COVID-19 toll on earnings for Bahrain-listed companies

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MANAMA: Earnings reported by Bahrain-listed companies in the third quarter this year remained significantly lower than historical levels as the Covid-19 pandemic took its toll on the economy.

The latest analysis by Kuwait-based Kamco Invest shows total Q3-2020 net profits for Bahrain-listed companies declined by 51.1 per cent to $230.7 million down from $471.3m in Q3-2019 after only three out of the 13 sectors on the Bahrain Bourse reported an increase in Q3-2020 net profits.

The kingdom’s commercial banks sector saw Q3-2020 net profits of $187.2m registering a year-on-year (YoY) decline of 45.8pc after three out of the 10 banks reported a loss in Q3-2020 earnings.

Ahli United Bank (AUB) posted the biggest Q3-2020 net profit among banks in the country at $116m, which was a decrease of 35.9pc as compared with $180.9m in Q3-2019. AUB attributed the decline in profits to the overall subdued business sentiment.

Total Q3-2020 net profits of the telecom sector increased 38.6pc to $42.4m, with Batelco reporting a profit of $38.3m, as against $27.2m in Q3-2019.

Batelco attributed the increase in Q3-2020 net profits to a decrease in operating expenses.

The materials sector posted its biggest net loss during the quarter at $29.8m as compared with a profit of $28.3m in Q3-2019. Within the sector, Alba reported a loss of $30.8m during Q3-2020 as compared with a profit of $28.4m in Q3-2019.

Alba attributed its loss to the disruption caused by Covid-19. For the wider GCC region, listed companies earnings remained subdued but showed significant improvement as compared to Q2-2020 as the regional economy emerged from the Covid-19 lockdowns in a phased manner during Q3-2020. Out of the 21 sectors on GCC exchanges, 13 sectors reported quarter-on-quarter (QoQ) growth in earnings and four of these reported profits as compared with losses in Q2-2020, the materials sector being the biggest out of the four.

In terms of sequential growth, excluding Bahraini companies, the growth in net profit was almost 80pc or an absolute growth of $10.9 billion to $25.1bn in Q3-2020.

The biggest QoQ growth was seen in the regional energy sector with the profits up by $4.9bn or 72.9pc to $11.5bn. The banking sector was next with a profit growth of 66.9pc after banks reported higher topline coupled with a decline in provisions that supported earnings.

The materials sector for the GCC as a whole reported profits of $634.5m during the quarter as compared with losses during Q2-2020. On the other hand, the insurance and real estate sectors reported the biggest QoQ decline in earnings at 36.8pc and 22.4pc, respectively.

Earnings performance when compared to last year was broadly negative with a decline of 34.5pc in Q3-2020 with steep declines in some of the key large-cap sectors on the GCC exchanges.

The GCC countries aggregated earnings for the first nine months of the year declined by 44.1pc YoY to $65.3bn as compared with $116.8bn during the same period last year, a decline of $51.5bn. avinash@gdn.com.bh

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