x Abu Dhabi, UAEFriday 19 January 2018

Shuaa trims fourth-quarter loss after completing restructuring programme

Shuaa Capital said fourth-quarter loss narrowed as it reduced costs by 72 per cent after restructuring.

Shuaa Capital narrowed fourth-quarter losses after the Dubai-listed investment bank completed its restructuring programme.

Net losses stood at Dh20.7 million (US$5.6m), compared with Dh111.9m in the same quarter the previous year, the company said yesterday. Shuaa stock fell 1.6 per cent to close at 60 fils.

Revenues increased by 25 per cent to Dh25.2m, helped by an increase in investments in the bank’s managed funds.

Costs dropped 72 per cent to Dh39.2m amid job cuts and as processes were made more efficient, it said.

Shuaa was hit hard after the global financial crisis wiped the value off assets and cut access to credit. The company stopped offering retail brokerage services as trading volumes collapsed after Europe’s debt crisis worsened and popular uprisings toppled leaders in Egypt, Libya, Tunisia and Yemen.

The company also drastically cut its equity research unit following the introduction of its “right-sizing programme” in 2011.

Shuaa has not booked a profit since 2008.

Total loss stood at Dh59m for last year, the company said. The result is in line with Shuaa’s forecast of a loss of Dh40m to Dh60m for the full year.

The company forecasts between a loss of Dh18m and a profit of Dh6m this year,  according to its November guidance report.

Shuaa plans to target lending to small and medium-sized businesses and high net worth individuals to boost revenues.

“The reduced scale of our industry and the renewed need for capital and advisory expertise are playing out in our favour,” Shuaa said.

The asset management industry in the Emirates has become very competitive with cut-throat pricing and limited business, said an analyst speaking on condition of anonymity. “Everyone is waiting for the next uptick.”

This month, Gulfmena Investment’s founder and chief executive Haissam Arabi said he had resigned as shareholders planned to close the asset manager’s proprietary funds and instead focus on mandates for high net worth individuals and family offices.

Gulfmena’s restructuring move came as the number of brokerages in operation dwindled to 48 companies from 102 in 2008.