Gulf firms to see double-digit profit growth in third quarter

Banks, led by National Bank of Kuwait (NBK), are expected to report more income from lending in the third quarter as companies and individuals borrowed more, according to the survey of analysts from 15 brokerages and investment banks. Last year’s third-quarter profits for the sector were hit by a drop in stock market-related income.

“Core earnings are now leading growth for banks rather than fee-based activities, such as from brokerage,” said Kuwait-based Global Investment House head of brokerage Faisal Hasan. “The macro-economic environment is good and the pie is increasing for all.”

Third-quarter profit this year at NBK (NBK), the third-largest Gulf Arab bank by market value, may have risen 15.4 per cent to 70.37 million dinars ($251.5 million), its second-biggest quarterly profit ever, according to Global.

Profit at Bank Muscat and Dubai Islamic Bank may have jumped as much as 42.2 per cent and 41.6 per cent respectively, the survey shows.

Gulf Arab economies are surging for a fifth year as oil prices, on which they depend for about a third of their gross domestic product, climb to a record, hitting almost $84 per barrel in the United States last month.

Still, some companies such as Kuwait-based Mobile Telemcommunications Co. (Zain) may see profit growth slow or even decline as they invest in expansion.

Zain, the third-largest Arab telecom company by market value, will probably post its second straight decline in quarterly profit as it spends on growing its foreign operations, including in Iraq and Saudi Arabia.

By contrast, profit growth at Qatar Telecommunications Co may resume after earnings declined in the second quarter because of financing costs associated with its $3.7 billion takeover in March of Kuwait’s National Mobile Telecommunications Co.

Net income at Abu Dhabi-based Emirates Telecommunications Corp is expected to have surged to a third consecutive record, the survey shows.

In the United Arab Emirates, profit growth at Emaar probably slowed for a second quarter as the U.S. housing crisis hurt its operations there and investment in foreign ventures grew.

By contrast, net income at Abu Dhabi-based Aldar Properties probably about doubled to 584 million dirhams ($159.1 million) as real estate sales accelerated, the survey shows.

Aldar agreed with Warner Bros Entertainment last week to set up a film and videogame production company, and develop a theme park, hotel and cinemas in Abu Dhabi, the UAE capital.

“Aldar is continuing yesterday’s gain that was set in motion by the Warner Bros joint venture news,” said Alaa El Din Moustafa, chief dealer at EFG-Hermes investment bank in Dubai.

Shares of Aldar have surged 12 percent since the Sept. 26 announcement.

In Saudi Arabia, Saudi Basic Industries Corp, the world’s largest chemical company by market value, will probably post its fifth consecutive record quarterly profit on higher chemical prices and increased output.

By contrast, earnings at Industries Qatar, another Gulf producer of chemical and steel, may see third-quarter earnings fall, according to Dlala Brokerage & Investment.

Shares of state-controlled Industries Qatar surged 28 percent in September.