Earnings of GCC-listed companies jumped to a record high of $196.5 billion in 2021 as compared to $93.1 billion during 2020, according to Kamco Invest, a premier investment company based in Kuwait. 

 

The $103.5 billion growth came mainly on the back of jump in profits for Saudi Aramco (by $56.1 billion or 113.8% y-o-y) followed by Banking, Materials and Utilities companies. 

 

The four sectors accounted for 85% 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 FY-2021.

 

Sectoral gains

Most of the sectors showed solid increase in net profits during the year. especially, the Utilities and Transportation Sector witnessed remarkable jump in net profits 2021 after suffering subpar performance during the pandemic. 

 

Out of the 21 sectors, 4 sectors witnessed y-o-y 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 FY-2021 with a fall of 3.7%.

 

In terms of sectors, profitability for the GCC banking sector reached one of the highest yearly levels during 2021, increasing by 52.9% to reach $35.4 billion. 

 

Banking sector profits reached the highest mark since 2018. The y-o-y increase in 2021 was broad-based across the GCC with profits for Kuwaiti banks almost doubled to $2.9 billion. Saudi and UAE-listed banks also reported healthy profit growth of 59.5% and 67.2% during the year. Higher profits also pushed the aggregate return on equity for the sector to a 7-quarter high level of 10.4% at the end of 2021 as compared to 9.6% in Q3-2021 and 8.1% at the end of 2020. The banking sector represented 18% of the total aggregate profits during 2021.

 

Bahrain-listed companies

Total net profits for Bahrain-listed companies increased by 225.9% in FY-2021 to $2.8 billion as compared to $870.2 million in FY-2020. All the largest five sectors by market cap registered a growth in earnings during the 2021 financial year. 

 

The Banking sector led the way in terms of aggregate FY-2021 net profits. FY-2021 net profits in the Banking Sector jumped 102.9% to reach $1.23 billion up from $609 million in FY-2020. Ahli United Bank posted the largest FY-2021 net profits among the banks with $607 million up from $452.2 million in FY-2020.

 

AUB reported its growth was mainly supported by effective balance sheet management and overall economic improvement in Bahrain and the GCC region. Arab Banking Corp was another major contributor to the overall increase in aggregate FY-2021 net profits. ABC reported $100 million in FY-2021 net profit returning from a net loss of $89 million during FY-2020. The bank attributed its turnaround to an increase in operating income as well moving on from the impact of ECL charges and regional fraud cases which contributed to its FY-2020 net loss.

 

The Materials Sector, which has Aluminium Bahrain as a sole constituent reported the second largest FY-2021 net profits in the Bahrain Bourse. Alba, the world’s biggest aluminium smelter outside China, posted a record FY-2021 net profit of $1.2 billion on the back of increasing aluminium prices and higher production.

 

In terms of quarterly performance, Q4-2021 total net profits for Bahraini listed companies soared by 584% to $906.4 million up from $132.5 million in Q4-2020 reflecting the steep full-year performance. Only one out of the 13 sectors in the bourse registered a loss in the Q4-2021. Aluminium Bahrain, the Materials Sector, contributed the largest Q4-2021 net profits posting $480.5 million up from $84.9 million in Q4-2020. The Banking and Telecom Sectors followed reporting aggregate Q4-2021 profits of $316.8 million and $36.8 million respectively.

 

Overall GCC quarterly performance

In terms of quarterly performance, net profits during Q4-2021 increased by 102.5% y-o-y to $50.6 billion as compared to $25 billion during Q4-2020. In terms of sequential performance, profits were down by 9% as compared to Q3-2021.

 

Earnings performance when compared to last year was broadly positive with an increase of 102.5% in Q4-2021 with steep growth is some of the key large-cap sectors on the GCC exchanges. 

 

Saudi Arabian companies reported the biggest absolute increase in earnings that rose by $19.9 billion or 102.9 % y-o-y to reach $39.1 billion during Q4-2021. Excluding the quarterly net profit of Saudi Aramco that increased by 125.5% y-o-y, aggregate profits for Saudi Arabia declined at a much smaller pace of 46.3% y-o-y.

 

Absolute net profits

Kuwaiti listed companies reported the second largest yearly absolute net profit increases after Saudi Arabian companies registering $7.8 billion increase in FY-21 net profits followed by Abu Dhabi which reported $7.6 billion growth in absolute net profits during the same period.

 

The Energy sector reported the biggest absolute profits in the GCC that reached $31.6 billion, more than double y-o-y and 125.4% q-o-q. Profits for Saudi Aramco was up 125.5% y-o-y during Q4-2021 at $31.1 billion, whereas the rest of the companies in the sector reported profits of $539.2 million in Q4 -2021 as compared to a loss of $246.9 million in Q4-2020. 

 

Profits for Aramco were supported by higher crude oil prices led by recovery in oil demand globally coupled uncertainty caused by the Russia-Ukraine conflict. In terms of segments, results also got a boost from improved refining and chemicals margins during the quarter. Sectors peers like Dana Gas and Al Rabigh Refining disclosed soaring profits which reached $38 million and $119.7 million respectively  during the quarter.

 

The banking sector

The Banking sector also reported higher profits during Q4-2021 that reached $8.7 billion, an increase of 76.6% y-o-y but witnessed a decline of 10.1% q-o-q. The y-o-y growth in profits was seen across the region after a steep decline in profits reported last year. Dubai-listed banks reported aggregate profits during Q4-21 after recording a total loss of $135.4 million during Q4-2. 

 

Kuwait and Saudi listed banks reported y-o-y profits increases of 181.9% and 39.8 during Q4-21. Saudi-listed banks accounted for 38% of the sector profits during the quarter. Profits for the Materials sector stood at $3.9 billion.-- TradeArabia News Service