Shuaa Capital wrote another loss for the third quarter after setting aside Dh260 million (US$70.7m) in charges for investments in associated companies, some of which are marked for sale. The impairment charges, plus another Dh42.5m in provisions, left Shuaa with a Dh269.7m loss for the September quarter. The 30-year-old bank, based in Dubai, has had a challenging nine months that saw it cede a 48 per cent stake to the government-owned Dubai Banking Group and become involved in a bitter legal battle with Dubai World, the emirate's investment arm.
Last year, the regulator fined Shuaa for alleged price manipulation in DP World shares. The results are a setback for the bank, which reported a Dh91.7m profit in the second quarter following three consecutive quarters of losses. "We have taken decisive steps to improve the balance sheet, significantly increase liquidity and eliminate further downside risks - from non-fee-generating businesses," said Sameer al Ansari, the chief executive of Shuaa. He said the bank had taken a "prudent approach to recognise impairment charges on associates".
Shuaa said it was in talks to sell its shareholdings in some associated companies. They range from a fund based in the Caymans and a building firm in Sharjah, to a Kuwaiti chemical maker and a Qatari asset manager. The bank has logged more than Dh383m in losses so far this year, up from Dh319.3m at the end of the second quarter. Assets declined about 25 per cent to Dh3.3 billion, from Dh4.4bn at the end of last year.
But with the impairment charges out of the way, Shuaa said it was on the right track for the future. "We are refocusing the firm's efforts on the fee-generating businesses and have engaged Bain & Co to help us formulate our future strategy against a changed regional landscape and new realities," said Mr al Ansari. Shuaa's brokerage, asset management and investment banking had sharply lower activity, but they were all profitable. Funds under management fell an average 6.5 per cent in the quarter.
Shuaa stock closed 9.7 per cent lower at Dh1.77 yesterday. @Email:uharnischfeger@thenational.ae
