Earnings grow 11%, mixed performance in the region


Total earnings during the first half-year of 2014 (H1, 2014) amounted to USD 33bn a growth of 11% over the same period, last year. Corporate earnings were driven by strong performance from banks and financial services, telecom, conglomerates and real estate sectors.

Aggregate net profits from financial services in the first half-year of 2014 came in at USD 1.2bn a growth of 35% over the same period last year. Earnings from Conglomerates came in at USD 1bn recording a growth of 29% when compared with the same period, last year (YoY). Earnings from Real estate came in at USD 1.8bn which is 8% higher than the earnings registered in first half-year in 2013. Banking sector had the highest earnings among the sectors at USD 13.3bn and hence had the highest impact on the overall earnings recording a growth of 6% over the same period, last year.

Figure: 1 – Earnings Trend – GCC – 1H 2014 (USD Mn)
Source: Reuters Eikon, Markaz Research
Jan-June 2014 Earnings

GCC corporate earnings in H1, 2014 increased by 11% when compared with the same period last year (H1 2014 vs H1 2013, YoY basis) while it has gained by 12% when compared with the preceding half year (H1 2014 vs H2 2013, HoH basis). On a YoY basis, Saudi Arabia was the biggest gainer with 20% in 1H 2014 while Bahrain declined the most at -23%. On a HoH basis, Bahrain gained the most at 53% during 1H 2014 (1H14) while Qatar’s earnings remained flat.

Financial services gained the most during 1H14, a total earnings growth of 35% on a YoY basis which was followed by the conglomerates, telecom and real estate which grew by 29%, 25% and 8% respectively. The financial services have been helped by the improving economic prospects and tremendous increase in value of asset classes such as equity and real estate.


Earnings in construction related and commodities segment contracted by 1% and 4% respectively on a YoY basis during the 1st half of 2014. Commodities segment in the GCC are highly correlated with global growth and as a result sluggish demand in global markets affected the earnings. The industry bellwether for the region SABIC has been affected by it and as a result has shown a very flat earnings growth of 2% (HoH).

Based on the current trends, we expect an annual earnings growth of 10% in 2014. We believe that local developments in the GCC region play a vital role in the regional stock markets. Implementation of structural reforms in Saudi Arabia, major changes in corporate law offering a conducive environment to conduct business in Kuwait and execution of infrastructural projects in anticipation of hosting Dubai Expo 2020 and FIFA World cup 2022 in UAE and Qatar respectively are expected to support earnings growth.

Overall, we expect UAE earnings growth to be robust at 15.5% for the full year of 2014 as against 2013. Corporate earnings in Saudi Arabia are expected to grow by 10.8%, while Kuwait, Qatar and Oman are expected to grow by 5.9%, 6.1% and 6.2% respectively, during the same period. Bahrain earnings are expected to grow moderately by 1.9%.


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About Kuwait Financial Centre “Markaz”

Kuwait Financial Centre K.P.S.C “Markaz”, established in 1974, is one of the leading asset management and investment banking institutions in the Arabian Gulf Region with total assets under management (AUM) of over KD 1 billion as of June 30th, 2014 (USD 3.82 billion). Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.

For further information, please contact:

Osama Al Musallam
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Media & Communications Department
Kuwait Financial Centre S.A.K. "Markaz"
Tel: +965 2224 8000 ext 1819
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Fax: +965 2241 4499
Email: [email protected]