News Column

Markaz: Earnings grow 11 per cent, mixed performance in the region

September 1, 2014

Markaz has reported that total earnings during the first half-year of 2014 (H1, 2014) amounted to $33 billion a growth of 11 per cent 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 $1.2 billion a growth of 35 per cent over the same period last year. Earnings from Conglomerates came in at $1 billion recording a growth of 29 per cent when compared with the same period, last year (YoY). Earnings from Real estate came in at $1.8 billion which is eight per cent higher than the earnings registered in first half-year in 2013. Banking sector had the highest earnings among the sectors at $13.3 billion and hence had the highest impact on the overall earnings recording a growth of six per cent over the same period, last year.


GCC corporate earnings in H1, 2014 increased by 11 per cent when compared with the same period last year (H1 2014 vs H1 2013, YoY basis) while it has gained by 12 per cent 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 per cent in 1H 2014 while Bahrain declined the most at -23 per cent. On a HoH basis, Bahrain gained the most at 53 per cent during 1H 2014 (1H14) while Qatar's earnings remained flat.

Financial services gained the most during 1H14, a total earnings growth of 35 per cent on a YoY basis which was followed by the conglomerates, telecom and real estate which grew by 29 per cent, 25 per cent and eight per cent 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 one per cent and four per cent 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 two per cent (HoH).

Based on the current trends, we expect an annual earnings growth of 10 per cent 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 per cent for the full year of 2014 as against 2013. Corporate earnings in Saudi Arabia are expected to grow by 10.8 per cent, while Kuwait, Qatar and Oman are expected to grow by 5.9 per cent, 6.1 per cent and 6.2 per cent respectively, during the same period. Bahrain earnings are expected to grow moderately by 1.9 per cent.

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Source: CPI Financial

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