GCC corporate earnings rocketed 120 percent in the first quarter of 2010, compared to the previous quarter, Kuwait Financial House (Markaz) has said in its latest report, with the UAE leading the way. Overall, the GCC posted robust earnings growth for the quarter, with earnings of $11.4 billion in 1Q. Saudi Arabia's corporate earnings grew 68 percent compared to Q1 2009, boosted by the performance of SABIC, which reported profits of $1.4 billion. On the flip side, profits from the banking sector contracted 10 percent to $1.5 billion, as provisioning rose. Saudi has the highest visibility at 93 percent of companies reporting as of the end of May. Kuwait's corporate profits grew 10x YoY to $1 billion, as the financial sector showed signs of revival after a dismal 2009. Q1 visibility is at 61 percent, the second lowest visibility after Oman's 54 percent. Kuwait recorded growth across key sectors, with financial services posting a profit in 1Q10 after two straight quarters of loss. In 1Q10, companies earned $1 billion of profits, after losing $1.8 billion in 4Q09. Although Kuwait's real estate sector remained in the red, it almost broke-even with loss narrowing to $1 million in 1Q10 from $782 million in 4Q09. On a QoQ basis, UAE was the top performer as earnings surged 17x to $3 billion in 1Q10. Banks and financial services were key growth drivers, their combined earnings jumping to $1.4 billion in 1Q10. A main reason for growth could be the significant declines in 4Q09 corporate earnings after Dubai deferred its obligations to repay external bank debt of $60 billion as well as statutory requirements to provision for the year end quarter. The UAE government intervened, agreeing to restructure $26 billion of the emirate's total debt, thereby restoring some confidence in the banking system. Qatar's corporate earnings grew 6 percent YoY in 1Q10 to $2 billion, driven by telecom growth. The telecom sector earnings doubled to $333 million in the quarter while banking sector profits were up 2.5 percent YoY. The quarterly rate shows a decline of 46 percent due to Ezdan Real Estate's extraordinary profit showing in 4Q09 which distorts the picture. Earnings for Oman and Bahrain were down 16 percent and 10 percent YoY in 1Q10. Poor performances by their respective banking sectors dragged down earnings. The Oman banking sector (37 percent of the country's corporate earnings in 1Q10) fell 26 percent to $133 million, while Bahrain's banking sector (69 percent of that country's corporate profits for the quarter) declined 17 percent to $226 million.
