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Kuwait Financial Centre “Markaz” R E S E A R C H

GCC Corporate Earnings – Q2 2012 Saudi, Kuwait and Bahrain decelerate

Report Highlights

2Q12 saw a decline of 1% YoY in net earnings of GCC corporations. The decline was led by Bahrain and Kuwait companies whose aggregate net

incomes dropped 29% and 27% YoY. Saudi Arabian firms too witnessed a

decline in profitability over the same period, albeit lower at 6%. Oman, UAE and Qatar firms‟ net income grew 56%, 12% and 8% respectively. Total GCC

earnings came in at USD 13.8bn, down 6% from 1Q2012.

Figure: 1 – Earnings Trend – GCC – 2Q12 (USD mn)

Source: Thomson Reuters Eikon, Markaz Research

YoY (2Q12 vs. 2Q11) decline of 1%

QoQ (2Q12 vs. 1Q12) decline of 6%

Kuwait, Bahrain and Saudi suffered considerable declines in net

earnings

Banks accounting for 40% of GCC earnings recorded a 1% increase

in profits YoY and a 3% decline over the quarter

Oman‟s 2Q12 earnings were the highest in the last seven quarters at

USD 469mn

Telecom recorded a growth of 8% YoY, staying close to the 1Q12 figure at USD 2.1bn

We forecast 8% YoY growth in GCC corporate earnings in 2012 at USD 56.5bn

September 2012

Research Highlights:

Provides a review of corporate

earnings across the GCC

Markaz Research is available on:

Bloomberg - Type “MRKZ”

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M.R. Raghu CFA, FRM

Head of Research +965 2224 8280

[email protected]

Deivanai Arunachalam

Analyst +965 2224 8000 ext. 4606

[email protected]

Kuwait Financial Centre S.A.K. “Markaz”

P.O. Box 23444, Safat 13095, Kuwait

Tel: +965 2224 8000 Fax: +965 2242 5828

markaz.com

mailto:[email protected]


MARKAZ RESEARCH September 2012

Kuwait Financial Centre “Markaz”

2

2Q12 Earnings

Saudi Arabia Earnings of Saudi Arabian companies totaled USD 6.5bn, a 6% decrease YoY.

SABIC, which reported USD 1.4bn in 2Q profits, saw its bottom-line decline 35% YoY due to softening of global petrochemical prices and higher raw

materials costs. Saudi Banks earnings increased 11% YoY while it fell 1% over

1Q12 to USD 2.0bn. Al Rajhi Bank reported a 14% YoY growth in net income to USD 558mn, on account of higher operating income. Telecom sector‟s

earnings grew 18% YoY to USD 891mn as Etihad Etisalat‟s earnings rose 22% to USD 379mn due to higher revenue from data services. Saudi Telecom

posted a 7% growth in earnings YoY at USD 642mn

Kuwait

Kuwait corporate earnings dropped 27% YoY to USD 811mn. Kuwait saw its earnings recover in the first quarter of 2012 after three consecutive quarters

of decline. However Kuwait corporations haven‟t been able to sustain the recovery in 2Q12. Bank earnings declined 25% over the year and 32% over

1Q12 to USD 380mn. National Bank of Kuwait‟s earnings dropped 41% to USD 142mn owing to a USD 96.4mn provision it took due to the deteriorating

operating environment. Telecom companies reported a bottom-line of USD

310mn (-20% YoY, -11% QoQ). Wataniya‟s profits fell almost 50% YoY as a result of competitive pressures in the country and negative exchange rate

movements in Algeria. Zain earnings dropped 1% over the year, settling at USD 254mn. Real Estate sector, whose profits grew 39% YoY dropped 62%

over the quarter to USD 34mn.

UAE

During 2Q12, UAE companies posted earnings of USD 3.0bn, a 12% growth YoY, and a 4% decline over the quarter. Banking sector, which accounts for

54% of UAE profits, declined 7% YoY, but grew 2% over the quarter to USD 1.6bn. Emirates NBD which had recovered from its lackluster performance

during 1Q12 registered a 13% YoY fall in net earnings this quarter. The

bank‟s 1H12 profits settled 40% lower than that of 1H11 due to gain on the sale of a stake in Network International last year. NBAD reported 2% YoY

growth in net income to USD 285mn primarily due to lower provisioning. Telecom earnings grew 22% YoY and 2% QoQ to USD 597mn. Etisalat

reported a net profit of USD 508mn, 17% growth on a YoY basis buoyed by

robust international operations. Real estate continued its recovery with profits of USD 355mn (1Q12: USD 342mn, 2Q11: USD 5mn). While Emaar witnessed

a 146% YoY growth in earnings to USD 167mn driven by increase in contribution of subsidiaries, Aldar‟s 228% increase in profits was led by better

occupancy. Table 1: Earnings Growth – Sectoral Trend (USD mn)

Sector 2Q11 1Q12 2Q12 YoY QoQ

Banks 5,455 5,705 5,518 1% -3%

Telecommunications 1,943 2,095 2,100 8% 0%

Commodities 3,648 3,139 2,570 -30% -18%

Financial Services 47 536 127 169% -76%

Real Estate 338 821 772 129% -6%

Construction Related 717 780 688 -4% -12%

Conglomerates 400 425 342 -14% -19%

Others 1,448 1,118 1,688 17% 51%

Total 13,996 14,619 13,806 -1% -6%


KSA earnings decline 6%

YoY in 2Q12 to USD 6.5bn

Kuwait earnings drop

27% YoY to USD 811mn, led by the banking sector


Kuwait Financial Centre “Markaz”

3

Qatar

Qatar‟s earnings continued to grow at a stable rate of 8% YoY and 5% over

the quarter to USD 2.6bn. Industries Qatar‟s earnings sustained recovery this quarter with a 3% growth over the year to USD 585mn. Bank earnings

continue to benefit from higher government spending with growth of 9% YoY and 3% sequentially to USD 1.14bn. Qatar National Bank‟s net income (USD

580mn) grew 17% YoY – the slowest bottom-line growth in the last 2 years.

Oman

Oman‟s corporate earnings grew 56% YoY and 7% over the previous quarter to USD 469mn. Banking sector profits grew to USD 173mn (+114% YoY,

+5% QoQ). Bank Muscat‟s net income of USD 91mn was 19% higher on a

YoY basis.

Bahrain Bahrain‟s corporate profits dropped 29% YoY in 2Q12 to USD 370mn. The

decline amounted to 11% on a sequential basis. Banking profits plunged 28% YoY and fell nearly 25% sequentially to USD 186mn. The drastic decline in

banking income was led by Bahrain Islamic Bank (a loss of USD 44mn) and a

25% and 13% decline in earnings of Arab Banking Corpn and United Gulf Bank respectively. Higher gas costs and lower London Metal Exchange levels

impacted Aluminium Bahrain‟s bottom-line (-49% YoY), while Bahrain Telecom‟s net profit was affected by lack of growth and stiff competition. The

company‟s 2Q profit was USD 49mn (-13% YoY).

Looking Ahead

Based on the current trend, we expect a muted earnings growth of 8% during the year 2012. We expect Saudi Arabia to clock a 9% growth to USD 27b

while UAE is expected to post a growth of 11% to USD 10.8 b. Kuwait earnings is expected to contract by 5% to USD 3.9b. Banks (38%),

Commodities (23%) and Telecom(14%) account for over 75% of earnings.

We expect Banks to post a growth of 8% to USD 21.5b, Commodities and Telecom are likely to contract by 1% each. Overall, stock markets should look

for triggers other than earnings to support it in 2012.

Figure: 2 – Earnings Trend – GCC – Long-Term (USD mn)


48,921

64,381

34,769 34,720

41,581

52,252 56,499

6%

32%

-46%

0%

20% 26%

8%

-60%

-40%

-20%

0%

20%

40%

60%

80%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2006 2007 2008 2009 2010 2011 2012 E

Qatar sustains stability; corporate earnings grew

8% YoY to USD 2.6bn

Bahrain’s corporate

profits drop 29% YoY to

USD 370mn led by banks again

GCC Corporate Earnings – 2Q12

2

GCC Market Cap Coverage at 98%

Country

Total market cap (USD Bn)

% Coverage

in terms of market cap

Total Number of Companies

Coverage based on no. of

companies

Saudi Arabia 352 100% 151 99%

Kuwait 97 95% 205 82%

U.A.E. 104 91% 110 95%

Qatar 123 100% 41 98%

Oman 17 98% 115 93%

Bahrain 17 95% 42 93%

GCC Total 710 98% 664 92%

• Market Capitalization-based coverage stood at 98% for all GCC countries.

• Qatar & Saudi Arabia topped with almost 100% coverage, followed by Oman at 98%.

• Earnings visibility (by number of companies) for the GCC region stood at 92% for 2Q12.

• KSA’s coverage stood at 99% and Qatar’s at 98%. Kuwait’s coverage was the lowest at 82%.


3

GCC Earnings dip in 2Q12

• Second quarter corporate earnings in the GCC dropped 1% YoY and 6% QoQ to USD 13.8bn.

• The fall in YoY earnings was led by Bahrain (-29%), Kuwait (-27%) and Saudi Arabia (-6%).

• In addition to these three countries, UAE too faced a decline in earnings on a QoQ basis

GCC Corporate Earnings (USD Mn)


GCC -1 -6

YoY

(%)

-29

QoQ

(%)

-56

8

12

-27

-6

-11

7

5

-4

-45

-2

13,892 13,996 13,507

9,810

14,619 13,806

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012

Bahrain

Oman

Qatar

UAE

Kuwait

Saudi Arabia

4

Commodities drive the decline

• In 2Q12, Banking sector earnings grew 1% YoY and declined 3% over the quarter, settling at USD 5.5bn. The real estate sector earnings declined 6% over 1Q12 reaching USD 772mn, a 129% increase YoY, largely due to a base effect.

• After a dismal performance in 2011, Telecom sector earnings grew 8% over the year, while it stayed flat on a QoQ basis at USD 2.1bn.

• The commodities sector that drove earnings in 1Q12 saw a dip of 30% on a YoY basis and an 18% decline over the last quarter

Sectoral Earnings Trend (USD Mn)


8

-18

YoY

(%)

17

QoQ

(%)

-14

-4

129

169

-30

51

-19

-12

-6

-76

0

1 -3

Top 10 companies grow 3% over 1Q12

5

Top 10 GCC companies by 2Q12 earnings (Mn USD)

Company Name Country Sector 2Q11 1Q12 2Q12 QoQ(%) YoY (%)

Saudi Basic Industries Corp Saudi Arabia Commodities 2,160 1,939 1,414 -27% -35%

Saudi Telecom Co Saudi Arabia Telecom 602 672 642 -5% 7%

Industries Qatar QSC Qatar Commodities 570 524 585 12% 3%

Qatar National Bank SAQ Qatar Banking 497 551 580 5% 17%

Al Rajhi Banking and Invt Corp Saudi Arabia Banking 492 536 558 4% 14%

Emirates Telecom Corp UAE Telecom 434 492 508 3% 17%

Etihad Etisalat Company Saudi Arabia Telecom 310 322 379 18% 22%

Saudi Electricity Co Saudi Arabia Others 356 -156 363 NM 2%

Samba Financial Group Saudi Arabia Banking 294 305 309 1% 5%

National Bank of Abu Dhabi PJSC UAE Banking 279 283 285 1% 2%

Total 5,994 5,469 5,622 3% -6%

GCC earnings 13,996 14,619 13,806 -6% -1%

6 of the top 10 GCC companies are Saudi-based, 2 hail from UAE and 2 from Qatar.

The composition of the top 10 is inclined towards banking, telecom and commodities firms

Saudi Arabia – 2Q12

7

Saudi banks hold ground; commodities slide

Quarterly Earnings Trend (USD Mn) Earnings Growth – YoY (%)

Saudi Arabia’s earnings fell 6% YoY and 2% over the quarter to USD 6.5bn as a result of decline in earnings of commodities firms.

Banking and telecom sectors performed well on a YoY basis registering increases in net income of 11% and 18% respectively.


5,813

6,956 6,870

5,226

6,676 6,542

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012

23%

27%

22%

2%

15%

-6%

-10% 0% 10% 20% 30%

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

8

Alinma and Saudi Hollandi earnings surge

Saudi banks’ performance was led by Alinma and Saudi Hollandi Bank whose net incomes surged 90% and 24% YoY in 1H12. Al Rajhi and Riyad Bank witnessed YoY growth of 14% and 9% in 2Q12 earnings

Earnings of players in the commodity sector were depleted in 2Q12: Sahara Petrochemicals, Advanced Petrochemicals and SABIC posted declines in profits of 74%, 65% and 35% respectively.

Quarterly Sectoral Earnings Trend (USD Mn)


1,339 1,399 1,668 1,821 1,731 1,610 2,043 2,019

1,025 798 501 753 576 920

853 891

1,776 2,108 2,650

2,845 2,898

1,972

2,531 1,858

5,646

5,111

5,813

6,956 6,870

5,226

6,676 6,542

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012

Others

Conglomerates

Construction Related

Real Estate

Financial Services

Commodities

Telecommunications

Banks

9

Top companies – Sector – Growth Rate – 2Q12


Top Companies – Saudi Arabia – Commodities

Company Name Market Cap (USD mn) 2Q11 2Q12 Growth

Saudi Basic Industries Corp 73,196 2,160 1,414 -35%

Saudi Arabian Fertilizers Co 11,399 211 209 -1%

Saudi Kayan Petrochemical Co 5,960 -4 -88 NM

Yanbu National Petrochemical Co 6,570 257 173 -33%

Saudi Arabian Mining Co 7,498 17 34 105%

Saudi Industrial Investment Group 2,448 39 27 -31%

Saudi International Petrochemical Co 1,765 44 36 -18%

Sahara Petrochemical Co 1,574 56 14 -74%

Advanced Petrochemical Co 1,047 42 14 -65%

Total 111,457 2,821 1,835 -35%

Top Companies – Saudi Arabia – Conglomerates


Kingdom Holding Co 11,809 44 48 9%

National Industrialization Co 5,512 158 155 -2%

Total 17,320 202 202 0%

Top Companies – Saudi Arabia – Telecom


Saudi Telecom Co 21,012 602 642 7%

Etihad Etisalat Company 11,666 310 379 22%

Saudi Mobile Telecommunications Co 2,912 -120 -105 NM

Total 35,590 793 916 16%

Top Companies – Saudi Arabia – Banking


Al Rajhi Bank 29,398 492 558 14%

Samba Financial Group 10,751 294 309 5%

Riyad Bank 9,300 223 244 9%

Banque Saudi Fransi 8,027 206 202 -2%

Saudi British Bank 8,640 227 244 7%

Arab National Bank 5,893 186 191 3%

Alinma Bank 4,880 29 48 68%

Saudi Investment Bank 2,303 56 59 7%

Saudi Hollandi Bank 2,805 70 89 26%

Total 81,996 1,782 1,944 9%

Top Companies – Saudi Arabia – Others


Saudi Electricity Co 14,332 356 363 2%

Almarai Trading Co Ltd 6,880 93 101 9%

Kuwait – 2Q12

11

Kuwait banks and telecom companies disappoint


Kuwait’s financial services sector ended in a loss of USD 39mn in 2Q12 while conglomerates closed with a loss of USD 67mn.

Among the profitable sectors too, most experienced a lull. Banking and telecom sector earnings dropped 25% and 20% respectively over the year.

The real estate sector posted a growth of 39% YoY.


2,009

1,112 978

-118

1,473

811

-500

-

500

1,000

1,500

2,000

2,500

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012

80%

-65%

-9%

0%

-27%

-27%

-100% -50% 0% 50% 100%

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

12

NBK, Gulf Bank and KIB deliver lackluster numbers

In 2Q12, Kuwait Banks saw their bottom-line come in at USD 380mn (-25% YoY, -32% QoQ). All major banks witnessed a net income decrease on YoY basis, for the second consecutive quarter.

National Bank of Kuwait took a severe beating, its net income declining 41% YoY; Gulf Bank and Kuwait International Bank’s incomes plunged 38% and 22% respectively.

Global Investment House and KAMCO experienced 2Q12 losses of USD 34mn and USD 12mn respectively. Wataniya’s profits fell 50% to USD 68mn, while Zain’s dropped 1% to USD 254mn.



595 524 565 505 571 405 555 380

345 383

1,277

388 301 367

351 310

1,080

-628

2,009

1,112

978

-118

1,473

811

-2,000

-1,000

-

1,000

2,000

3,000

Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012

Others Conglomerates

Construction Related Real Estate

Financial Services Commodities

Telecommunications Banks

13


Note: Companies that have not declared their 2Q12 results on the date of this report are marked as NA in the 2Q12 and 2Q11 columns.


Top Companies – Kuwait – Banking


National Bank of Kuwait 16,090 240 142 -41%

Kuwait Finance House 7,588 83 79 -5%

Gulf Bank 4,100 31 19 -38%

Commercial Bank of Kuwait 3,551 0 0 -7%

Boubyan Bank 3,880 8 10 17%

Al Ahli Bank of Kuwait 3,250 44 35 -21%

Burqan Bank 2,378 49 49 -1%

Ahli United Bank 3,812 39 38 -2%

Kuwait International Bank 947 9 7 -22%

Total 45,595 505 380 -25%

Top Companies – Kuwait – Financial Services


Kuwait Projects Co Holding 1,555 31 31 -1%

National Investments Co 326 18 -3 NM

ALAFCO Aviation Lease & Finance Co 781 13 12 -7%

Commercial Facilities Co 538 9 18 93%

International Finance Co 239 -9 0 NM

KIPCO Asset Management Co 219 1 -12 NM

Kuwait Financial Centre 217 5 -6 NM

Global Investment House 228 -61 -34 NM

Total 4,102 7 6 -19%

Top Companies – Kuwait – Telecom


Mobile Telecommunications Co 11,425 256 254 -1%

National Mobile Telecom 3,969 136 68 -50%

Total 15,394 393 322 -18%

Top Companies – Kuwait – Others


Kuwait Food Company Americana 1,842 49 32 -35%

Mabanee Co 2,363 21 29 37%

Agility Public Warehousing Co 1,443 29 28 -2%

National Industries Group Holding 955 25 4 -85%

Gulf Cable and Electrical Industries 857 76 4 -95%

Total 7,458 199 97 -51%

United Arab Emirates – 2Q12

15

UAE earnings fairly stable


UAE 2Q12 corporate profits grew 12% YoY; registered a 4% decline over the quarter settling at USD 3bn.

Banking continued to dominate corporate profits with more than half the country’s earnings coming from that sector. Earnings deteriorated 7% YoY, while a 2% increase over the quarter was recorded.


2,836 2,693

2,050

1,416

3,130 3,009

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012

1%

37%

-4%

NM

10%

12%

-20% 0% 20% 40%

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

16

Real Estate sustains its recovery

Abu Dhabi Commercial Bank’s 2Q12 net income dropped 45%, ENBD’s by 13% and Commercial Bank of Dubai’s by 7% over the year.

The Telecom sector posted a strong 22% YoY growth at USD 597mn; a 2% increase over the quarter. Emirates Integrated Telecom (Du) posted a 57% YoY rise in net profit taking the figure to USD 89mn, while ETISALAT’s earnings rose 17% during the same period.

The Real Estate sector sustained its recovery with 2Q12 profits of USD 355mn; a QoQ increase of 4%.



1,304 903

1,640 1,740 1,354

960 1,588 1,618

518 800

551 490 536

312

583 597

2,126 -2,287

2,836 2,693

2,050 1,416

3,130 3,009

-5,000

-4,000

-3,000

-2,000

-1,000

-

1,000

2,000

3,000

4,000

Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012





17



Top Companies – United Arab Emirates – Banking


National Bank of Abu Dhabi 8,714 279 285 2%

First Gulf Bank 6,723 242 277 14%

Emirates NBD Bank 4,101 203 176 -13%

Mashreqbank 2,993 78 87 12%

Abu Dhabi Commercial Bank 5,043 363 200 -45%

Dubai Islamic Bank 1,933 90 84 -6%

Union National Bank 1,889 113 124 10%

Commercial Bank of Dubai 1,554 71 66 -7%

National Bank of Fujairah 1,587 20 19 -5%

United Arab Bank 841 20 32 64%

Total 35,380 1,480 1,351 -9%

Top Companies – United Arab Emirates – Real Estate


Emaar Properties 4,727 68 167 146%

Aldar Properties 1,235 35 114 228%

Sorouh Real Estate Co 729 30 40 34%

Deyaar Development 467 5 5 3%

Union Properties 371 -142 23 NM

Total 7,529 -4 349 NM

Top Companies – United Arab Emirates – Telecom


Emirates Telecom. Corp 19,741 434 508 17%

Emirates Integrated Telecom. 3,809 56 89 57%

Total 23,550 490 597 22%

Top Companies – United Arab Emirates – Construction Related


Arkan Building Materials Co 372 3 5 60%

Arabtec Holding 1,210 8 -3 NM

National Marine Dredging 589 29 26 -12%

Drake and Scull International 493 14 7 -49%

Total 2,664 54 35 -36%

Top Companies – United Arab Emirates – Others


Dubai Financial Market 2,065 4 3 -31%

Abu Dhabi National Energy 2,048 118 122 3%

Dana Gas Co 665 34 49 46%

Total 4,778 156 174 11%

Qatar – 2Q12

19

Qatar growth firms up

Quarterly Earnings Trend (USD Mn) Earnings Growth –YoY (%)

Qatar 2Q12 earnings grew 8% YoY and 5% over the quarter stabilizing at USD 2.6bn.

Earnings of the commodities sector (Industries Qatar) grew 3% YoY and 12% over the quarter reaching USD 585mn.

The real estate sector witnessed a 35% growth in net income YoY and a 14% growth over the quarter. Financial services and construction related sectors posted YoY net income growth of 18% each, while income decline on a QoQ basis.


2,445 2,413

2,738

2,790

2,485

2,605

2,200

2,300

2,400

2,500

2,600

2,700

2,800

2,900

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012

14%

23%

35%

50%

2%

8%

0% 20% 40% 60%

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

20

Banking continues its stable growth while telecom suffers

Qatar banks registered a 9% increase in 2Q12 net income over the year even as they maintained 3% increase over the quarter. While Qatar National Bank and Commercial Bank of Qatar held up the sector’s results, Qatar Islamic Bank was a dampener recording a 9% YoY decline in second quarter earnings.

The telecom sector failed to impress with net income falling 6% in 2Q12 as compared to 2Q11, while the QoQ fall was 11%. Qatar Telecom’s quarterly earnings plunged 11% YoY to USD 176mn whereas Vodafone Qatar incurred a loss of USD 32mn.



917 848 978 1,049 1,069 1,023 1,105 1,142

391 390

575 570 570 463

524 585 132 212

211 146 479 691 172

196 2,030 1,859

2,445 2,413

2,738 2,790

2,485 2,605

-

500

1,000

1,500

2,000

2,500

3,000

Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012





21

Top companies – Sector – Growth Rate –2Q12


Top Companies – Qatar – Banking


Qatar National Bank 25,560 497 580 17%

Commercial Bank of Qatar 4,750 140 150 7%

Qatar Islamic Bank 4,952 105 96 -9%

Masraf Al Rayan 5,562 100 102 2%

Doha Bank 3,122 93 96 3%

Qatar International Islamic Bank 2,025 45 45 1%

Al Khalij Commercial Bank 1,661 36 38 8%

Ahli Bank 1,817 33 34 1%

Total 49,449 1,049 1,142 9%

Top Companies – Qatar – Commodities


Industries Qatar 19,215 570 585 3%

Total 19,215 570 585 3%

Top Companies – Qatar – Real Estate Operations


Ezdan Real Estate Company 14,512 18 54 196%

Barwa Real Estate Company 2,859 56 83 48%

United Development Company 1,639 56 44 -22%

Total 19,010 131 181 39%

Top Companies – Qatar – Telecom


Qatar Telecom(Q Tel) 9,281 198 176 -11%

Vodafone Qatar 2,104 -45 -32 NM

Total 11,385 153 144 -6%

Top Companies – Qatar – Others


Qatar Electricity & Water Co 3,653 121 96 -21%

Aamal Co 2,381 14 14 0%

Qatar Gas Transport Co Ltd 2,371 53 56 6%

Qatar Fuel 3,312 91 88 -3%

Qatar Navigation 1,850 43 43 1%

Total 13,566 322 297 -8%

Oman – 2Q12

23

Oman delivers steady earnings


Oman’s corporate earnings grew an impressive 56% over the year, and 7% QoQ to USD 469mn, the highest in the last 8 quarters.

Banks and telecom held their positions recording increases in earnings of 5% each on a QoQ basis.


370

300

396

334

439

469

-

50

100

150

200

250

300

350

400

450

500

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012

-22%

-45%

-1%

10%

19%

56%

-100% -50% 0% 50% 100%

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

24

Banking contributes to majority of incremental growth Quarterly Sectoral Earnings Trend (USD Mn)

Most banks showed positive earnings growth in 2Q12. Bank Muscat’s net profit was up 19% YoY in 2Q at USD 91mn while Bank Dhofar’s first quarter earnings came in at USD 27mn.

Financial services delivered a decent set of numbers with bottom-line staying close to 1Q12 figure at USD 46mn, increasing more than 6 times over the 2Q11 number.

Telecom earnings rose 7% YoY (QoQ: 5%) to USD 109mn; Oman Telecom reported a 11% YoY increase in net income to USD 83mn.


119 126 138

81

154 140 165 173

92

19

99

101

106 107

103 109 53

39

17

7

27 13

47 46

41

27

35

32

24

33

45 39

401

305

370

300

396

334

439 469

-

50

100

150

200

250

300

350

400

450

500

Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012

Others Conglomerates Construction Related Real Estate

Financial Services Commodities Telecommunications Banks

25



Top Companies – Oman – Construction Related


Raysut Cement Co 698 10 18 75%

Oman Cement Co 553 8 10 22%

Galfar Engineering & Contracting 235 3 4 14%

Oman Cables Industry 191 5 8 58%

Total 1,676 27 40 48%

Top Companies – Oman – Telecom


Oman Telecommunications Company 2,601 75 83 11%

Omani Qatari Telecommunications 861 26 25 -3%

Total 3,462 101 109 7%

Top Companies – Oman – Real Estate Operations


Sahara Hospitality Company 37 1 1 21%

Total 37 1 1 21%

Top Companies – Oman – Banking


Bank Muscat 2,763 76 91 19%

Bank Dhofar 1,195 -39 27 NM

National Bank of Oman 838 24 27 10%

Ahli Bank 510 9 15 64%

Bank Sohar 384 10 13 30%

Total 5,689 81 173 114%

Bahrain – 2Q12

27

Bahrain corporate earnings falter


Bahrain’s corporate profits plunged in 2Q12, a 29% YoY fall spurred largely by the commodities and banking sectors. The QoQ decline in Bahrain net income was 11%.

Bahrain Islamic Bank ended in a loss of USD 44mn, while Arab Banking Corp and United Gulf Bank saw their earnings deplete on a YoY basis by 25% and 13% respectively.


419

521

475

162

416

370

-

100

200

300

400

500

600

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012

0%

7%

332%

N.M.

0%

-29%

-100% 0% 100% 200% 300% 400%

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

28

Dismal performance from Aluminium Bahrain

Lower London Metal Exchange levels and higher gas costs impacted Aluminium Bahrain’s bottom-line. The company’s net income (USD 94mn) was 49% lower than 2Q11.

Bahrain Telecom’s net profit of USD 49mn declined 13% over the year, impacted by lack of growth and stiff competition.



179

-108

232 260 197

35

248 186

51

55

46 56

47

62

43

49

-51

111

88

185

214

76

57 94 110

-58

419

521 475

162

416 370

-300

-200

-100

-

100

200

300

400

500

600

Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012





29


Source: Reuters Eikon, Markaz Research

Top Companies – Bahrain – Banking


Ahli United Bank 3,035 84 88 4%

Arab Banking Corporation 1,431 68 51 -25%

National Bank of Bahrain 1,248 28 29 5%

Al Baraka Banking Group 959 34 38 13%

BBK 903 30 30 -1%

United Gulf Bank 518 8 7 -13%

Ithmaar Bank 322 1 1 61%

Al Salam Bank Bahrain 163 4 -7 NM

Bahrain Islamic Bank 237 4 -44 NM

Khaleeji Commercial Bank 104 1 - -100%

TAIB Bank 307 -3 -8 NM

Total 9,227 260 186 -28%

Top Companies – Bahrain – Telecom


Bahrain Telecommunications Co. 1,757 56 49 -13%

Total 1,757 56 49 -13%

Top Companies – Bahrain – Financial Services


Gulf Finance House 285 -11 5 NM

Securities and Investment Co 350 3 -1 NM

Esterad Investment Co 60 -8 0 NM

Bahrain Middle East Bank 42 1 0 -87%

Total 1,375 -15 4 NM

Top Companies – Bahrain – Others


Aluminium Bahrain 2,034 185 94 -49%

30

Annual Results Saudi Earnings (USD Mn)

Kuwait Earnings (USD Mn)

GCC Earnings (USD Mn)


21,445 23,044

12,472

15,643

20,844

24,837 27,187

-

5,000

10,000

15,000

20,000

25,000

30,000

2006 2007 2008 2009 2010 2011 2012E

8,983

15,802

-1,003 -76

4,906 4,147 3,940

-2,000

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2006 2007 2008 2009 2010 2011 2012E

48,921

64,381

34,769 34,720

41,581

52,252 56,499

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2006 2007 2008 2009 2010 2011 2012E

31

Annual Results

Oman Earnings (USD Mn) Bahrain Earnings (USD Mn)

UAE Earnings (USD Mn) Qatar Earnings (USD Mn)


10,815

15,039

12,758

9,064

4,961

9,756 10,828

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2006 2007 2008 2009 2010 2011 2012E

4,733

6,482 7,507

9,482

8,121

10,367 11,233

-

2,000

4,000

6,000

8,000

10,000

12,000

2006 2007 2008 2009 2010 2011 2012 E

1,036

1,569

1,255

1,463

1,690

1,405

1,650

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2006 2007 2008 2009 2010 2011 2012E

1,909

2,445

1,781

-856

1,058

1,741 1,660

-1,500

-1,000

-500

-

500

1,000

1,500

2,000

2,500

3,000

2006 2007 2008 2009 2010 2011 2012E


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