Dubai, Abu Dhabi corporates post big Q2 surge in net profits
Net profits for listed companies in Dubai and Abu Dhabi soared 29.7 per cent and 49 per cent respectively year-on-year in the second quarter of 2021, driven by banking, real estate and the telecom sectors.
While Dubai-listed companies posted net earnings of $1.9 billion in the second quarter 2021 as against $1.5 billion in the same 2020 period, companies in Abu Dhabi saw profit rising to $3.8 billion from $2.6 billion during Q2-2020, Kamco Invest said in its GCC Corporate Earnings Report.
Corporates across the GCC recorded over 200 per cent y-o-y growth in net profit in Q2-2021 led by energy, bank and material sectors. “The resumption of economic activity in the GCC to almost full scale was reflected in corporate profits booked during Q2-2021. Aggregate profits during the quarter breached pre-Covid-19 levels to reach $45.0 billion during Q2-2021 vs $14.2 billion during Q2-2020. The sequential growth in net profit was also healthy at 17.6 per cent as a majority of the sectors posted growth as compared to last year.
Saudi Arabian companies reported the biggest absolute increase in earnings that rose by $26.5 billion or 356.6 per cent y-o-y to reach $ 33.9 billion during Q2-2021.
In Dubai, the increase in earnings was primarily due to the easing of economic restrictions that were in place during the first half of 2020. Earnings growth during the quarter were mainly driven by banks and real estate companies. The two sectors accounted for the biggest share of corporate profits in Q2-2021 with y-o-y increases of 34.5 per cent and 65.7 per cent, respectively, said the report.
Out of Dubai Stock Exchange’s 10 sectors, only four have witnessed a y-o-y increase in profits during Q2-2021 while the remaining six sectors including the Insurance and transportation sectors recorded a decline.
Total net profits for the banking sector rose $287.7 million in Q2-2021 to reach $1.1 billion, up from $834.4 million in Q2- 2020. The sector’s rise in total earnings was primarily driven by Emirates Islamic Bank’s return to profits during 2021. The bank’s Q2-2021 profits stood at $97.2 million compared with a loss of $39 million during the corresponding period of 2020, driven by stronger top line growth and declining impairment charges.
Combined profits for Dubai real estate sector rose by 65.7 per cent y-o-y in Q2-2021 to reach $509.6 million, up from $307.5 million in Q2-2020. Union Properties and Emaar Malls Group that posted losses during Q2-2020 have both returned to profits in Q2- 2021 posting $7.3 million and $82.6 million in net profits, respectively, contributing to the total rise in profits of the sector.
Union properties returned to profits on the back of higher revenues as the UAE Real Estate sector recovers from the pandemic. On the other hand, Emaar Malls Group return to profits was underpinned by its acquisition of the e-commerce fashion and lifestyle platform, Namshi, which recorded a 65 per cent increase in sales in Q2-2021 compared with Q1-21.
In Abu Dhabi, the banking sector, in line with the rest of the GCC markets, witnessed an increase in net profits with aggregate sector profit of $ 1.3 billion as compared to $1.1 billion during Q2-2020, a y-o-y rise of $153 million or 13.4 per cent. The telecom sector posted the second-largest net profits in the sector during Q2-2021, although the y-o-y increase in profit was marginal at 0.5 per cent to reach $658.2 million compared with $655.1 million during Q2-2020.
Abu Dhabi’s utilities, real estate, and capital goods sectors were some of the other sectors that reported a rise in net profits during the quarter. On the other hand, energy, transportation, and insurance sectors reported a decline in profits during the quarter.
In the banking sector, First Abu Dhabi Bank, the UAE’s biggest lender, lead the way posting the largest absolute increase in Q2-2021 net profits among the banks with a y-o-y increase of 20.4 per cent to reach $766.7 million compared with a net profit of $ 636.9 million during Q2-2020. FAB attributed the increase in profits to sharp gains in its investments and derivatives coupled with higher fee income, said the report.
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