Kuwait Financial Centre (Markaz) stated that during H1 2015 the GCC corporates posted a negative 7.2 percent growth over H1 2014. Earnings in H1 2015 totaled 34 billion. H1 2015 earnings were driven by strong performance from banks and real estate.
Aggregate net profits for banks totaled 16.7 billion in H1 2015 a rise of 9 percent over H1 2014. Earnings from real estate were 3.7 billion recording a growth of 44.5 percent (YoY).
Robust growth in the earnings of banking sector which accounts for 49 percent of earnings could not prevent overall corporate earnings from declining by 7.2 percent (YoY) in H1 2015. Telecom sector continued its negative run from 2014 with overall profits declining by 35 percent.
Qatar had the highest earnings growth in H1 2015 at 13 percent with the rest of the GCC countries recording a decline. Fall in oil prices strengthening of the dollar and company specific issues were responsible for the poor earnings in the first half of 2015.
Earnings in Kuwait and Saudi Arabia contracted by 19 percent and 16 percent respectively (H1 2015 YoY basis) while the UAE Bahrain and Oman also registered negative earnings growth of 2 percent 5 percent and 7 percent respectively.
Real estate and banking sectors have been the star performers in the region for H1 2015 registering growth of 44.5 percent and 9 percent respectively.
Despite signs of slowing down toward the end of last year the real estate sector had a great run in the first half of 2015.
The commodities sector which is the second largest sector in terms of net earnings was impacted by lower oil prices.
Telecom sector the 4th largest in terms of net earnings was affected by the reduction in average revenue per user (ARPU) as well as company specific losses.
Real estate boom in major markets such as the UAE (Dubai and Abu Dhabi) Qatar and introduction of mortgage lending reforms in Saudi Arabia have led to significant earnings growth of the sector.
Telecommunication sector’s earnings were affected by strengthening of the dollar (Ooredoo) the earnings restatement of Mobily and its continued dispute with Zain Saudi. Falling ARPU across the region was also a reason behind the fall in telecom earnings.
The GCC corporate earnings are expected to contract by 0.3 percent in 2015 over FY2014 and reach 69.7 billion by the end of the year. The UAE Qatar and Bahrain earnings growth are expected to be robust at 8 percent 6.2 percent and 6 percent respectively for the full year of 2015 as against 2014.
Corporate earnings in other GCC countries are also expected to decline during the same period with earnings in Saudi Arabia declining the most at 7.9 percent. Corporate earnings in Kuwait and Oman are expected to fall moderately by 1.6 percent and 0.4 percent respectively.
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