Listed companies on the GCC bourses had an impressive run in terms of growth in profits during the first quarter of 2022 except for the long-term commodities, a research from Kamco Invest said.
The PMI data for Saudi Arabia, the UAE, Dubai and Qatar remained above the 50-point growth barrier continuously during the first three months of the year on the back of government efforts and the strong activity of the private sector. Bank credit to the private sector has also witnessed sustainable growth in Saudi Arabia, Kuwait and Qatar, according to data available from the central banks of those countries.
The net revenues of companies listed on the Gulf stock exchanges amounted to $65.4 billion during the quarter, compared with $51.5 billion during Q4 of 2021, bringing the growth rate on a quarterly basis to 27%. Year-on-year growth was stronger, at 67%, compared with first-quarter 2021 earnings of $39.2 billion.
On a regional basis, the report indicated that the profits of the seven stock exchanges grew during the quarter. Saudi Arabia recorded the largest annual net revenue growth rate at 73.2%, followed by Abu Dhabi and Bahrain with annual growth of 63.3% and 62.4%, respectively.
On the other hand, Oman recorded the lowest growth rate in profits on an annual basis during the first quarter. Saudi Arabia continued to acquire the lion’s share of total profits on a quarterly basis with a share of 76.2% compared with 73.4% during The first quarter of 2021.
The report showed that the profits of companies listed on the Kuwait Stock Exchange increased from $1.3 billion in the first quarter of 2021 to $2.1 billion in Q1 of 2022. This was mainly due to the banking sector, which witnessed a strong jump in profits, by 50.6%, as the sector’s profits amounted to $926.8 million in the first quarter, compared with $615.2 million in Q1 of 2021.
The net profit of the telecommunications sector increased by 17.7% on an annual basis, to reach $208.4 million, compared with $177.1 million in the first quarter of 2021. The net profit of the investment and financing sector amounted to $337.6 million in the first quarter of 2022, compared with $133.3 million in the first quarter of 2021.
The profits of the capital goods sector also increased from $77.1 million in the first quarter of 2021 to $184.6 million in the first quarter of 2022, after most of the sector’s companies recorded higher profits during this quarter. The transportation sector recorded a profit of $89 million, compared with a profit of $20.9 million in the corresponding period of 2021.
Sharp Drop in Allowances
The report indicated that the Gulf banking sector recorded a greater profit during the first quarter of 2022, at a value of $10.9 billion, with a growth rate of 32.3% on an annual basis, and by 25.4% on a quarterly basis. The profit growth mainly reflects the sharp decline in provisions during the quarter supported by the growth in credit facilities. The sector recorded growth in profits on an annual and quarterly basis in all markets during the first quarter of 2022, as the listed banks in the UAE recorded the highest rate of profit growth on an annual basis by 62%, followed by Kuwaiti banks whose profits grew on an annual basis by % 50.6.