SHUAA Capital today reports financial results for the third quarter ended 30 September 2015. The third quarter revenues and net loss were AED 34.3 million and AED 28.6 million respectively, compared with revenues of AED 71.8 million and a net profit of AED 26.2 million in Q3 2014.

The net loss for the first nine months of the year ended 30 September 2015 was AED 28.5 million as opposed to a profit of AED 40.7 million for the first nine months of 2014. Revenues for the same period stood at AED 138.1 million compared to revenues of AED 188.0 million in the corresponding period in 2014.

'Difficult market conditions in combination with macroeconomic uncertainty created a volatile operating environment during the third quarter,' commented Abdul Rahman Hareb Rashed Al Hareb, Chairman of SHUAA Capital. 'Despite this, a number of encouraging highlights can be deduced from our financial performance; for instance growth in interest income, further expansion of the loan book and continued reduction of G&A expenses are positive steps towards improving our bottom line and enhancing revenue generating capabilities - a key target as we continue to position the Company for future growth.'

Interest income for the quarter continued to improve to AED 42.1 million representing an increase of 31% compared to the third quarter in 2014 (Q3 2014: AED 32.0m), while net fees and commissions were reported at AED 9.2 million (Q3 2014: AED 19.4m).

Total expenses grew to AED 61.5 million (Q3 2014: AED 45.9m) mainly due to a rise in provisions related to the SME Lending division, and continued investment into expansion of the sales force in the Capital Markets division. General and administrative expenses were further reduced by 18% to AED 32.0 million (Q3 2014: AED 39.2m) as the Group continued to reduce costs.

Mr. Al Hareb said: 'We continue to execute on our strategy of achieving sustainable long-term growth by enhancing our revenue generating capabilities and improving our net income. In the last three months, we expanded our client coverage and placement team via a number of strategic hires and are currently preparing for new product launches both in the UAE and Saudi Arabia. We see the business consolidating its position as a multiproduct financial services company driven by recurrent revenues generated from the SME Lending and Asset Management divisions, and complemented by additional revenue streams from fund performance, investment banking advisory transactions and capital markets activities.'

SHUAA Capital's balance sheet remains solid with total assets of AED 1.7 billion at 30 September 2015 (Q4 2014: AED 1.6 billion). At the end of the third quarter, SHUAA Capital had cash and deposits with banks of AED 245.0 million (Q4 2014: AED 365.4m), while total loans and advances increased to AED 1,054.1 million (Q4 2014: AED 847.0 million). Liabilities increased to AED 626.3 million (Q4 2014: AED 458.8 million) and SHUAA Capital's debt/equity ratio now stands at 42%.

SEGMENTAL PERFORMANCE Investment Banking

The Investment Banking team reported quarterly net revenues of AED 2.9 million (Q3 2014: AED 4.1m) and a net profit of AED 0.04 million (Q3 2014: AED 1.3m). Following a challenging first half of the year, the third quarter saw the first closing for Cayan Real Estate Development Fund I, a real estate development fund, managed by SHUAA Capital to finance the development of the Cayan Cantara project, an AED 1 billion real estate project in Al Barsha South, Dubai. At the onset of the fourth quarter, the Investment Banking division continues to work on a number of advisory and placement mandates.

Lending

Gulf Finance UAE and Gulf Finance Saudi Arabia reported net revenues and a net profit of AED 43.5 million (Q3 2014: AED 33.1m) and AED 2.8 million (Q3 2014: AED 9.7m) respectively. Despite signs of a deceleration in the UAE's SME sector over the past quarter, demand for the division's loan products remained robust resulting in a 37% increase in interest income to AED 41.5 million (Q3 2014: AED 30.4m). Total expenses increased to AED 40.7 million (Q3 2014: AED 23.4m) mainly as a result of a jump in provisions to AED 18. 1 million (Q3 2014: AED 6.9m). The SME segment in the UAE is currently experiencing the effects of the economic slowdown which impacts performance of the sector as a whole. Gulf Finance will continue to closely monitor developments in the SME sector over the coming quarter.

As of 30 September 2015, Gulf Finance gross loan portfolio was AED 1,094 million compared to AED 854 million in the fourth quarter of 2014.

Asset Management

The Asset Management division posted net revenues of AED 3.3 million (Q3 2014: AED 10.4m) and a profit of AED 1.5 million (Q3 2014: AED 9.0m) for the quarter. No performance fees were recorded in Q3 2015. The division is currently working on a number of new products that are expected to launch in the coming six months.

The Emirates Gateway Fund and the Arab Gateway Fund recorded quarterly returns of -8.9% and -12.1%, (outperforming their respective benchmarks by 0.9% and 2.1%). As of 30 September 2015, client Assets under Management grew to AED 867 million from AED 853 million as of 31 December 2014.

Capital Markets

Capital Markets reported third quarter revenues of AED 0.9 million (Q3 2104: AED 2.7m) and a net loss of AED 2.3 million (Q3 2014: net profit of AED 2.6m) as regional trading volumes for the period remained lower compared to the same period in 2014.

Corporate

The Corporate division posted quarterly revenues of AED 0.3 million (Q3 2014: AED 1.1m) before losses on investments in SHUAA managed funds of AED 16.6 million (Q3 2014: gains of AED 20.3m). Overall the division recorded a loss of AED 30.7 million (Q3 2014: profit of AED 3.6 m). Corporate revenues were principally from interest income, the sale of investments and returns from SHUAA managed funds. Savings were incurred via a continued reduction in general and administrative expenses.

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