After the end of the period given to listed companies for providing their financial statements for the first nine months ending September 30, 2009, 165 companies announced their results out of 188 companies listed on KSE excluding Non-Kuwaiti companies, those with fiscal year not ending on December 31st, and companies whose shares are already suspended from trading (9 companies up till the date this report is published). Aggregate profits for the 165 companies which announced their 9M2009 results stood at KD606.86mn for the nine months ending on September 30, 2009, registering a decline of 75.77% compared to KD2,505.02mn reported in the same period in 2008.
The high provisions provided by all local Kuwaiti banks, had its negative impact on the nine months profits. Banks continued their cautious approved by increasing their provsining levels. Aggregate profits of the Banking sector (nine banks) stood at KD330.21mn for the first nine months profits of 2009, registering a decline of 63.10% compared to KD894.81mn reported in the same period in 2008. The two largest banks in Kuwait, National Bank of Kuwait (NBK) and Kuwait Finance House (KFH), reported a 17.30% and 51.77% decline in their 9M2009 profits respectively. The retreat in NBK’s profits can be attributed to impairment losses for investment securities amounting to KD18.17mn, whereas there was no corresponding loss in 2008. Provision charge for credit losses –jumped 169.43% during this period, reaching KD24.87mn. As for KFH’s results, it can be mainly attributed to a 693.95% increase in its impairment provisions, which stood at KD137.25mn for 9M2009. Out of the nine listed banks, four banks reported net losses for the period under review. Boubyan Bank reported the biggest losses of KD17.26mn, due to high provisions amounted to KD29mn for the nine months ending on September 30, 2009.Looking at the Investment sector, 42 companies announced their results out of 46 companies among the sector (excluding Industrial & Financial Investments Company, Investment Dar and International Leasing & Investment Company) that are suspended from trading by KSE. The sector as a whole reported hit the most amongst the other seven sectors, with an aggregate loss of KD324.890mn reported for nine months period ending September 30, 2009, compared to net profit of KD533.90mn for the corresponding period of 2008. Only three companies within the sector managed to eke out some profits for the nine months period. Kuwait Financial Center reported highest profits amounting to KD4.16mn compared to KD0.97mn loss in the corresponding period of 2008. Al-Salam Group Holding Company and International Finance Company followed posting 89.10 percent and 12.72 percent gain respectively in nine months profits for 2009. The services sector reported aggregate profits reaching KD448.81mn for the first nine months ending September 30, 2009, down by 18.44% from the corresponding period of last year. Zain, reported net profits of KD195.69mn for 9M2009, down 16.79% from the corresponding period of last year. The group’s EBITDA witnessed a significant growth of 37 percent during this period amounting to KD757.3mn. The Telecom giant operating income went up by 33 percent exceeding KD455mn compared to KD342mn in the corresponding period of the last year. However, high fluctuations in currencies, especially in many of its subsidiries in Africa, had a great impact on the net profits of the company, which declined by 18.44% to KD195.69mn.
On the other hand, Agility posted 7.18 percent gain in nine months profits amounting to KD115.55mn. The company is expecting to rise its revenues by 20 percent in 2010. Agility may divestiture of non-core assets including 11 percent stake in Kenya Telecom and $250mn in Iraq’s Korek Telecom. Its worth mentioning that, Agility’s stock witnessed heavy selling pressures during the last few days.
Source: Kuwait Stock Exchange & Global Research
We expect that 4Q2009 results would witness improvement as compared to profits reported in the last few quarters. This positive overview comes in line with the relative improvement in the developed countries economies and increased oil prices over US$75 per barrel. On the back of this, general economic sentiment is likely witness gradual recovery which will have its positive impact on all the economic sectors.