As the COVID-19 pandemic took a devastating toll last year on all the sectors of the economy, total net profits of Oman’s listed companies dropped by 18.6 per cent for the full year 2020.
Total net profits of the firms listed on the Muscat Stock Exchange (MSX) fell to US$1.45bn (around RO558mn) for the year ended December 31, 2020 compared to US$1.8bn (around RO693mn) recorded in the previous year, according to a report released by Kamco Invest.
The decline in total profits of the listed companies was mainly driven by sharp falls in profits of banking and telecom sectors. Four out of 15 sectors in the Omani exchange recorded net losses during 2020, Kamco Invest said in its GCC Corporate Earnings report.
Oman’s banking sector, the biggest sector in the exchange by market capitalisation, saw its 2020 net profits decline 32.5 per cent to US$709.9mn (around RO273mn) down from US$1.1bn (around RO423mn) in 2019.
The second biggest sector in terms of earnings contribution, the telecom sector, saw its 2020 profits slump by 20.9 per cent to US$229.8mn (around RO88.4mn).
In contrast, Kamco Invest said, aggregate 2020 profits for the sultanate’s diversified financial sector jumped 217 per cent to reach US$210.7mn (around RO81mn).
The aggregate profits for Oman’s insurance sector jumped 36.2 per cent to US$81mn (around RO31.2mn) in 2020.
On the other hand, total net profits of the listed utility sector firms fell 20.9 per cent to US$125.5mn (around RO48.3mn) last year. ACWA Power Barka posted 2020 net losses of US$27.4mn, contributing to the fall in full year total net profits for the sector, according to the report.
GCC profits reach 5-year low
The pandemic resulted in an unprecedented impact on the GCC economy that dented both corporate and government’s coffers. Earnings reported by the GCC-listed companies declined to a five-year low to US$91.3bn in 2020 as compared to US$150.5bn during 2019, Kamco Invest report said.
It said the 39.3 per cent or US$59.2bn decline in GCC corporate earnings came mainly on the back of decline in profits for Saudi Aramco followed by banking, real estate and materials sectors. The three sectors accounted for 85 per cent of the decline in net profits for the year, when excluding net profits for Aramco.
‘The only sectors that showed a noticeable increase in net profits during the year were utilities and food, beverage and tobacco that remained resilient during the pandemic due to their defensive nature,’ the report said.
At the exchange level, Abu Dhabi reported the smallest decline in profits during the year at 7.4 per cent followed by Oman and Qatar with declines of 18.6 per cent and 20.5 per cent, respectively.
The GCC banking sector was amongst the biggest sectors that reported a decline in profits during 2020. The sector’s US$11.8bn fall in net profits was led by higher provisions booked by banks as bad loans increased during the year due to the pandemic.
Loan loss provisions (LLP) booked by GCC banks during 2020 reached a record high of US$20.3bn with increase seen across the board in all the six countries.
Banks in the UAE booked the biggest spike in LLP during the year with an increase of US$3.4bn or 71.6 per cent to reach US$8.2bn.
Saudi Arabian banks booked the lowest percentage increase in LLP at 37.6 per cent or US$1.3bn to reach US$4.6bn during the year. Banks in the GCC region set aside US$6.4bn for doubtful credit during the fourth quarter of 2020, the highest for a quarter ever recorded in the region.