banks and builders struggle in fourth quarter
Last Updated : GMT 09:07:40
Egypt Today, egypt today
Egypt Today, egypt today
Last Updated : GMT 09:07:40
Egypt Today, egypt today

Banks and builders struggle in fourth quarter

Egypt Today, egypt today

Egypt Today, egypt today Banks and builders struggle in fourth quarter

ATM machines at Al Rajhi Bank in Riyadh.
Dubai - Arab Today

With the fourth-quarter earnings season just finished, it is clear that the performance and prospects of listed companies across the Arabian Gulf are div­erging.
Healthcare providers, entertainment and tourism companies and some property developers are doing relatively well, while construction firms and many banks are struggling.
In Saudi Arabia, healthcare companies and banks in general reported stronger fourth-quarter results.
Banks experienced some credit growth towards the end of last year, with many resuming lending to contractors that had been hit by payment delays. The sector reported an aggregate 5.4 per cent increase in 2016 net profit despite higher provisions, mainly for loans to the construction sector.
Saudi banks are likely to continue to perform well this year, especially if liquidity conditions continue to improve. And in a rising interest-rate environment, their net interest margins should widen, as their funding is largely made up of individual customer deposits – and these types of deposit rates can usually be held down while lending rates rise.
In the UAE, where funding is largely through the wholesale market or from corporate deposits, there will be less of a benefit for banks from the widely expected further rise in benchmark interest rates this year.
Although UAE bank results broadly beat expectations, it is clear that credit growth is weak and non-performing loans are on the rise.
While deposits grew across the board quarter-on-quarter, the loan book contracted by about 2 per cent at a couple of UAE banks. Non-performing loan ratios ranged from 2.3 per cent at FGB and 9.1 per cent at Emirates Investment Bank, prompting a rise in provisions across the sector.
Meanwhile, we can expect the leading UAE developers, such as Emaar, to achieve better earnings this year. Emaar reported a 56 per cent increase in fourth-quarter net profit, boosted by higher revenues from property developments as well as the performance of its malls and hospitality businesses.
However, margins for construction companies in the region continue to be squeezed and are suffering from reduced spending on physical infrastructure. Exceptions to this may be contractors that are heavily involved in delivering Dubai Expo 2020 and Qatar Fifa World Cup infrastructure.
UAE retail and tourism companies – such as Emaar Malls and DXB Entertainments – will benefit from greater local and regional visitor growth numbers this year. With Legoland and Bollywood Parks Dubai already open, the emphasis this year is on the full opening of all rides at Motiongate Dubai.
Plans for international amusement park company Six Flags to open in the UAE in 2019 at the Dubai Parks and Resorts destination alongside additional hotels create further investment opportunities for 2017 – especially after recent share-price correction.
Emaar Malls, which recently announced a 13 per cent year-on-year increase in net profit, has prime exposure to the increasing tourist numbers in Dubai.
The company is looking to expand The Dubai Mall retail space this year by about 15 per cent and at current valuation of 15.7x earnings, which is a 15 per cent discount to emerging market peers, this offers an attractive dividend yield of 3.7 per cent.
With crude oil forecast to fluctuate in the US$50 to $60 range – about double the lowest level hit in early 2016 – regional economic activity and liquidity conditions should gradually improve.
GCC fiscal deficits are expected to narrow slightly to an aggregate of 6.5 per cent of GDP in 2017, with governments prioritising spending on sectors that have a direct beneficial effect on the lives of local populations.
Companies involved in health care, education and social and human capital development should do well. Saudi Arabian healthcare companies such as Al Mouwassat and Al Hammadi should benefit from this spending, while the UAE’s NMC Health should continue to grow through bolt-on acquisitions and organic growth, as demand for specialised medical services increases.
Mohammed Al Hashemi is the executive director of Invest AD Asset Management


Source: The National

egypttoday
egypttoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

banks and builders struggle in fourth quarter banks and builders struggle in fourth quarter



GMT 09:51 2016 Tuesday ,29 March

Back to drawing board for new father Murray

GMT 09:17 2017 Monday ,13 February

RAK police seek help to locate missing girl

GMT 21:52 2011 Monday ,08 August

Leverkusen\'s Giefer hospitalised

GMT 23:05 2017 Wednesday ,25 January

Millions travel for China’s Lunar New Year festival

GMT 23:06 2017 Tuesday ,24 January

Pakistan military tests nuclear-capable missile

GMT 11:34 2017 Tuesday ,14 February

Artist makes NY fashion week debut on a bus

GMT 14:35 2018 Monday ,22 January

Azza Fahmy Jewellery announces UK store launch

GMT 07:41 2014 Wednesday ,19 March

Nail brand The Lacquer Lab launches

GMT 15:19 2011 Tuesday ,02 August

Orwellian Barton forced to train alone by Newcastle

GMT 12:25 2016 Wednesday ,14 December

Evaluation of Participating Companies Goes in Full Swing

GMT 13:37 2017 Monday ,25 December

Abducted Yemenis kept in chains in Houthi jails

GMT 20:05 2011 Wednesday ,20 July

Maid repatriated after 3-year ordeal

GMT 01:09 2012 Wednesday ,15 February

Elegant Patch Sofa

GMT 09:45 2016 Friday ,25 November

In French missionary retirement home

GMT 06:06 2011 Monday ,12 December

Homemade Pet treats maker

GMT 04:41 2017 Monday ,09 January

Emirates Youth Council holds first meeting of 2017

GMT 08:09 2014 Thursday ,05 June

Opel outlines growth plan until 2022

GMT 11:27 2017 Thursday ,21 December

Dollar exchange stable at Egypt's major banks

GMT 08:48 2017 Sunday ,29 October

Spain seizes control of 'independent' Catalonia

GMT 17:27 2017 Monday ,13 November

EU's Mogherini urges 'no external interference'

GMT 07:29 2017 Tuesday ,19 December

Helmy el-Namnam hails Sharjah Ruler's support

GMT 13:49 2017 Wednesday ,29 November

ARIES (March21st-April20th)
 
 Egypt Today Facebook,egypt today facebook  Egypt Today Twitter,egypt today twitter Egypt Today Rss,egypt today rss  Egypt Today Youtube,egypt today youtube  Egypt Today Youtube,egypt today youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

egypttoday egypttoday egypttoday egypttoday
egypttoday egypttoday egypttoday
egypttoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
egypttoday, Egypttoday, Egypttoday