7.21 PM Friday, 29 March 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:56 06:10 12:26 15:53 18:37 19:52
29 March 2024

Shuaa Capital's H1 net profit drops sharply

Shuaa Capital's H1 net profit has dropped sharply. (Supplied)

Published
By Wam

Shuaa Capital on Monday announced financial results for the second quarter ended June 30, 2015, reporting revenues and net profit of Dh59.7 million and Dh1.7 million respectively, as compared with revenues of Dh 52.0 million and a net profit of Dh6.2 million in Q2 2014.

Net profit for the first half ended June 30, 2015 was Dh0.1 million as opposed to Dh 14.4 million for the first half 2014.

Interest income continued to improve and increased by 18.7 per cent to Dh38 million (Q2 2014: Dh32 million) as Gulf Finance increased loan deployments. Income from net fees and commissions stood at Dh9.4 million (Q2 2014: Dh19.0 million). Total expenses for the quarter increased to Dh 56.5 million (Q2 2014: Dh47.3 million). Shuaa’s cost/income ratio during Q2 stands at 72 per cent (Q2 2014: 76 per cent).

Abdul Rahman Hareb Rashed Al Hareb, Chairman of Shuaa. said "Although general market sentiment has remained subdued due to macroeconomic and geopolitical issues, we are encouraged by a number of positive developments within the business that we believe will set the scene for higher recurrent revenue generation in the second half of the year and beyond. These include progress by the asset management division’s expected launch of new products; continued growth of Gulf Finance’s loan book, our wholly-owned SME lending business; and expansion of our sales force and product offering in the capital markets division."

Shuaa had total assets of Dh1.8 billion at 30 June 2015 (Q4 2014: Dh1.6 billion). Total loans and advances increased to Dh1,024.7 million (Q4 2014: Dh847.0 million), with Dh970.6 million attributable to the SME Lending Business. Liabilities increased to Dh 605.3 million (Q4 2014: Dh 458.8 million) and Shuaa’s debt/equity ratio now stands at 42 per cent.

The investment banking team reported quarterly net revenues of Dh1.6 million compared to net revenues of Dh6.8 million during the second quarter of 2014.

Following a challenging first quarter, the second quarter saw the investment banking division continue to work on a number of public and private mandates, and the deal pipeline of the division remains strong at the onset of the third quarter.

Gulf Finance UAE and Gulf Finance Saudi Arabia reported net revenues and a net profit of Dh38.4 million (Q2 2014: Dh33.4m) and Dh3.0 million (Q2 2014: Dh7.0m) respectively. Demand for the division’s loan products remained strong resulting in an increase in interest income of 23 per cent to Dh 37.4 million (Q2 2014: Dh30.4 million). Total expenses increased during the second quarter to Dh35.4 million (Q2 2014: Dh 26.4 million) as investments to grow the business, to launch new products and to expand the sales force continue.

During the second quarter, Gulf Finance expanded its product range through the launch of trade finance solutions to provide support to SMEs engaged in imports and exports. In June the company also successfully completed its rebrand with the launch of a new logo and a new corporate identity, reinforcing its position as a leading SME financing company.

As of 30 June 2015, Gulf Finance gross loan portfolio was Dh1,018 million compared to Dh 854 million in the fourth quarter of 2014, and the company plans to grow the loan book further by the end of the year. Following the Dh500 million senior secured term loan which was closed in the last quarter of 2014, the division is considering to secure similar additional financing in the fourth quarter of 2015.

The Asset Management division posted net revenues of Dh4.9 million (Q2 2014: Dh5.4m) and a profit of Dh3.4 million (Q2 2014: Dh4.2 million) for the quarter. The result was driven by the performance recorded on Shuaa-managed funds. The division is currently working on a number of new products that are expected to launch in the second half of the year.

The Emirates Gateway Fund and the Arab Gateway Fund recorded quarterly returns of 10.5 per cent and 7.6 per cent, outperforming their respective benchmarks by 0.6 per cent and 4.7 per cent. As of 30 June 2015, client Assets under Management grew to Dh929 million from  Dh853 million as of 31 December 2014.

For the second quarter, Capital Markets reported net revenue of Dh3.0 million (Q2 2104: Dh4.0 million) and a net loss of Dh0.2 million (Q2 2014: net profit of Dh1.8m) as regional trading volumes for the period remained lower compared to the same period in 2014. However, the division recorded an increase in trading income and investments to expand the sales and trading desk continue.

The corporate division posted quarterly revenues of Dh11.7 million (Q2 2014: Dh2.3 million) and a net loss of Dh2.5 million (Q2 2014: loss of Dh11.2m). This significant improvement was mainly a result of higher gains from investments in Shuaa managed funds and maintaining disciplined cost control measures restricting general and administrative expenses to Dh12.2 million (Q2 2014: Dh17.3m).


 

WAM/AAMIR

WAM 1702  2015/08/10
END