Listed companies in the Gulf Cooperation Council (GCC) reported another record aggregate profits during 2022 with growth seen almost across all the six member states, according to a report from Kuwait-based Kamco Research.
This was due to spurt in the GCC region’s economic activity in post-pandemic era that resulted in one of the best GDP growth rates during 2022. Manufacturing activity in the region, as seen from PMI figures, also showed a consistent growing trend, especially in Saudi Arabia and the UAE where the PMI remained comfortably above the growth mark while Qatar showed a slowdown only during the second half of the year. Continued lending growth by banks in the GCC was another indicator of higher investments in businesses during the year.
Net profits reported by these GCC companies jumped to a record high of $273.3 billion in 2022 compared with $199 billion in the previous year. The 37.3% growth ($74.2 billion) came mainly on the back of a steep jump in profits for the energy sector mainly led by higher profits reported by Aramco ($159.1 billion profits in FY-2022 as against $105.4 billion in 2021) due to higher crude oil prices and higher volumes, the report said.
The banking sector in the GCC was next with a net profit growth of $8.7 billion to reach $44.4 billion mainly led by higher net interest income as interest rates saw one of the fastest paces of increases during the year globally and in the region coupled with lower provisions.
The GCC capital goods sector came in third with a profit growth of $7.3 billion to reach $11.6 billion, mainly led by higher y-o-y profits for recently listed Multiply Group and Alpha Dhabi Holding during the year.
Net profits for Dubai-listed companies recorded a growth of 47.5% y-o-y to $3.4 billion in Q4-2022 as against $2.3 billion in Q4- 2021. The surge in earnings was primarily driven by earnings growth in the banking, real estate, and utilities sectors.
These three sectors accounted for the biggest share of corporate profits in Q4-2022 at 87.4% with a y-o-y increase of 61.7%. On the other hand, the consumer services was the only sector which reported total Q4-2022 losses while transportation sector witnessed the largest percentage profits decline among the eleven sectors in the exchange.
Total net profits for the banking sector increased by 55% in Q4-2022 to reach $1.9 billion up from $1.2 billion in Q4-2021. The sector’s rise in total earnings was primarily driven by Emirates NBD’s 89% growth in Q4-2022 with net earnings reaching $1 billion as against $547.8 million in Q4-2021.
The banks strong performance was attributed to record breaking net profits from its Islamic arm as well as growth in total income. On the other hand, Dubai Islamic Bank’s Q4-2022 net earnings dipped 3% to reach $351.7 million compared with $362.7 million in Q4-2021 despite reporting $1.5 billion its largest ever FY- 2022 net profit.
In the real estate sector, aggregate Q4-2022 net earnings jumped 92.2% to $593.6 million as against $308.8 million in Q4- 2021. The introduction of Tecom group in the sector and return to profitability by Union Properties were significant in the growth of the sector’s overall profits.
Emaar Properties reported the biggest Q4-2022 net profits that reached $283.6 million despite suffering a 14.8% y-o-y decline. On the other hand, Emaar Development reported a 12.7% increase in its Q4-2022 net profits which reached $264.1 million up from $234.2 million in Q4-2021.
In terms of full year performance, total FY-2022 net profits for Dubai listed companies reached $14.2 billion as against $6.3 billion in the previous year. Top five largest sectors in terms of total net profits witnessed double-digit growth during the year.
The Banking Sector led the way reporting total FY-2022 net earnings of $7 billion up from $4.9 billion. Similarly, FY-2022 total net profits of the real estate sector jumped 72.3% to $3.1 billion as against $1.8 billion while aggregate net earnings for the utilities sector reached $2.4 billion during the year recording a growth of 23.6%.
Listed companies in Abu Dhabi witnessed a 49.4% y-o-y increase in net profits during Q4-2022 to reach $7.8 billion compared with $5.2 billion during Q4-2021. The capital goods sector drove the robust rise in quarterly earnings after the sector was reinforced with higher earnings by the two newly listed companies, Multiply Group and Alpha Dhabi Holding.
The capital goods sector’s total net earnings in Q4-2022 jumped nine times to reach $2.8 billion compared with $319.5 million in Q4-2021. Multiply Group announced Q4-2022 net profits of $2.4 billion up from $22.9 million in Q4-2021. Furthermore, quarterly profits of Alpha Dhabi Holding Company witnessed 65.2% growth to reach $461.3 million during the quarter.
The aggregate net profits of the banking sector witnessed a 17.3% decline to $1.6 billion down from $2 billion in Q4-2021. The fall in aggregate banks quarterly net earnings was mainly due to the continuation of Invest Bank’s losses and the decline of Bank of Sharjah’s profits from $365.8 million in Q4-2021 to $34.5 million in Q4-2022.
In terms of FY-2022 net profits, aggregate net earnings for Abu Dhabi-listed companies increased by 63.5% to reach $30.5 billion compared with $18.6 billion in FY-2021. The capital goods sector’s over seven-fold jump in total profits which reached $8 billion in FY-2022 compared with $986.7 million, was the primary driver of growth in net earnings during the year, the report added.