Shuaa Capital profit falls 10% on staff costs and poor returns

Dubai: UAE investment bank Shuaa Capital saw a 10 per cent drop in its first-quarter profit as higher staff costs and poor returns on international investments weighed on its bottomline.

It reported a profit of Dh67.1 million for the first three months of the April 2008-March 2009 financial year, compared to Dh74.5 million profit for the same quarter of 2007-08.

But the company saw a profit growth of 13.9 per cent over the last quarter.

Operating income for the April-June period reached Dh176.6 million, up 21.9 per cent from the same period a year earlier.

Iyad Duwaji, Shuaa chief executive officer, in a statement noted "difficult market conditions regionally and globally."

"Although the performance during the first quarter partially reflected the poor performance and unusual volatility in capital markets, our annuity fee business generated the second strongest quarter in the company's history," he said.

Global markets

Oliver Schutzmann, head of Shuaa's investor relations, told Gulf News the ongoing volatility in global markets affected the company's return investments. "These investments did not perform as per our expectations, but it was still a positive return," he said.

He said due to volatile market conditions the company has become more "risk-averse."

The company's staff costs also went up as the number of employees increased to 498 last June from 257 in 2007.

The value of assets under management increased from Dh3 billion in June last year to Dh6.7 billion this year, Schutzmann said, describing the asset management division as a "star performer."

The bank also hopes for better income from its investment banking business.

It is working on two merger and acquisition transactions, three initial public offerings and one debt deal.