The Gulf Cooperation Council GCC member states' corporate earnings total earnings during the first half-year of 2014 (H1, 2014) amounted to USD 33 billion, a growth of 11 percent over the same period, last year, a specialized economic report revealed Monday.
The report, by Kuwait-based Al-Markaz Financial Center, stated that the corporate earnings were driven by strong performance from banks and financial services, telecom, conglomerates and real estate sectors.
"GCC corporate earnings in H1, 2014 increased by 11 percent when compared with the same period last year (H1 2014 vs H1 2013) while it has gained by 12 percent when compared with the preceding half year (H1 2014 vs H2 2013)," reads the repot.
"On a Y-o-Y basis, Saudi Arabia was the biggest gainer with 20 percent in 1H 2014 while Bahrain declined the most at -23 percent. On a H-o-H basis, Bahrain gained the most at 53 percent during 1H 2014 (1H14) while Qatar's earnings remained flat." It added that the aggregate net profits from financial services in the first half-year of 2014 came in at USD 1.2 billion, a growth of 35 percent over the same period last year.
"Earnings from Conglomerates came in at USD 1 billion recording a growth of 29 percent when compared with the same period, last year. Earnings from Real estate came in at USD 1.8 billion which is 8 percent higher than the earnings registered in first half-year in 2013. Banking sector had the highest earnings among the sectors at USD 13.3 billion and hence had the highest impact on the overall earnings recording a growth of 6 percent over the same period, last year," Al-Markaz wrote.
The data also showed that the financial services gained the most during 1H14, a total earnings growth of 35 percent on a Y-o-Y basis which was followed by the conglomerates, telecom and real estate which grew by 29 percent, 25 percent and 8 percent 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.
Meanwhile, the report unveiled that earnings in construction related and commodities segment contracted by 1 percent and 4 percent respectively on a Y-o-Y 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 percent (H-o-H).
Al-Markaz forecasted that GCC countries would be able to retain the growth trend in the remaining half of the year.
"Based on the current trends, we expect an annual earnings growth of 10 percent 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," it said.
"Overall, we expect UAE earnings growth to be robust at 15.5 percent for the full year of 2014 as against 2013. Corporate earnings in Saudi Arabia are expected to grow by 10.8 percent, while Kuwait, Qatar and Oman are expected to grow by 5.9 percent, 6.1 percent and 6.2 percent respectively, during the same period. Bahrain earnings are expected to grow moderately by 1.9 percent." (end) fh.jk.ibi