Leading UAE investment bank Shuaa Capital has registered a sharp drop in its net revenue for 2015 which fell to Dh178.2 million ($48.5 million) compared to the previous year's Dh213.4 million ($58 million).

The company posted an overall loss of Dh190.3 million in the fourth quarter over a profit of Dh25.8 million) hit by poor performance of the SME lending business, which set aside provisions of Dh154.6 million against bad loans.

For the fourth quarter, Shuaa reported revenues of Dh40.1 million, up 58 per cent over Dh25.4 million last year.

Commenting on the results, chairman Abdul Rahman Hareb Rashed Al Hareb, said: "The difficult market conditions driven by the decline in oil prices, global economic instability and continued political uncertainty in the region witnessed during the course of 2015 created a challenging operating environment for Shuaa’s business units, particularly in the second half of the year."

“We have during the course of 2015 closely monitored market developments and reassessed our positioning accordingly, and we are currently working on a number of initiatives that we are confident will enhance Shuaa’s performance in 2016,” noted Al Hareb.

He pointed out that the majority of the loss recorded in 2015 was because of Gulf Finance, the SME lending business, which set aside provisions of Dh154.6 million against bad loans.

Despite this, the business increased full year revenues by 21 per cent to Dh159.7 million compared to Dh131.5 million the year before and continues to see strong demand for its financing products, particularly in the Saudi Arabia division, where SMEs have historically experienced difficulty in accessing growth finance.

According to him, despite volatile market conditions in 2015, Shuaa had maintained a solid balance sheet and total assets at year-end stood flat at Dh1.6 billion.

The group’s liquidity position too remained strong with Dh263 million in cash.

Liabilities increased to Dh639 million from Dh459 million in 2014, principally due to additional financing support for the SME lending business. As of 31 December 2015, net assets stood at Dh961 million while the leverage ratio was 0.47 at year-end, he added.

On the future outlook, Al Hareb said: Some of the key growth areas we see in 2016 include our asset management division, which has performed well in 2015 despite challenging markets and has a number of new product launches in the pipeline."

"Our focus is on Shuaa Capital Saudi which has entered into a partnership with Jumeirah Group and is nearing completion of two of its principle hotel projects in the kingdom and the continued growth of Gulf Finance, both in the UAE and in Saudi Arabia, where we see significant opportunity for the business and continued strong demand for our financing products," he added.-TradeArabia News Service