Listed Kuwait corporate profits disappoint in Jan-Sept

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The financial results for the first nine months of 2015 of corporates listed on the Kuwait Stock Exchange (KSE) were disappointing, a report issued today by National Bank of Kuwait (NBK) says.

Strong performance by the banking sector was offset by weakness in the telecom and non-bank financial services sectors. The unimpressive results failed to provide any stimulus to the market.

Earnings of 166 Kuwaiti listed companies totalled KD 1.23 billion, down 2 per cent compared to the same period of 2014. The number of loss-making companies increased to 38 from 28.

Banks were the main driver of growth with the sector’s profits up 13 per cent year-on-yeaar. Banks benefitted from an improving operating environment and healthy growth in credit. With such results, bank profits continued to dominate the listed corporate sector with a 46 per cent share of total earnings. Their share increased by four percentage points in the first nine months of 2015.

The insurance sector was the second largest contributor to growth followed by the industrial and real estate sectors. The strong results of the insurance sector were broad based, with almost all insurance companies seeing healthy growth in profits. However, in the case of the real estate sector, the aggregate figure masked more widespread weakness in the sector. The growth in the sector’s earnings was driven almost entirely by a large gain at one company. By contrast, the weak results by other companies are largely in line with the slowdown seen in the real estate market in January-September 2015.

Telecommunication companies pulled corporate profits down as earnings shrank by nearly a quarter. The two largest telecom companies saw notable declines in profits. The sector has seen intensifying competition eat into profit margins including competition from non-traditional providers. Some operators have also seen foreign exchange losses related to exposures to North Africa and other markets.