GCC corporate earnings fall by 5% in 2009

Fourth quarter earnings plummeted due to a correction in real estate prices in Qatar, UAE, and Kuwait. Furthermore, the debt crisis in Dubai led to greater provisioning by banks against credit losses and impairment in the value of investments and adversely impacted Banking earnings during 4Q09.

On a YoY basis, the Financial Services and Real estate sectors' earnings took the largest hit, down 67% and 64%, respectively in 2009. GCC banks earnings declined 1% YoY in 2009 primarily due to last quarter dip in earnings. Meanwhile, Conglomerates posted a profit of $971m in 2009 compared to a loss of $8bn in 2008. The Telecom sector registered a 7% YoY decline in earnings in 2009.

Saudi Arabia performed in line with our expectations and registered a YoY growth of 26% in its earnings. UAE's corporate earnings declined 32% due to Dubai's debt woes.

The banking sector, which contributed 45% of overall corporate earnings, witnessed a YoY decline of 19% in 2009. Furthermore, the Real Estate sector's earnings declined 86% on a YoY basis in 2009. On a like-to-like basis (29 companies), Kuwait registered an earnings growth of 29% in 2009. Kuwaiti banks and financial services sector emerged out of the crisis and registered aggregate profits in 2009.

A quantum jump in Ezdan Real Estate Company's Q4 2009 profits ($2.3bn) aided Qatar to record an earnings growth of 14% YoY in 2009. On a YoY growth basis, Bahrain was the worst performer for the year 2009 in the GCC region, this is particularly due to steep losses ($728m in 2009) reported by Gulf Finance House. Oman's Real Estate sector reported an earnings growth of 22% YoY in 2009. Nevertheless, 19% and 28% YoY fall in the Banking and Conglomerates sector's, respectively led to a 14% YoY decline in Oman's earnings.