Kuwait fiscal deficit hits KD 1.492 bln in 7m of 2017
Boursa Kuwait listed cos nine-month profit up 15.9 pct to KD 1.515b
The Monthly Report of the State, Financial Administration Accounts – October 2017 n its monthly follow-up report for the State’s Financial Administration until October 2017 (as published on its website), the Ministry of Finance indicates that total collected revenues in the end of the seventh month of the current fiscal year 2017/2018 scored approximately KD 8.341 billion, about 62.5% of the total estimated revenues for the entire current fiscal year in the amount of approximately KD 13.344 billion.
In detail, actual oil revenues until 31/10/2017 scored about KD 7.532 billion, i.e. 64.3% of estimated oil revenues for the entire current fiscal year in the amount of KD 11.711 billion, or about 90.3% of total collected revenues. The average oil price during the period passed of the current fiscal year scored US$ 49.1 per barrel. An amount of KD 808.432 million was collected from non- oil revenues during the same period, a monthly average at KD 115.490 million, while the total estimated amount for the entire current fiscal year was about KD 1.634 billion. This means that the realized amount if it continues at this level will be less for the entire fiscal year by about KD -248 million than the estimated.
Expenditures allocations for the current fiscal year were estimated at about KD 19.9 billion, of which an amount of KD 8.464 billion was actually spent -according to the bulletin- until 31/10/2017. An amount of KD 1.369 billion was also obligated and is deemed spent making total actual expenses -and the like- at about KD 9.833 billion. Monthly expenditures’ average scored KD 1.405 billion. Though the bulletin concludes that the budget achieved in the first seven months of the current fiscal year deficit by KD 1.492 billion prior to discounting 10% of revenues to the Future Generations Fund, we do not recommend reliance on it. Deficit figure will depend mainly on oil price and its production in the remaining part of the current fiscal year i.e. the next 5 months. We expect it will be around KD 4.5 billion to 5 billion when the final account is issued.
Profits of Listed Companies – 30 September 2017
The number of listed companies which officially announced results of their operations for the first nine months of the current year was 150 companies, about 95.5% of 157 listed companies, after excluding the suspended companies and those with different fiscal years. The net profits of those companies scored KD 1.515 billion, increased by 15.9% than profits of the same companies in the first nine months of 2016, which scored KD 1.306 billion.
When we compare profits of the third quarter of the current year which scored KD 509.7 million with profits of the same sample in the second quarter, which scored KD 469.8 million, we note it rose by 8.5%, while it dropped by -4.8% if compared with profits of the first quarter, perhaps due to the sharp rise in share prices in the first quarter.
8 sectors out of 12 active sectors increased their profits if compared with its performance in the first nine months of 2016. The best was Financial Services sector which increased its profits from KD 59.1 million to KD 185.4 million, or by 213.9% rise perhaps due to the boursa activity in the current year. The Basic Materials sector came second and increased its profits from KD 5.6 million to KD 11.6 million, or by 108.4%. The Healthcare sector came third and increased its profits from about KD 3.9 million to KD 5.4 million, or by 39%. The last two sectors are small and their contributions to the total boursa profits are meagre. The second highest absolute increase in net profits was in the Banking sector. The relative increase in its profits did not exceed 5.6% and scored KD 729.3 million, which is 48.1% of total net profits of Boursa Kuwait. The absolute increase in its profits scored KD 38.9 million. The Technology sector’s profits
IFile photo shows traders on Boursa Kuwait trading floor.
dropped from KD 6.4 million to KD 2.3 million, about -64.1%. Details of the sectors performance are summarized in the attached table.
Results of the first nine months of the current year indicate improvement in the performance of 99 companies, including 75 companies which increased profits and 24 companies reduced their losses or turned in to profitability. This means that 66% of the companies which announced their results achieved better performance.
51 companies achieved drop in their performance including 32 companies whose profits level dropped, while 19 companies increased their losses or moved from profitability to losses. The top gainers list contained 10 leading companies that achieved the highest value in profits scored KD 901.9 million, or 59.5% of total absolute profits, led by “NBK” with about KD 238.4 million. “Ahli United Bank” -Bahraincame second by KD 142.3 million and “KFH” came third in profits by KD 137.9 million.
On the other hand, 10 companies achieved the highest absolute losses with a total of KD 31.3 million and “Ithmaar Holding Co.” scored the highest loss by KD 8.2 million and “The Energy House Holding Co.” came second in losses by about KD 3.9 million.
Regional Stock Exchanges and Geopolitical Events
The 7 GCC stock markets are sensitive to the surrounding geopolitical events and are more sensitive to those that occur within them. This was valid after Qatar Crisis and the boycotting states last June. It is also valid after “Hariri’s” resignation and the socalled corruption arrests campaign in Saudi Arabia on 3rd and 4th of current November. Indexes of the regional stock exchanges indicate losses by varying rates between June 4, 2017 (one day before Qatar crisis) and November 22, 2017. The highest losses belonged to the Qatari stock market which lost -21.4%. Losses of the other five stock markets ranged from about -1.5% for KSA, about -2.5% for Boursa Kuwait, about -4.7% for Abu Dhabi, about -4.8% for Bahrain and -6.4% for Muscat. The only exception was Dubai stock market which gained about 3.1%.
In the recent events, on November 3rd and 4th, six stock markets out of seven lost, according to their closure on November 22nd. Boursa Kuwait achieved the highest losses by -5.8% of its index value, followed by Dubai stock exchange which lost about -4.9%, then Qatar stock exchange, and Abu Dhabi stock exchange both lost -4.3%, and KSA stock exchange lost about -1.9%, then Bahrain stock exchange which lost -1.1%. Muscat index gained about 0.8%.
On June 5, 2017 Brent crude price scored US$ 48.25 per barrel and rose to about US$ 63.2 per barrel on 22/11/2017, i.e. 31% gain. While the rise in oil prices should be a supportive factor for the activities of the regional stock markets, the negative influence of the geopolitical events outweighed the positivity impacts. Losses occur because of the drop in demand due to the high uncertainty-risk- level as reflected by the continues decline in the stock exchanges liquidity. Liquidity figures indicate that the liquidity of the seven exchanges combined scored in the first quarter of this year about US$ 100.1 billion, scored about US$ 66.4 billion in the second quarter, losing -33.7%, and lost about -9% of their second quarter level, and scored about US$ 60.4 billion in the third quarter. Liquidity of these stock markets between the beginning of the fourth quarter until November 22, 2017 scored about US$ 43.6 billion, better than the third quarter, and may have got some political support. However, they remained lower by about -24.7% vis-àvis liquidity in the first quarter even if remained at its high level for the entire fourth quarter. Besides, they failed to support indexes.
The losses above are within logical limits. As capital is described as timid, negative effects of the geopolitical events outweigh the positive effects of improved oil market conditions and the public finances of those states.
For the remainder of this year and part of the next year, the prospect of the regional stock markets’ movement in both directions remains open. The worst would happen if geopolitical events and the oil market move in the negative direction. It would be better if the opposite occurred. The unpredictable impact on stock exchange would be if they moved in opposite directions because that relies on the movement strength of each.
AlAhli Bank of Kuwait (ABK) Financial Results – 30 September 2017
AlAhli Bank of Kuwait (ABK) announced results of its operations for the nine months of the current year, which showed that the bank’s net profits, after tax deductions, scored about KD 22.2 million, rose by KD 2.3 million, or by 11.7%, compared with KD 19.8 million. This rise in the net profits is due to the rise in total operational income versus a drop in total expenses. Therefore, the operational profit rose by KD 5.6 million and scored KD 71.2 million compared with KD 65.6 million.
In detail, total operational income increased by KD 4.7 million, or by 4.3%, and scored KD 114.7 million compared with KD 110 million. This resulted from rise in the item net gain on investment securities by KD 3 million and scored KD 461 thousand (representing 0.4% of total operational incomes) versus losses by KD 2.6 million in the same period of 2016. Likewise, the item of net foreign exchange gain rose by KD 1.4 million and scored KD 82.9 million compared with KD 81.5 million. While the item of dividend income and item share of results from an associate dropped by KD 377 thousand and scored KD 3.5 million compared with KD 3.9 million.
On the other hand, total operational expenses decreased by KD 893 thousand, or by 2%, and scored KD 43.5 million (compared with 44.4 million for the same period of 2016, as a result of drop in all items of operational expenses except for the item of other operating expenses, which rose by KD 1.6 million. Percentage of total operational expenses to total operational incomes scored 37.9% compared with 40.4%. Total provisions increased by KD 4 million, or by 9.5%, and scored KD 46.4 million compared with KD 42.3 million. Therefore, the net profit margin rose to 16% compared with 14.8% for the same period of 2016.
Total bank’s assets scored KD 4.301 billion, an increase by 0.4%, compared with KD 4.285 billion in the end of 2016. While it dropped by 2.8%, if compared with the total assets in the same period of 2016 when they scored KD 4.426 billion. Item of loans and advances portfolio, the largest contributor of the bank’s assets, increased by about KD 36.8 million, or by 1.2%, and scored KD 3.066 billion (71.3% of total assets) versus KD 3.029 billion (70.7% of total assets) in the end of December 2016. It decreased by KD 117 million, or by 3.7%, if compared with the same period of 2016, when it scored KD 3.183 billion (71.9% of total assets). Percentage of total loans and advances to total deposits scored 87.8% compared with 84.7%. The high rise in the percentage of loans to deposits resulted mainly from 7.1% drop in the value of the bank’s deposits. Item of investments in securities dropped by KD 65.6 million and scored KD 172.3 million (4% of total assets) versus KD 237.9 million (5.6% of total assets) in the end of last year. It dropped by KD 148.9 million from the end of the same period of 2016, when it scored KD 321.2 million (7.3% of total assets).
Figures indicate that the bank’s liabilities (without calculating total equity) increased by KD 8.8 million, or by 0.2%, and scored KD 3.738 billion compared with KD 3.729 billion in the end of 2016, but dropped by KD 130.8 million, or by 3.4%, compared with the total in the end of the same period of last year. Percentage of total liabilities to total assets scored 86.9% compared with 87.4%.
Results of analyzing the bank’s financial statements calculated on annual basis indicates that all bank profitability indexes increased compared with the same period of 2016. Average return on equities relevant to bank shareholders (ROE) rose to 5.3% compared with 4.7%. Likewise, the average return on the bank’s capital (ROC) increased to 18.2% versus 16.3%. The average return on the bank’s assets (ROA) increased slightly to 0.7% compared with 0.6%. (EPS) increased to 14 fils compared with 12 fils. (P/E) scored 16.6 times -improved- compared with 20 times, due to the rise in the (EPS) by 16.7% versus a drop in the market share price by 3.1% compared with its price on 30 September 2016. (P/B) scored 0.89 time compared with 0.93 time in the same period last year.
The Weekly Performance Boursa Kuwait
The performance of Boursa Kuwait for last week was less active compared to the previous one, where all indexes showed a decrease, the traded value index, the traded volume index, number of transactions index, and the general index. AlShall Index (value weighted) closed
at 382.6 points at the closing of last Thursday, showing a decrease of about 10.7 points or about 2.7% compared with its level last week, while it increased by 19.6 points or about 5.4% compared with the end of 2016.
The following tables summarize last week’s performance of Boursa Kuwait
of
Most Active Sectors & Companies