Shuaa posts 22% increase in earnings

Dubai: Shuaa Capital yesterday reported a 22 per cent rise in first-half net profit to Dh128.6 million.

Revenue increased to Dh277.2 million, a 62 per cent rise over the first half of last year

Earnings per share were up to Dh0.226 from Dh0.179, representing a year-on-year rise of 18 per cent.

"Market conditions are favourable," said Majid Saif Al Ghurair, chairman.

"It is clear to us that the financial services industry in the GCC will continue its rapid development. Integration of the GCC region into global financial markets is also increasing pace. Shuaa Capital will continue to be at the forefront of these developments," he added.

Shuaa's operating income climbed by Dh65.2 million to Dh208.5 million, an increase of 46 per cent over the first six months of last year.

"We have built up a lot of momentum over the last six months," said chief executive Iyad Duwaji.

"Our operating income trends mirror the performance of our fast growing franchise. The performance in our core businesses provides a solid base for future earnings growth and we are well positioned to capture the benefits that would result from increased activities in our various business lines," he added.

The consolidation of the brokerage business, higher fees and commission income from investment banking and asset management as well as income from investment securities drove this increase, which more than offset the decline in income from investments.

Interest income

Interest income, which accounted for 19 per cent of revenues, grew to Dh53.3 million, amounting to an increase of 27 per cent versus the first half of 2007-08. Income from associates increased by 14 per cent to Dh 17.2 million, accounting for 6 per cent of net revenues.

While top line growth was strong, general and administrative expenses increased from Dh36.4 million to Dh76.3 million.

This was a direct result of the fast growth in the number of employees, with the headcount increasing from 170 to 270 over the past 12 months, the company said in a statement.

Additional costs were accrued from Shuaa Capital's expansion into Saudi Arabia, and offices in Beirut and Cairo.

Operating costs were also up due to provision accruals of Dh23 million for employee benefits. Interest expenses were up by 57 per cent to Dh42.6 million at mid-year. This was the result of increased leverage from Dh789.6 million in the first half of 2006-07 to Dh1,197.7 million in 2007-08 respectively.