SHUAA Capital psc (DFM: SHUAA), the leading asset management and investment banking platform in the region, has announced its financial results for Q2 2022. In the second quarter SHUAA and its subsidiaries (the “Group”) reported a net operating income of AED 6 million compared to AED 24 million in Q1 2022* primarily due to lower trading revenues.
The Group reported a net loss attributable to shareholders of AED 170 million in Q2 2022, compared to a net income of AED 6 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.
Further consolidation of recurring revenues and deleveraging of the balance sheet
In the second quarter, SHUAA delivered another set of strong recurring revenues of AED 64 million across all business segments of the Group.
- The Group’s Asset Management segment delivered a robust performance of AED 33 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 AED 3 million due to lower advisory and trading revenues compared to the first quarter, but given a favorable 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 USD 3.6 billion in the U.K. and the GCC, in addition to its real estate investment and asset management platforms.
- Revenues from our Corporate segment remained strong at AED 28 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.
- The Group continues to focus on deleveraging with repayments of AED 188 million in H1 2022.
Positioned to benefit from the UAE’s strong economic fundamentals and growth prospects
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 Gulf Cooperation Council (GCC) will run budget surpluses due to higher oil prices, resulting in excess accumulation of capital being available for investment opportunities.
Commenting on SHUAA’s Q2 2022 results, 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 AED 64 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.”
* excluding one-off items and carry expense