GCC Corporate Earnings Surge by 16% in Q3-Kuwait leads


In a recent report released by Kuwait Financial Centre “Markaz”, third quarter earnings for GCC surged by 16% YoY and 3% QoQ to USD 8.7 Bn in 3Q10 driven mainly by a surge in the region’s commodities and banking segments’ earnings. Though only 292 companies (out of 663) declared their 3Q10 results, they accounted for 80% of market capitalization providing good visibility. The commodities segment’s impressive performance aided 9M10 growths as well. Consequently, the GCC’s overall earnings for 9M 10 increased 24% YoY to USD 25.4 Bn.

Saudi Arabia (at 83% coverage) reported 18% YoY growth in corporate earnings to USD 5.4 Bn in 3Q10. aided by commodities and telecom sectors. Factors such as the recovery in commodity prices, stable demand in major export markets, and weakening dollar supported strong growth in the commodities sector. The banking sector, on the other hand, dampened KSA’s earnings prospects—earnings dipped 27% in 3Q10 and 15% YoY in 9M10. High loan loss provisions and slow loan book growth dented the sector’s earnings growth, especially in 2Q10 due to exposures to the Sa’ad and Algosaibi groups.

Kuwait recorded one of the fastest growths in earnings though on the back of poor visibility. Quarterly earnings (3Q) came in at USD 637 m signifying a jump of 57% YoY and 23% QoQ. Banks and Telecom led this surge. NBK and Zain are notable performers. While financial services showed impressive growth, it still accounts for a meager share of the total.

UAE’s earnings1 grew just 1% YoY in 3Q10 showing anemic performance. While banks posted good results, telecom disappointed.. UAE banks posted mixed results during 9M10 due to repercussions of the Dubai debt crisis, which resulted in high loan defaults, increased provisioning and lower lending activity in 1H10. The sector grew 21% YoY in 3Q10, but witnessed a substantial slowdown (growing just 1% YoY) in 9M10.

Qatar continues to impress through its earnings performance with Q3 earnings increasing by 27% led by banks and commodities. The performance of QNB and Masraf Al Rayan was especially notable. Oman and Bahrain reported sequential declines in their Q3 performance, with their overall contribution to GCC earnings remaining very minimal.

About Kuwait Financial Centre “Markaz”

Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD1,03 billion (USD 3,64 billion) as of September 30, 2010, 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.