Dubai’s listed companies bucked the regional trend in the wider Gulf Cooperation Council, with a 35.8 per cent year-on-year growth in third-quarter profits, a report showed.

According to Kamco Invest’s GCC Corporate Earnings Report: Q3 2023, in comparison, quarterly profits reported by GCC-listed companies once again showed a year-on-year decline in profits during Q3 , mainly led by a fall in energy and commodity prices.

The report showed that the combined profit of companies listed on the Dubai Financial Market in the third quarter rose to $5.8 billion, as compared to $43 billion in the same period last year. “Earnings growth during the quarter was broad-based and was mainly driven by banks, real estate, and utilities companies with the three sectors accounting for 90.7 per cent of the aggregate earnings in the exchange during the quarter,” the report said. Out of DFM’s 12 sectors, ten have witnessed a year-on-year increase in profits during Q3 while the remaining two sectors, namely the capital goods and materials sectors witnessed declines, it added.

Total net profits for the banking sector rose by $0.8 billion in Q3 to reach $2.8 billion up from $2.0 billion in Q3-2022. In contrast, in terms of quarter-on-quarter performance, the sector suffered 5.8 per cent decline in total profits. The sector’s rise in total earnings was primarily driven by Emirates NBD’s 38.3 per cent year-on-year profits jump that reached $1.4 billion during Q3 as net interest income increased supported by the continuing economic momentum of the UAE. The sector’s total earnings were supported by Mashreq Bank which announced a year-on-year profit increase of 90.7 per cent to $613.1 million during Q3 , exceeding analyst estimates. Dubai Islamic Bank recorded $448.6 million in Q3 net earnings as compared to $374.8 million in Q3-2022 while Commercial Bank of Dubai registered a 55.8 per cent increase in Q3 earnings which reached $193.2 million up from $124.0 million in net profits during Q3-2022.

Aggregate net profits for the utilities sector witnessed 6.1 per cent year-on-year growth during the quarter to reach $980.9 million up from $924 million in Q3-2022. Dubai Electricity & Water Authority posted $905.3 million in Q3 net earnings recording 7.7 per cent year-on-year growth. The company recorded record quarterly revenue of $2.56 billion and Ebitda of $1.4 billion during the quarter. Dewa’s robust net earnings were mainly driven by an increase in demand for electricity, water, and cooling services as well as growth in the revenues from Dewa’s other portfolio of assets.

Aggregate profits for the transport sector rose by 12.9 per cent year-on-year in Q3 to reach $215.9 million up from $191.3 million in Q3-2022. Air Arabia drove most of the earnings growth in the sector after the airline posted 25.4 per cent year-on-year net profit jump in Q3 which reached $142 million as compared to $113.3 million in Q3-2022. Air Arabia attributed the growth in quarterly net earnings to the continued strong demand for air travel during the quarter. The number of passengers that travelled on the airline during the quarter rose 21 per cent to reach more than 4.7 million passengers. Salik, the company that operates Dubai’s Road toll system, recorded $69.4 million in profits in Q3 as compared to $65.9 million in Q3-2022.

In the wider GCC, the slide in the Bloomberg Commodity index by around 10 per cent since the start of 2023 and the decline in prices of Brent, the global crude oil benchmark, was reflected in profits of listed energy companies in the GCC, including Aramco. A fall in profits for the capital goods and F&B sectors also added to the decline while profits for the utilities sector was affected by higher financing costs as declared by the two biggest players in the sector. On the other hand, banking sector profits once again remained resilient registering healthy quarter-on-quarter and year-on-year growth as lending grew in most markets despite higher interest rates.

The telecom sector also showed higher year-on-year profits as did real estate during Q3.

Aggregate net profit for GCC-listed companies reached $62.3 billion during Q3 as compared to $72.9 billion during Q3-2022 resulting in a double-digit year-on-year decline of 14.4 per cent. Out of the 22 sectors in the region, profits for 12 sectors showed year-on-year declines while 10 sectors showed higher profits. At the country level, aggregates for Saudi Arabia showed double-digits declines vs. last year while Bahraini companies showed a decline of 8.3 per cent. On the other hand, Kuwait showed the biggest year-on-year earnings growth of more than 40 per cent during Q3 , while Oman showed a healthy growth of 24 per cent. Aggregate for Qatari companies was almost flat with a marginal year-on-year growth of 0.3 per cent.

In terms of quarter-on-quarter performance, aggregate GCC profits increased by 7.7 per cent in Q3 led by double-digit profit growth for companies listed on Oman and Dubai while Saudi and Qatari companies showed slightly smaller growth of 9.8 per cent and 7.2 per cent, respectively. On the other hand, Bahrain, Kuwait and Abu-Dhabi listed companies reported quarter-on-quarter decline in profits.

In terms of quarterly sectoral earnings performance, profits for the energy sector witnessed a steep year-on-year decline of 20.2 per cent or by $8.8 billion to reach $34.9 billion during Q3 . On the other hand, in terms of quarter-on-quarter performance, the sector witnessed profit growth of $4.0 billion or 12.8 per cent reflecting higher average prices during the quarter vs. Q2-2023. The banking sector showed healthy quarter-on-quarter and year-on-year growth in profits during Q3 reflecting higher interest rates in the region as most central banks replicated the rate hikes by the US Fed. The sector witnessed continued lending growth during the quarter despite higher interest rates mainly due to the resilient projects market in the region. Real Estate lending also remained healthy, especially in the UAE.

Listed companies in Abu Dhabi witnessed a 27 per cent year-on-year decline in total net profits during Q3 to reach $7.6 billion as compared to $10.4 billion during Q3-2022, the report showed. The banking sector in Abu Dhabi witnessed a year-on-year increase of 30.1 per cent in Q3 net profits with aggregate sector profit of $2.2 billion as compared to $1.7 billion during Q3-2022. In terms of quarter-on-quarter performance, the Q3 net profits for the banking sector remained stable recording a marginal decline of 0.1 per cent during the quarter. On the other hand, the energy sector posted the second-largest net profits in the exchange during Q3 , although the year-on-year decline in profit was 14 per cent that reached $1.8 billion compared with $2.1 billion during Q3-2022. The food & beverages, capital goods and materials sectors were some of the other sectors that reported a decline in net profits during the quarter, contributing to the overall drop in total profits on the Abu Dhabi Exchange. On the other hand, telecommunication services and food, transportation sectors reported an increase in profits during the quarter which helped to partially offset the decline of aforementioned sectors.

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