GCC Corporate Earnings grow 10% in 2014

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GCC Corporate Earnings grow 10% in 2014 31 - Mar - 2015

Kuwait Financial Centre “Markaz” has published its report on GCC corporate earnings where it stated that during 2nd half of 2014 GCC corporates posted a 6% growth over 2H13. Total earnings in for the period came in at USD 32Bn. Earnings for the period were driven by strong performance from financial services and real estate.

Aggregate net profits from Financial Services in 2H14 came in at USD 1.2Bn, a growth of 99% over 2H13. Earnings from real estate came in at USD 2.7Bn recording a growth of 29% (YoY). Earnings from Real estate came in at USD 2.7Bn which is 29% higher than 2H14 (YoY). Banking sector had the highest earnings and third highest growth among the sectors at 20% and hence had the highest impact on the overall earnings recording a growth of 6% (YoY) over 2H14.

UAE and Bahrain had the highest full year earnings growth in 2014 at 32% and 11% respectively each followed by Kuwait 8% and Qatar 6%. Oil prices were partly responsible for Saudi Arabia’s 3% mediocre performance. GCC corporate earnings grew by 6% in 2nd half of 2014 (YoY basis). During the same period, Bahrain was the biggest gainer with 57% (YoY) growth in earnings 2H14 while earnings in KSA and Oman contracted by 10% and -1% respectively. UAE, Kuwait and Qatar also witnessed positive double digit earnings growth in 2nd half of 2014 on a YoY basis.

2014 Earnings

Real Estate and banking sectors have been the star performers in the region for FY 2014 registering growth of 22% and 16% respectively. While the real estate sector has shown signs of slowing down towards the end of the year, they had a great run in the beginning of the year. The commodities sector which is the second largest sector in terms of net earnings has been impacted heavily by the lower oil prices. Telecom sector, the 3rd largest in terms of net earnings has been heavily affected by the reduction in ARPUs as well as company specific losses.

Earnings from the financial services sector had the highest growth in earnings at 99% for the 2H14 (YoY basis) followed by real estate whose growth increased by 29% during the same period on a YoY basis. Real estate boom in major markets such as UAE (Dubai & Abu Dhabi), Qatar and introduction of mortgage lending reforms in Saudi Arabia have led to significant earnings growth of the sector.

Telecommunications sector’s earnings was affected by the earnings restatement of Mobily which resulted in wiping out USD 381 Mn out of its total profits. Falling ARPU across the region was also a reason behind the fall in net earnings.

We expect GCC corporate earnings to grow by another 5% in 2015 over FY14 and reach USD 71Bn by the end of 2015. 2H14 earnings were at USD 32Bn with a 6% growth over 2H14. Overall, we expect UAE earnings growth to be robust at 10.4% for the full year of 2015 as against 2014. Corporate earnings in Qatar are expected to grow by 7.8%, while Kuwait and Oman are expected to grow by 7.4% and 4.6% respectively, during the same period. Bahrain and KSA‘s earnings are expected to grow moderately by 2.7% and 1.6% respectively.









 

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About Kuwait Financial Centre “Markaz”
Kuwait Financial Centre K.P.S.C “Markaz”, with total assets under management of over KD 1.08 billion as of December 31, 2014, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.

For further information, please contact:
Osama Al Musallam
Senior Officer
Media & Communications Department
Kuwait Financial Centre K.P.S.C "Markaz"
Tel: +965 2224 8000 ext 1819
Dir: +965 2224 8075
Fax: +965 2241 4499
Email: omusallam@markaz.com