During 3Q11, GCC corporates posted a mixed set of numbers with overall earnings growth of 17% when compared to 3Q10.

Total earnings, which came in at $13.5 billion, were a decline of 4 per cent over 2Q11. Corporate earnings were driven by strong performance from Commodity companies and banks. The region's continued dominance as a petrochemical hub, strong demand and increase in commodity prices over the last year augured well for companies in the region.

Aggregate Net Profits from the Commodity sector were USD 3.5bn (+61% YoY, +0% QoQ). Amongst sectors, Banking continued to deliver the highest profits, at $5.1 billionn. Bank earnings grew 13% YoY but declined 9% sequentially. Telecom continued to drag overall earnings with bottom-line drops of 23% YoY and 12% over the quarter. Most Telecom companies attributed this decrease to foreign exchange losses.

Real Estate sector continued its recovery with aggregate net income coming in at USD 773mn (2Q11: $414 million, 3Q10: USD -3.8bn).

 

3Q11 Earnings

Earnings of Saudi Arabian companies totaled USD 6.9bn, an increase of 22% YoY but decline of 2% QoQ. SABIC, which reported USD 2.2bn in 3Q profits, led the growth which was driven by increased production and sales. Al Rajhi Bank reported 18% YoY growth in net income to USD 516mn. Telecom sector's earnings fell 44% YoY to USD 576mn as Saudi Telecom's earnings fell 53% to USD 417mn due to heavy foreign exchange losses.

Kuwait corporate earnings grew 9% YoY but dropped 2% sequentially. Banks delivered a mixed set of numbers with overall earnings declining 6% over the year but growing 13% over the quarter to USD 570mn. National Bank of Kuwait reported a flat set of numbers with net income coming in at USD 285mn.

The bank booked increased provisions this quarter which dragged its earnings. Telecom companies saw their bottom-line decline to USD 309mn (-11% YoY, -9% QoQ). Zain's earnings declined 10% YoY to USD 253mn and Wataniya's earnings decreased 11% to USD 56mn. Both Zain and Wataniya attributed the decrease to foreign exchange (FX) losses. Zain's FX losses totaled USD 100mn in the first nine months of 2011.

During 3Q11, UAE companies posted earnings of USD 2.15bn (3Q10: USD 2.21bn, 2Q11: USD 2.78bn). Banking sector profits grew 4% YoY, but declined 25% over the quarter to USD 1.4bn. Emirates NBD reported a 59% YoY (QoQ: -77%) drop in net profit to USD 48mn due to restructurings at Dubai Holding. NBAD reported 12% growth in net income to USD 281mn driven by higher interest income.

Real estate continued its recovery with profits of USD 168mn in 3Q11 (3Q10: USD -160mn, 2Q11: USD 12mn). Aldar Properties reported profits of USD 39mn, compared to USD 199mn loss in 3Q10 because of revenue recognition from land sales and increased delivery. Emaar properties continued its sluggish year with 34% drop in 3Q earnings to USD 111mn due to decreased revenue from property sales.

While Etisalat reported flat set of numbers with net profit of USD 468mn, Emirates Integrated Telecom (Du) continued its outperformance with profits increasing 50% YoY to USD 67mn due to strong customer addition.