The earnings of Kuwaiti companies were flat, despite a solid performance by banks during the first half of the year, on the back of an improving operational environment and reduced provisioning, boosted overall earnings an offset weakness in other sectors, said a report.

Most of the weakness came from the real estate and non-bank financial services sectors, following several years of strong recovery in both, though other sectors also saw declines, said the National Bank of Kuwait statement.

The reported earnings of 165 listed companies were down 1.3 per cent year-on-year (YOY) in the first half of the year to KD810 million ($2.8 billion), off by only KD11 million from a year ago.

The aggregates conceal more mixed results, with over 70 companies reporting declines in profits compared to a year ago while 94 companies reported healthy growth.

The banks, however, continued to ride the economic upturn, benefitting from reduced provisions and a healthier appetite for credit, with profits growing 16 per cent YOY to KD315 million.

They accounted for 39 per cent of the total reported earnings, while their contribution increased by seven percentage points compared to a year ago at the expense of the real estate and financial services companies, as these saw their shares shrink to 10 per cent and eight per cent respectively.

The real estate and financial services sectors led most of the declines in profits during the period, with aggregate profits for the sectors contracting by KD28 million and KD15 million respectively.

The declines in the financial sector were triggered by unusual items at a handful of companies and if those were excluded, earnings in the sector showed an increase of four per cent versus the 18 per cent drop, reaffirming the sector’s positive, but slow, recovery.

Declines in the real estate sector were more widespread, though a small number of companies still dominated the declines.

Meanwhile, other sectors reported mixed results, with the technology and oil and gas sectors displaying strong growth, while the bulk of the rest saw negative earnings growth, led by consumer services companies.

The equity prices reacted positively to the profit announcements, with the value-weighted index is up five per cent since the end of the second quarter, following its minor correction during that quarter. - TradeArabia News Service