GCC financial services sector grows 85 percent

The sector registers a staggering earnings growth of 85 percent in H1 2014, compared with H2 2013.

The results were announced by Kuwait’s Markaz research center, according to whom, total corporate earnings in the Arabian Gulf during the first half of 2014 amounted to $33 billion – a growth of 11 percent over the same period last year.

These corporate earnings were driven by strong performance from banks and financial services, telecom, conglomerates and real estate sectors.

“Aggregate net profits from financial services in the first half-year of 2014 came in at $1.2bn, a growth of 35 percent over the same period last year. However, this growth was 85 percent in H1 2014 against H2 2013.

“Earnings from conglomerates came in at $1bn, recording a growth of 29 percent when compared with the same period, last year (YoY). Earnings from Real estate came in at $1.8bn, which is eight percent higher than the earnings registered in the first half-year of 2013.

“Banking had the highest earnings among the sectors at $13.3bn and hence had the highest impact on the overall earnings recording a growth of six percent over the same period last year,” says Markaz, also known as Kuwait Financial Centre.

G-1

The analysis by Markaz says GCC corporate earnings in H1 2014 increased by 11 percent when compared with the same period last year, while it has gained by 12 percent when compared with the preceding half year (H1 2014 vs H2 2013, HoH basis).

On a YoY basis, Saudi Arabia was the biggest gainer with 20 percent in H1 2014 while Bahrain declined the most at -23 percent.

The Markaz analysts say in a media statement: “Based on the current trends, we expect an annual earnings growth of 10 percent in 2014.

“We believe that local developments in the GCC region play a vital role in the regional stock markets. Implementation of structural reforms in Saudi Arabia, major changes in corporate law offering an attractive environment to conduct business in Kuwait and execution of infrastructural projects in anticipation to hosting Dubai Expo 2020 and FIFA World cup 2022 in the UAE and Qatar, respectively, are expected to support earnings growth.

“Overall, we expect UAE earnings growth to be robust at 15.5 percent for the full year of 2014 compared with 2013. Corporate earnings in Saudi Arabia are expected to grow by 10.8 percent, while Kuwait, Qatar and Oman are expected to grow by 5.9 percent, 6.1 percent and 6.2 percent respectively, during the same period. Bahrain earnings are expected to grow moderately by 1.9 percent,” they conclude.

G-2