Qatar’s corporate sector was among the best performing in the region with positive double digit earnings in the second half of 2014, a new report has shown.
Corporate earnings in Qatar are expected to grow by 7.8% this year, said Kuwait Financial Centre (Markaz) in a report.
GCC corporate earnings in H1, 2014, totaled $32bn, driven by strong performance from financial services and real estate, Markaz said. This shows a 6% growth compared with the same period in 2013.
Aggregate net profits from financial services in the second half of 2014 came in at $1.2bn, up 99% on H2, 2013.
Earnings from real estate came in at $2.7bn recording a growth of 29% on a year-on-year (YoY) basis.
Banking sector had the highest earnings and third highest growth among the sectors at 20% and hence had the highest impact on the overall earnings recording a growth of 6% (YoY) over H2, 2014.
The UAE and Bahrain had the highest full-year earnings growth in 2014 at 32% and 11% respectively, followed by Kuwait 8% and Qatar 6%.
Oil prices were partly responsible for Saudi Arabia’s 3% “mediocre” performance, Markaz said.
GCC corporate earnings grew by 6% in the second half of 2014 (YoY basis). During the same period, Bahrain was the biggest gainer with 57% (YoY) growth in earnings H2, 2014, while earnings in Saudi Arabia and Oman contracted by 10% and -1% respectively.
Real Estate and banking sectors have been the star performers in the region in the financial year 2014, registering growth of 22% and 16% respectively. While the real estate sector has shown signs of slowing down towards the end of the year, they had a great run in the beginning of the year.
The commodities sector, which is the second largest sector in terms of net earnings, has been impacted heavily by the lower oil prices.
Telecom sector, the third largest in terms of net earnings has been heavily affected by the reduction in average revenue per unit (ARPU) as well as company specific losses.
Earnings from the financial services sector had the highest growth in earnings at 99% for the H2, 2014 (YoY basis) followed by real estate whose growth increased by 29% during the same period on a YoY basis. Real estate boom in major markets such as the UAE (Dubai & Abu Dhabi), Qatar and introduction of mortgage lending reforms in Saudi Arabia have led to significant earnings growth of the sector.
Telecommunications sector’s earnings were affected by the earnings restatement of Mobily, which resulted in wiping out $381mn out of its total profits. Falling ARPU across the region was also a reason behind the fall in net earnings.
“We expect GCC corporate earnings to grow by another 5% in 2015 compared with 2014 and reach $71bn by end-2015. Overall, we expect UAE earnings growth to be robust at 10.4% for the full year of 2015 as against 2014. Corporate earnings in Qatar are expected to grow by 7.8%, while Kuwait and Oman are expected to grow by 7.4% and 4.6% respectively, during the same period. Bahrain and Saudi‘s earnings are expected to grow moderately by 2.7% and 1.6% respectively,” Markaz said.