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UAE corporates outperform GCC.

Earnings surge 33.5 per cent in first nine months of 2014; banks drive Dubai's 55.5 per cent leap to $5.1 billion

Dubai -- Driven by higher earnings in banking and real estate sectors, the UAE market recorded corporate earnings surge of 33.5 per cent in the first nine months and continued to outperform the GCC region, according to analysts.

The UAE has been the best-performing market in the GCC region during the first three quarters as Dubai's corporate earnings expanded 55.5 per cent year-on-year to $5.1 billion led by banks (48.8 per cent growth), real estate and construction (47.4 per cent), and investment and financial services (125.2 per cent), analysts at Global Investment House said in a report.

Earnings growth in the banking sector was driven by Emirates NBD (51.4 per cent), Dubai Islamic Bank (72.2 per cent), and Mashreq (35.3 per cent), which contributed 22.3 per cent, 13.8 per cent and 7.7 per cent, respectively, to the sector's incremental earnings.

"Emirates NBD's higher earnings can be ascribed to lower provision expenses and higher non-interest income. Dubai Islamic Bank reported significant expansion in earnings owing to higher net and non-interest incomes. Expansion in the net profit of Mashreq Bank was driven by growth in net interest income and net fee and commission income," Global analysts said.

Abu Dhabi's corporate earnings expanded 22.8 per cent year on year to $8.3 billion in the nine-month period, led by a 15.1 per cent rise in the banking sector's earnings (56.3 per cent of consolidated earnings) to $4.7 billion during period. Growth was led by First Gulf Bank (up 20.7 per cent), followed by National Bank of Abu Dhabi (14.7 per cent), Abu Dhabi Commercial Bank (17.7 per cent), and Abu Dhabi Islamic Bank (21.1 per cent).

FGB's profits improved due to strong growth in non-interest income and lower provisions. National Bank of Abu Dhabi reported robust growth in the bottom line, mainly due to strong increase in non-interest income and huge decline in provisions.

ADCB's profit growth was supported by significant decrease in provision expenses.

Earnings growth in the telecommunications sector (24.8 per cent) was driven by Emirates Telecommunication Corporation (20 per cent).

"This growth was led by higher profits from recently acquired Maroc Telecom and its associates, and Sudan Telecommunication, which reported Dh108.5 million profit during the nine-month period compared to a loss of Dh127.6 million in the same 2013 period," Global analysts said.

Corporate earnings in the GCC region rose 13 per cent to $52.0 billion during the nine-month period. Broadly, all the countries posted gains in the corporate earnings during this period.

The UAE corporate earnings surged 33.5 per cent, which contributed 7.3 per cent to the incremental rise in earnings, led the overall earnings growth, followed by Saudi Arabia (10.4 per cent), which contributed 4.7 per cent to the incremental earnings growth. Qatar (3.8 per cent) accounted for 0.7 per cent of GCC earnings growth during the same period. Bahrain and Oman recorded lower corporate earnings growth of 1.6 per cent and 0.4 per cent, respectively.

"Overall, the UAE has witnessed solid recovery on improvement in the banks, investment and financial services sectors, driven by strong investor optimism," they said.

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Publication:Khaleej Times (Dubai, United Arab Emirates)
Geographic Code:7UNIT
Date:Dec 3, 2014
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