And the research company added, in a research note, which “Mubasher” obtained a copy of today, Sunday, that the companies’ results in the second quarter of 2021 indicate a significant recovery in the economy from the impact of the Corona epidemic “Covid-19”, and that most sectors are operating near pre-existing levels. The Corona pandemic, in addition to the rise in oil prices, which supports the positive outlook during the coming period.
Al Jazira Capital indicated that the profit growth for the second quarter of 2021 on an annual basis came as a result of the increase in net profit within the energy sector, banks, basic materials and operating utilities, and this could also be due to the comparison with the same quarter of 2020, which was negatively affected by the emerging Corona virus pandemic. The rise in oil prices, which touched the highest level in 6 years, the economic recovery and the increase in global demand supported net profits.
The research company noted that the net profit of the energy sector in the second quarter of 2021 increased from the same quarter of last year by 271%; As a result of the increase in the net profit of Saudi Aramco by 65.5 billion riyals on an annual basis, the net profit of the company also increased due to the rise in crude oil prices, the improvement of chemicals margins and the financial results of SABIC.
The net profit of the banking sector in the second quarter of 2021 increased by 1014.9% year on year; Mainly due to the Saudi British Bank achieving a net profit in the second quarter of 2021 of 918.5 million riyals, compared to a loss of 6.9 billion riyals in the second quarter of 2020; Most of this is due to the provision for impairment in the value of goodwill by about 7.4 billion riyals on an annual basis.
The report pointed out that the net profit margin in the second quarter of 2021 increased from the previous quarter and the same quarter of the year 2020, where margins increased by more than 1,000 basis points on an annual basis, and revenues increased by 89% to 548.3 billion riyals.
At the level of profits during the past 12 months (ending in the second quarter of 2021), the net profit increased by 27.3% to reach 370.4 billion riyals; Mainly due to the increase in net profit for the second quarter of 2021 by 372.9% and by 45.3% in the first quarter of this year.
The contribution of the energy sector was the highest during the second quarter of 2021 by 73%, led by Saudi Aramco, followed by the basic materials sector by 11%.
Overall profitability improved during the second quarter of 2021 on an annual basis; The number of profitable companies increased by 8 to 128 companies, compared to 47 losing companies, and compared to 120 profitable companies in the second quarter of 2020, compared to 59 losing companies.
In its report, Al Jazira Capital noted that the market’s profitability ratio decreased in the second quarter of 2021 to 27.3 times from 36.8 times in the previous quarter.
According to the report, the total market debt (excluding banks and insurance) decreased during the second quarter of 2021, and the interest rate among Saudi banks stabilized around its level at 0.83% during the second quarter of the year.