Shuaa Capital returned to profit after seven consecutive quarters of losses, trumping analysts’ expectations of another loss-making quarter.
The Dubai-based investment bank reported net profits of Dh1.3 million in the second quarter, up from a loss of Dh15.8m during the same period last year.
It was the sixth time Shuaa reported a quarterly profit in the past five years, which have been marked by sustained quarterly losses and several changes of chief executive.
“Shuaa has continued to make good progress in the second quarter and this underlines our systematic approach towards generating long-term sustained profitability,” Sheikh Maktoum Hasher Al Maktoum, Shuaa’s executive chairman, said in a statement.
“The engine room, centred on our market-leading SME [small-to-medium enterprise] lending business, has performed well as we have continued to deploy our balance sheet lending to companies both in the UAE and in Saudi Arabia, where there is significant demand for secured asset-backed lending.”
The bank’s shares fell as much as 3.4 per cent in early trading before paring declines to close down 2.6 per cent at 73.3 fils each. Analysts estimate Shuaa will report a full-year loss of Dh33.1m in 2013.
Shuaa’s loan book grew by 15 per cent during the quarter to Dh730.9m as it tapped into demand for small business credit.
Revenues almost doubled during the quarter, growing by 95.2 per cent to Dh43.3m.
Shuaa’s asset management arm returned to profit, generating income of Dh2.5m in the second quarter after a small loss in the corresponding period last year.
In the year-to-date period, the UAE’s markets were among the five best-performing worldwide.
However, the bank’s income from its investment banking arm dipped to Dh300,000 from Dh1.5m a year earlier as fees and commissions dropped and equity capital markets activity dwindled.
“The team continues to work on mandates and are hopeful in showing a stronger performance in the second half of the year,” Shuaa’s statement added.
The UAE’s stock markets have not had a successful initial public offering since 2011, with companies instead opting to tap equity markets with share sales in London and New York.
Shuaa announced the closure of its retail brokerage arm in late 2011 to target institutional clients instead.