was driven by Emirates Telecommunication Corp. (7.6 per cent y-o-y), led by the strong performance of the domestic business and the consolidation of Maroc Telecom. The growth in the earnings of the real estate sector (18.9 per cent y-o-y) was led by Al Dar Properties Co. (36.3 per cent y-o-y) on higher revenue. Among losers, the insurance sector posted the highest decline at -56.2 per cent y-o-y, followed by the energy sector (-31.5 per cent y-o-y).
 

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