Driven by strong banking sector growth, Dubai's corporate earnings expanded 3.7 per cent year-on-year to $4.1 billion in the first half of 2015,

The banking sector, which contributed 12.4 per cent to the Dubai Financial Market's incremental earnings, recorded 32 per cent growth in the first half. However, this was partly offset by another index heavyweight, the real estate and construction sector (-9.9 per cent), which accounted for 32.5 per cent of the consolidated earnings of the bourse, Global Investment House said.

But the consolidated corporate earnings of the UAE declined 0.6 per cent in the first half as Abu Dhabi recorded a 3.7 per cent drop during the same period.

On the DFM, out of the nine sectors, banks was the major gainer as a sector with 32 per cent rise in earnings, followed by consumer staples (12.1 per cent), industrials (4.7 per cent), services (4.3 per cent) and transportation (2.3 per cent). Investment and financial services (-45.2 per cent) was the major loser, followed by insurance (-25.8 per cent), real estate and construction (-9.9 per cent) and telecommunications (-4.7 per cent).

The growth in the earnings of the banking sector was driven by Emirates NBD (40.5 per cent), Dubai Islamic Bank (34.5 per cent) and Emirates Islamic Bank (97.4 per cent), which contributed 16.8 per cent, 7.8 per cent, and 3.9 per cent, respectively, to the sector's incremental earnings.

Global said Emirates NBD reported strong bottom-line growth owing to an improvement in the top line due to a favourable shift in the asset mix (retail and Islamic business) and a rise in current account savings account deposits. Furthermore, the bank's provisions declined, adding to the profitability.

"All banks reported earnings growth during the first half, except Emirates Investment Bank, which reported a 21.1 per cent fall in its earnings during the period, partially dented the overall earnings growth of the sector.

Abu Dhabi's corporate earnings decreased 3.7 per cent to $5.5 billion during the first half. This was due to a fall in the earnings of energy, telecommunications and insurance sectors, which added 11.3 per cent to the accumulated fall in the bourse's earnings, was partially offset by earnings growth in the banking sector, which offset the accumulated fall by six per cent.

Across the GCC, corporate earnings fell 2.9 per cent to $36 billion in the first half. This was ascribed to weakness in earnings of Saudi Arabia (-12.3 per cent), Oman (-4.9 per cent), and Abu Dhabi (-3.7 per cent). Saudi Arabia contributed 5.3 per cent to the accumulated fall in the GCC's earnings, partly offset by Qatar (15.8 per cent), which added 2.4 per cent to the region's incremental earnings. Apart from Qatar, Dubai (3.7 per cent), Bahrain (2.1 per cent), and Kuwait (1.2 per cent) reported improved earnings in first half.

Saudi Arabia remained the major contributor to the overall earnings of GCC (38.7 per cent); hence, a fall in saudi Arabia's earnings severely impacted the overall region's consolidated earnings. Saudi Arabia was followed by the UAE (26.7 per cent), Qatar (18.3 per cent), Kuwait (8.4 per cent), Bahrain (five per cent) and Oman (2.9 per cent). Within the UAE, Dubai accounted for 11.4 per cent of the total GCC earnings and Abu Dhabi accounted for 15.2 per cent of the total GCC earnings.

"Although the UAE was the best-performing market in the GCC in 2014, Qatar outperformed it in the first half. Qatar's performance was attributed to strong growth in the real estate sector's earnings, which accounted for 20.5 per cent of the consolidated earnings of the country and added 16.6 per cent to the incremental earnings growth of the bourse. Infrastructure growth in the country was robust, led by construction developments related to the 2022 Fifa World Cup. Apart from real estate, the banks and financial services sector fuelled the growth of the bourse's consolidated earnings," Global said.