Shuaa Capital swings to net loss in quarter

SLOWDOWN IN CORPORATE TRANSACTIONS WEIGHS ON RESULTS

Shuaa Capital said yesterday it swung to a net loss in the first quarter to March, even as revenues fell impacted by a slowdown in corporate transactions due to falling crude oil prices.

The company recorded a net loss of Dh1.6 million for the first quarter of 2015 compared to a net profit of Dh8.2 million. Revenues fell to Dh44 million in the March quarter in 2015 from Dh64.2 million in the same period last year.

“Despite this, our first quarter performance has benefited from continued investment into Gulf Finance, our SME-focused financing subsidiary, which continues to see strong growth of its loan book and client base,” Abdul Rahman Hareb Rashed Al Hareb, Chairman of Shuaa, said in a statement.

“The revenues generated from Gulf Finance and our asset management business, which also continued to perform well, helped offset market volatility and we remain committed to our key strategy of maintaining a low cost base while focusing on enhancing recurring revenue capabilities,” said Al Hareb.

In the first quarter, interest income increased to Dh3.7 million while net fees and commissions income was Dh9.6 million as both investment banking and capital markets divisions faced challenges due to general market uncertainty, especially during the first two months of the year, causing a delay in the execution of a list of projects in the pipeline.

Shuaa said its balance sheet remains strong with total assets of Dh1.6 billion. Total loans and advances increased to Dh902.9 million, with Dh873.4 million attributable to the SME lending business. Liabilities decreased slightly to Dh431.8 million.

The investment banking team reported quarterly net revenues of Dh2.0 million and net loss of Dh1.5 million compared to net revenues of Dh6.4 million and a net profit of Dh8.0 million during the corresponding period of 2014.

The first two months of the year proved challenging as macroeconomic uncertainty and local market sentiment resulted in lower levels of activity. Despite these issues, the team successfully closed an M&A mandate during the first quarter and executed a number of advisory mandates.

As of March 2015, the loan portfolio for Gulf Finance was Dh907.5 million compared to Dh853.6 million as of December 2014.

Gulf Finance’s client base currently consists of small businesses operating mainly in the wholesale trade, transportation and manufacturing sectors.

The asset management division posted quarterly net revenues of Dh4.4 million, down from Dh4.8 million in the first quarter of 2014 as net fees and commissions dipped 8.6 per cent on a year-on-year basis. As of March 2015, client assets under management grew to Dh878 million from Dh853 million as of December 2014.