Dubai's corporate gains surge highest in GCC

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Aden - Yasmine El Tohamy - Listed companies in Dubai and Kuwait reported higher earnings during the third quarter of 2019 while corporates across the GCC had a drop of 10.1 per cent year-on-year to $16.8 billion from $18.7 billion, Kamco Research said.

Net profits for Dubai-listed companies jumped 20 per cent to $2.8 billion in the third quarter, up from $2.3 billion in the same 2018 period, recording the largest earnings increase among GCC markets.

Saudi Arabia witnessed the biggest fall of 25.4 per cent while Dubai-listed stocks reported a healthy growth as compared to third-quarter 2018, Kamco said in its GCC Corporate Earnings Report.

In terms of first nine-month earnings, the growth numbers were comparable to the third quarter 2019 with Saudi Arabia reporting a year-on-year decline of almost a quarter whereas Dubai reported the strongest growth.

In terms of sectors at the GCC level, two of the top 10 largest sectors by market cap - the materials and utilities sectors - recorded steep double-digit declines in their third-quarter net profits resulting in an overall decline in aggregate quarterly profits for the GCC during 2019 third quarter.

On the other hand, the banking and telecom sectors' 11 per cent and 3.4 per cent growth in profits during the third quarter, respectively, partially offset the overall decline at the GCC level.

The banking sector represented 61 per cent of GCC earnings in the third quarter, increasing marginally both as compared to the 2018 quarter as well as sequentially.

In terms of sectors, Dubai's banking sector has been the primary contributor to the overall profits of the exchange representing over 71 per cent of the total earnings.

Comparatively, the consumer services sector suffered the largest loss in earnings at $71.2 million. The banking sector's third-quarter net profits rose 51 per cent, the largest percentage increase among the GCC banking sector to reach $2 billion from $1.3 billion during the same 2018 period, whereas sequential growth remained flat for the sector.

Emirates NBD, Dubai's largest lender, led the sector in both in absolute profits and percentage increase in profits with a 90 per cent surge in third-quarter profits that reached $1.4 billion compared with $0.72 billion in the same 2018 period.

The main reason for the surge in the banks' earnings was higher-than-expected gains on the partial sale of the bank's stake in Network International which was recently listed on the FTSE 250 Index.

Similarly, Emirates Islamic Bank and Commercial Bank of Dubai improved their third-quarter net profits by 54 per cent and 28 per cent to reach $71.9 million and $98.6 million, respectively.

In Dubai's real estate sector, the second-largest sector of the exchange by market cap, third quarter net profits went down 8.5 per cent to $628.6 million from $687 million year-on-year.

Of the six companies in the sector only Union Properties recorded a loss of $22.2 million third quarter due to lower revenues and a loss incurred during revaluation of the company's assets.

On the other hand, profits for Emaar Malls Group increased 12 per cent to $163.8 million while net profits for Emaar Development rose one per cent to $187.3 million in the same period. Emaar Properties, the biggest real estate company in the GCC, reported a year on year profit decline of 6.1 per cent.

After the banking sector, the transportation sector was Dubai stock exchange's largest contributor in absolute profits in the third quarter, rising by 42.7 per cent to $154.3 million led by 64 per cent surge in earnings for Air Arabia that reached $128.3 million from $78.2 million in the third quarter of 2018.

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Issac John

Editorial Director of Al Khaleej Today, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Al Khaleej Today. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.

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