GCC corporates posted overall earnings growth of 4 percent in the first quarter of 2012 compared to the same period last year, Kuwait Financial Centre (Markaz) said in a report Monday, a copy of which was sent to the Saudi Gazette. Excluding the one-off item, GCC aggregate corporate profits increased 12 percent YoY. Total earnings, which came in at $14.6 billion, increased 45 percent over 4Q11. The large sequential increase in earnings is due to dismal performance by companies in 4Q11 on account of weak petrochemical prices and increased last quarter provisioning by banks, the report said. The first quarter of last year saw Kuwait's Wataniya Telecom book a one-time fair value gain of $959 million which boosted earnings, it added. Incremental growth in earnings was driven by contributions from Saudi Arabia, UAE and Kuwait (adjusted for one-off). Among sectors, banks and real estate companies delivered good performance with earnings growth of 9 percent and 61 percent YoY respectively. Banks continue to dominate GCC earnings representing almost 40 percent of total profits. Commodity companies reported a mixed set of numbers because of volatile global prices. Commodity earnings decreased 8 percent YoY but rose 26 percent sequentially to $3.1 billion. After a tough 2011, telecom came in strong with net income coming in at $ 2.1 billion, an increase of 23 percent YoY (adjusted for one-off) and 11 percent over the quarter. Earnings of Saudi Arabian companies totaled $6.7 billion, an increase of 15 percent YoY and 28 percent QoQ. SABIC, which reported $1.9 billion in 1Q profits, saw its bottom-line decline by 5 percent YoY due to softening of global petrochemical prices when compared to 1Q11. Saudi banks continued its stable growth with earnings increasing 23 percent YoY and 27 percent QoQ to $2.0 billion. Telecom sector's earnings grew 70 percent YoY to $853 million as Saudi Telecom's earnings rose 60 percent to $672 million due to improved operational efficiency. Kuwait corporate earnings dropped 25 percent YoY to $1.5 billion due to Wataniya's extraordinary item in 1Q11. Excluding the extraordinary item, aggregate profits grew 41 percent. Kuwait saw its earning recover in the first quarter of 2012 after three consecutive quarters of de-growth. Banks delivered a mixed set of numbers with overall earnings declining 2 percent over the year but growing 37 percent over the quarter to $555 million. Telecom companies reported a bottom line of $351 million (+10 percent YoY, -4 percent QoQ). Real estate sector, which dented 4Q11 profits with aggregate losses of $467 million, reported a net income of $127 million in the first quarter. During 1Q12, UAE companies posted earnings of $3.1 billion (1Q11: $1.6 billion, 4Q11: $1.4 billion). This is the highest earnings during the last 10 quarters. Banking sector, which accounts for 66 percent of profits, declined 3 percent YoY, but grew 66 percent over the quarter to $1.6 billion. Telecom earnings grew 6 percent YoY and 87 percent QoQ to $583 million. Real estate continued its recovery with profits of $342 million (1Q11: $223 million, 4Q11: $252 million). While Emaar witnessed a 44 percent YoY growth in earnings to $ 165mn driven by increase in recurring income, Aldar's two-fold increase in profits is led by recognition from government sales. After a remarkable growth in 2011, Qatar's earnings are starting to stabilize. Aggregate profits grew 2 percent YoY to $2.5 billion. Qatar's 4Q11 profits were inflated due to a $463 million revaluation gain booked by United Development Company. If that effect is negated, then Qatar's earnings grew 5 percent QoQ. Industries Qatar's earnings dropped 9 percent over the year to $524 million (4Q11: $463 million) mainly due to reduced profitability in fertilizer and steel segments. Bank earnings continue to benefit from higher government spending with growth of 13 percent YoY and 8 percent sequentially to $1.1 billion. Qatar National Bank's net income ($551 million) grew 17 percent YoY — slowest bottom-line growth in the last 2 years. Oman's corporate earnings was flat on YoY basis but increased 10 percent over the previous quarter to $380 million. Bahrain's corporate profits dropped 2 percent YoY in 1Q12 to $410 million. However, profits more than doubled on sequential basis due to large losses reported by Ithmaar Bank ($66 million) and Bahrain Islamic Bank ($55 billion) in 4Q11.
