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Fawad Tariq Khan

Shuaa Capital posts operating income of $1.63m in Q2

ABU DHABI, August 11, 2022

Shuaa Capital, a leading asset management platform, has reported a net operating income of AED6 million ($1.63 million) in the second-quarter (Q2) of the year compared to AED24 million in Q1 primarily due to lower trading revenues.

Shuaa and its subsidiaries (the Group) reported a net loss attributable to shareholders of AED170 million in Q2 2022, compared to a net income of AED6 million in Q1 2022. Non-cash expenses (mark-to-market of Shuaa managed funds, accrued expenses, and accelerated amortization of intangible assets) contributed to results.

In the second quarter, Shuaa delivered another set of strong recurring revenues of AED64 million across all business segments of the Group.

The Group's Asset Management segment delivered a robust performance of AED33 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 AED3 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 investment 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 Corporate segment remained strong at AED28 million despite increased market volatility - led by Shuaa's robust trading business in Q2 2022.

The cost-income ratio of 90% in Q2 2022 is higher than the 73% in Q1 2022 due to lower revenues. However, additional cost optimization measures are expected to have an impact in the second half of 2022, a Shuaa statement said.

The Group continues to focus on deleveraging with repayments of AED188 million in H1 2022, it added.

Shuaa is well positioned to benefit from the UAE's 8.2% y-o-y economic expansion in the first quarter of 2022, led by higher oil production and strong 6% 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 GCC will run budget surpluses due to higher oil prices, resulting in excess accumulation of capital being available for investment opportunities.

Fawad Tariq Khan, Group Chief Executive Officer of Shuaa Capital, said: "Despite a challenging quarter, our core operating business remained resilient and delivered recurring revenues of AED64 million across all business units. We have embarked on a Group-wide exercise to streamline our business by addressing non-cash expenses and cost optimization measures to position us for profitability in the future. 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." – TradeArabia News Service




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