Shuaa posts Dh6m operating income in Q2

Shuaa Capital, the leading asset management and investment banking platform in the region, said the company and its subsidiaries (the group) reported a net operating income of Dh6 million during the second quarter of 2022 compared to Dh24 million in first quarter of the year primarily due to lower trading revenues.

In a statement, the group reported a net loss attributable to shareholders of Dh170 million in second quarter of 2022 compared to a net income of Dh6 million in first quarter of 2022. Non-cash expenses (mark-to-market of Shuaa managed funds, accrued expenses, and accelerated amortisation of intangible assets) contributed to results.

"Despite a challenging quarter, our core operating business remained resilient and delivered re-curring revenues of Dh64 million across all business units. We have embarked on a group-wide exercise to streamline our business by addressing non-cash expenses and cost optimisation measures to position us for profitability in the future,” Fawad Tariq Khan, group chief executive officer of Shuaa Capital, said.

“We remain committed to providing innovative investment solutions to our clients, as evidenced by the global launch of Northacre and the increase in the number of managed funds our clients have access to," he said.

In the second quarter, Shuaa delivered another set of strong recurring revenues of Dh64 million across all business segments of the group.

The Group's Asset Management segment delivered a robust performance of Dh33 million of revenues, driven by the strong contribution from recurring management fees, which is expected to increase in the second half of the year with additional fee income from assets under management.

The group's Investment Banking business reported revenues of Dh3 million due to lower advisory and trading revenues compared to the first quarter, but given a favourable deal pipeline, revenues in the second half of the year are expected to be higher.

As part of the global expansion of Shuaa’s wholly-owned subsidiary, Northacre, a separate new entity based in London has been established to bring together the group’s real estate-related in-vestment management, development management and asset management businesses under one platform. Northacre will develop a portfolio of projects worth $3.6 billion in the UK and the GCC, in addition to its real estate investment and asset management platforms.

Revenues from the group’s corporate segment remained strong at Dh28 million despite in-creased market volatility led by Shuaa's robust trading business in second quarter of 2022.

The cost-income ratio of 90 per cent in Q2 2022 is higher than the 73 per cent in Q1 2022 due to lower revenues. However, additional cost optimisation measures are expected to have an impact in the second half of 2022. The group continues to focus on deleveraging with repayments of Dh188 million in first half of 2022.

Shuaa is well positioned to benefit from the UAE's 8.2 per cent y-o-y economic expansion in the first quarter of 2022, led by higher oil production and strong six per cent growth in the non-oil sector, as the country benefited from an increase in travel and tourism coupled with the positive impact of Expo 2020.

In addition, the UAE, and the Gulf Cooperation Council (GCC) will run budget surpluses due to higher oil prices, resulting in excess accumulation of capital being available for investment opportunities.

— muzaffarrizvi@khalejtimes.com