Muscat – Omani companies which are listed on the Muscat Stock Exchange (MSX) reported total net profits of US$1.39bn for the year 2021.

However, total net profits of the listed companies last year declined by 3.7 per cent compared with total earnings of US$1.44bn in 2020 after four out of the top five sectors at the MSX recorded falls in net profits, according to a research report released by Kuwait-based Kamco Investment Company.

As per the report, Oman’s banking sector, the biggest sector in the exchange by market capitalisation, offset some of the net profit declines of other main sectors. The banking sector recorded a 28.2 per cent growth in total net profits at US$861.9mn in 2021 compared to US$672.5mn net profits posted in the previous year.

Full-year 2021 net profits for Bank Muscat, the biggest lender by assets in the MSX, rose 16 per cent to reach US$492.5mn driven mainly higher operating income and lower impairment charges. Moreover, National Bank of Oman reported 66.8 per cent growth in 2021 net profit which reached US$78.6mn contributing to the overall growth of the banking sector’s aggregate full-year net profits. Strong fee income and a decrease in net impairment combined with gross loans increase were the main drivers of NBO’s performance, Kamco Investment noted in its report.

On the other hand, the sultanate’s telecom sector registered a 9.8 per cent year-on-year decline in 2021 with aggregate earnings falling to US$207.2mn, according to Kamco Investment.

The diversified financials sector also witnessed a 44 per cent drop in aggregate net profits which decreased to US$117.7mn in 2021, the report added.

GCC corporate earnings soar

Total net profits of the publicly listed companies in the GCC soared to record high in 2021, mainly due to higher growths reported by energy, materials and banking sector companies.

Earnings reported by the GCC region’s listed companies jumped to a record high of US$196.5bn in 2021 as compared to US$93.1bn during 2020, Kamco Investment said.

The US$103.5bn growth came mainly on the back of jump in profits for Aramco (by US$56.1bn or 113.8 per cent year-on-year) followed by banking, materials and utilities companies. The four sectors accounted for 85 per cent of the total full-year net profit in 2021.

‘The recovery from the COVID-19 pandemic and the relaxation of the restrictions globally significantly impacted economies in the GCC region supporting the robust performance in earnings for the full year 2021,’ Kamco Investment said.

Most of the sectors in the GCC showed solid increase in net profits during the year. The utilities and transportation sector witnessed remarkable jump in net profits during 2021 after suffering subpar performance during the pandemic.

Out of the 21 sectors, four sectors witnessed year-on-year decline in profits whereas the rest reported growth. At the exchange level, Oman was the only market which reported a decline in aggregate net profits for listed companies during the full year 2021 with a fall of 3.7 per cent, the report noted.

In terms of sectors, profitability for the GCC banking sector reached one of the highest yearly levels during 2021, increasing by 52.9 per cent to reach US$35.4bn. Banking sector profits reached the highest mark since 2018.

The year-on-year increase in 2021 was broad-based across the GCC with profits for Kuwaiti banks almost doubled to US$2.9bn. Saudi and UAE-listed banks also reported healthy profit growth of 59.5 per cent and 67.2 per cent during the year.

Higher profits also pushed the aggregate return-on-equity for the banking sector to a seven-quarter high level of 10.4 per cent at the end of 2021 as compared to 9.6 per cent in the third quarter of 2021 and 8.1 per cent at the end of 2020. The banking sector represented 18 per cent of the total aggregate GCC earnings during 2021.

In terms of quarterly performance, total net profits of the GCC’s listed firms during the fourth quarter of 2021 increased by 102.5 per cent to US$50.6bn as compared to US$25bn during the fourth quarter of 2020. In terms of sequential performance, profits were down by nine per cent as compared to the third quarter of 2021.

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