SHUAA Capital yesterday announced financial results for the second quarter ended 30 June 2015, reporting revenues and net profit of Dh 59.7 million and Dh 1.7 million respectively, as compared with revenues of Dh 52.0 million and a net profit of Dh 6.2 million in Q2 2014.
Net profit for the first half ended 30 June 2015 was Dh 0.1 million as opposed to Dh 14.4 million for the first half 2014.
Interest income continued to improve and increased by 18.7% to Dh 38 million (Q2 2014: Dh 32m) as Gulf Finance increased loan deployments. Income from net fees and commissions stood at Dh 9.4 million (Q2 2014: Dh 19.0m). Total expenses for the quarter increased to Dh 56.5 million (Q2 2014: Dh 47.3m) as the Group continued to invest in expanding its salesforce. SHUAA's cost/income ratio during Q2 stands at 72% (Q2 2014: 76%).
"SHUAA's balance sheet in the second quarter remains in good health as we invest and make progress in growing our business divisions," commented Abdul Rahman Hareb Rashed Al Hareb, Chairman of SHUAA.
"Although general market sentiment has remained subdued due to macroeconomic and geopolitical issues, we are encouraged by a number of positive developments within the business that we believe will set the scene for higher recurrent revenue generation in the second half of the year and beyond. These include progress by the Asset Management division's expected launch of new products; continued growth of Gulf Finance's loan book, our wholly-owned SME lending business; and expansion of our sales force and product offering in the Capital Markets division."
SHUAA maintains a strong balance sheet and a solid liquidity position with total assets of Dh 1.8 billion at 30 June 2015 (Q4 2014: Dh 1.6 billion). Total loans and advances increased to Dh 1,024.7 million (Q4 2014: Dh 847.0 million), with Dh 970.6 million attributable to the SME Lending Business. Liabilities increased to Dh 605.3 million (Q4 2014: Dh 458.8 million) and SHUAA's debt/equity ratio now stands at 42%.
The Investment Banking team reported quarterly net revenues of Dh 1.6 million compared to net revenues of Dh 6.8 million during the second quarter of 2014.
Following a challenging first quarter, the second quarter saw the Investment Banking division continue to work on a number of public and private mandates, and the deal pipeline of the division remains strong at the onset of the third quarter.
Gulf Finance UAE and Gulf Finance Saudi Arabia reported net revenues and a net profit of Dh 38.4 million (Q2 2014: Dh 33.4m) and Dh 3.0 million (Q2 2014: Dh 7.0m) respectively. Demand for the division's loan products remained strong resulting in an increase in interest income of 23% to Dh 37.4 million (Q2 2014: Dh 30.4m). Total expenses increased during the second quarter to Dh 35.4 million (Q2 2014: Dh 26.4m) as investments to grow the business, to launch new products and to expand the sales force continue.
During the second quarter, Gulf Finance expanded its product range through the launch of trade finance solutions to provide support to SMEs engaged in imports and exports. In June the company also successfully completed its rebrand with the launch of a new logo and a new corporate identity, reinforcing its position as a leading SME financing company.
As of 30 June 2015, Gulf Finance gross loan portfolio was Dh 1,018 million compared to Dh 854 million in the fourth quarter of 2014, and the company plans to grow the loan book further by the end of the year. Following the Dh 500 million senior secured term loan which was closed in the last quarter of 2014, the division is considering to secure similar additional financing in the fourth quarter of 2015.
The Asset Management division posted net revenues of Dh 4.9 million (Q2 2014: Dh 5.4m) and a profit of Dh 3.4 million (Q2 2014: Dh 4.2m) for the quarter. The result was driven by the performance recorded on SHUAA-managed funds. The division is currently working on a number of new products that are expected to launch in the second half of the year.
The Emirates Gateway Fund and the Arab Gateway Fund recorded quarterly returns of 10.5% and 7.6%, outperforming their respective benchmarks by 0.6% and 4.7%. As of 30 June 2015, client Assets under Management grew to Dh 929 million from Dh 853 million as of 31 December 2014.
For the second quarter, Capital Markets reported net revenue of Dh 3.0 million (Q2 2104: Dh 4.0m) and a net loss of Dh 0.2 million (Q2 2014: net profit of Dh 1.8m) as regional trading volumes for the period remained lower compared to the same period in 2014. However, the division recorded an increase in trading income and investments to expand the sales and trading desk continue.
The Corporate division posted quarterly revenues of Dh 11.7 million (Q2 2014: Dh 2.3 million) and a net loss of Dh 2.5 million (Q2 2014: loss of Dh 11.2m). This significant improvement was mainly a result of higher gains from investments in SHUAA managed funds and maintaining disciplined cost control measures restricting general and administrative expenses to Dh 12.2 million (Q2 2014: Dh 17.3m)