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Gulf’s profits rise thanks to petrochemicals and banks

By Matt Smith
An employee inspects construction work at the Fadhili gas plant project; Aramco reported a second-quarter net profit of $28.3 billion – almost half the regional profit total – but Sico excludes the company from its calculations Aramco
An employee inspects construction work at the Fadhili gas plant project. Aramco reported a second-quarter net profit of $28.3 billion but Sico excludes the company from its calculations
  • Q2 company earnings $61bn
  • Turnaround in petrochemicals
  • Finance stands out in Saudi Arabia

A turnaround in Saudi Arabia’s long-troubled petrochemicals industry has helped Gulf companies’ second-quarter earnings rise year on year. The region’s banking, telecom and real estate sectors also prospered.

GCC listed companies’ earnings totalled $60.7 billion in the three months to June 30, up from $57.4 billion a year earlier, a report by Kuwait’s Kamco Invest reveals.

Saudi Arabia’s petrochemicals producers, classified on the kingdom’s bourse as “basic materials”, made a combined profit of only $242 million in the second quarter of 2023. Due to weak demand, oversupply and high costs, they subsequently made losses in both the third and fourth quarter last year.

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However, in the three months to June 30, 2024, the industry reported an aggregate profit of $849 million, a study by Bahrain’s Sico Bank found. It attributed the turnaround to higher commodity prices and improved demand.

In Saudi Arabia, the financial sector also stood out, with quarterly profit rising 13 percent year on year to nearly $6 billion thanks to higher interest rates and sizeable loan growth.

Sico excludes Saudi Arabia’s Aramco from its earnings calculations. The world’s largest listed oil company reported a second-quarter net profit of $28.3 billion, almost half the regional profit total, but down 2.5 percent on the same period last year, as its crude sales fell and refining and chemical margins shrunk.

Kamco estimate that the Gulf listed energy sector’s second-quarter profit fell 1 percent to $30.7 billion.

UAE second-quarter earnings were mixed, although aggregate profits nonetheless expanded 15 percent to $11.3 billion, Sico estimated. The financial industry’s combined profit rose 13 percent to $7.3 billion, while the communications, consumer and energy sectors each increased their profits by more than 20 percent.

Two thirds of Qatari quarterly profits came from the financial sector. Total profit rose 7 percent to just over $3 billion and within this the financial industry reported an 8 percent increase in profit to $2 billion.

Kuwait was the weakest performer in the six-country GCC, with its listed companies achieving a combined year-on-year profit growth of 1 percent to $2.3 billion.

Oman grew 10 percent to $524 million and Bahrain jumped 35 percent to $601 million, Sico estimated.

From a GCC-wide perspective, banks’ quarterly earnings rose 11 percent to nearly $15 billion.

“The biggest support to bottom-line performance for the sector came from a steep decline in impairments,” the Kamco report states. Total provisions against problem loans fell to their lowest level in more than eight years, it said.

Regional real estate quarterly profits rose 24 percent to $1.8 billion, while those of the telecom sector grew 14 percent to $2.74 billion, Sico estimates.

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