Dubai's Shuaa Capital more than doubles Q4 profit on 'strategic transformation'

Investment banking and asset management firm swung to a full-year net loss of $37m on one-off charges

Shuaa Capital has made moves to diversify its product portfolio and grow its fee income business. Jaime Puebla / The National

Shuaa Capital, an investment banking and asset management firm based in Dubai, has reported that its fourth-quarter net profit more than doubled annually amid a continued focus on its “strategic transformation”.

Net profit attributable to shareholders in the three months ended December surged 114 per cent a year to Dh9.2 million ($2.51 million), from about Dh4.3 million in 2021, the company's preliminary results showed on Tuesday in a filing to the Dubai Financial Market, where its shares are traded.

However, revenue declined by 38 per cent annually to Dh50.8 million while earnings before interest, taxes, depreciation and amortisation (ebitda) surged 122 per cent on an annual basis to Dh38.6 million.

For the full year, the company swung to a net loss of Dh135.2 million, from a profit of Dh24.2 million in 2021, Shuaa said.

The loss was driven by one-off charges taken in the first half of 2022, primarily attributed to an accelerated amortisation of intangible assets and other non-cash items, the lender said.

Revenue for 2022 declined by about 18 per cent annually to Dh265.9 million, from Dh322.7 million a year earlier, Shuaa said.

The bank also posted an operating loss of Dh46.9 million last year, compared with an operating profit of Dh34.4 in 2021 while ebitda swung to Dh135 million in 2022, from a loss of Dh54.7 million a year earlier, the company said.

Despite the losses, Shuaa remains on track in carrying out its strategy, group chief executive Fawad Khan said.

“2022 was a crucial year for Shuaa. We executed on a plan for a simpler, more focused financial services firm, built around client needs and innovative investments,” he said.

“We remain committed to our core mission and building on our leading franchise in the Middle East to grow our business and deliver significant value creation for our clients and shareholders.”

Economic growth gained momentum in 2021 and continued last year as the UAE's financial system remained robust, boosting other industries.

The economy of the Emirates is projected to have grown by 7.6 per cent in 2022, driven by a sharp expansion in both oil and non-oil sectors, according to estimates by the UAE Central Bank.

In Dubai, business activity in the non-oil private sector economy remained robust in January, expanding for the ninth month in a row as consumer demand improved along with employment in the emirate, the S&P Global purchasing managers' index showed last week.

We remain committed to our core mission and building on our leading franchise in the Middle East to grow our business and deliver significant value creation for our clients and shareholders.

Fawad Khan,
group chief executive of Shuaa Capital

Shuaa has made moves to diversify its product portfolio and grow its fee income business. In December, it set up three Sharia-compliant funds in Abu Dhabi Global Market, bringing assets under management on the company's Sharia-compliant platform to more than $200 million.

Earlier this month, it announced plans to launch two Sharia-compliant funds in the first half of 2023 to further expand its asset portfolio.

The new funds will be managed by Shuaa GMC under the umbrella of Shuaa's Incorporated Cell Company (ICC) fund structure, domiciled within the Abu Dhabi Global Market.

One of the funds will be set up in the first quarter, focused on Saudi Arabia and the GCC, while the other is expected to be launched in the second quarter.

“With this launch, the ICC umbrella now offers five funds catering [to] the strong investor appetite for diversification of their Sharia-compliant investments across geographies and asset classes,” Shuaa said in Wednesday's filing.

Shuaa's assets at the end of 2022 were valued at Dh3.44 billion, down more than 40 per cent from Dh5.77 billion a year earlier.

Shuaa announced the development of Ocean House, a prime waterfront property on Dubai's Palm Jumeirah, in the fourth quarter of 2022, marking the arrival of a Shuaa subsidiary, London-based real estate firm Northacre, in the region.