United Arab Emirates (UAE) companies may report rising second-quarter earnings this week, led by banks as economic growth boosts demand for financial services in the second-biggest Arab economy.
Net income at UAE companies will rise an average 14 percent, say estimates from Global Investment House KSCC, Kuwait’s biggest investment bank. Profit growth at banks may be 24 percent, the best industry performance.
“The macro-economic backdrop is very strong,” Amr Abol-Enein, head of equity research for the Middle East and North Africa for ING Bank NV, said in a telephone interview from Dubai last Wednesday. “Sentiment and demand are still strong, and there is no slowing on infrastructure building and financing.”
Growth in the UAE economy will average 7.2 percent this year, a Bloomberg survey of seven analysts showed.
Expansion has been accompanied by record inflation, which accelerated to 11.1 percent last year from 9.3 percent in 2006.
Amlak Finance PJSC, the UAE’s second-biggest home mortgage company, could kick off the second-quarter earnings season on Friday. Emaar Properties PJSC, the country’s biggest publicly traded real-estate developer, may say profit was little changed from a year ago, analysts said.
“What we will be looking out for in the second quarter is how the higher costs have impacted profit margins of companies, and whether they have been able to pass on the higher costs to consumers,” Deon Vernooy, head of asset management at Emirates Investment Services, said in Dubai last Wednesday.
Net income at National Bank of Abu Dhabi PJSC, the second-biggest lender in the UAE, will rise 4 percent and third-ranked Abu Dhabi Commercial Bank PJSC will post growth of 34 percent, Deutsche Bank AG said.
“Loan growth in Abu Dhabi banks should continue to be as strong as it has been in the last two quarters,” Zahed Chowdhury, the Dubai-based head of Middle East research at Deutsche Bank, said in an interview in Dubai last Wednesday. “The property sector will continue to be as lumpy as ever.”
UAE’s stock markets have been mixed this year, with the Dubai Financial market benchmark share index declining 8 percent while Abu Dhabi Securities Exchange’s gauge gained 9 percent.
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