Shuaa Capital swings from profit to loss as it restructures

Shuaa Capital went into the red in the second quarter as it pushed on with a restructuring drive yet to return the bank to consistent profit.

The financial institution, based in Dubai, generated a loss of Dh15.8 million (US$4.3m) in the quarter, compared with a profit of Dh608,000 in the same quarter last year.

Shuaa, which trades in asset management, stockbroking, investment banking and private equity, has reported losses during every year since 2008 and analysts expect annual losses for this year of about Dh107m.

Shuaa's staff has been cut to 201 from 322 a year ago, the bank said, adding the final stages of its "right-sizing" programme had taken place in the second quarter. The company's revenues fell 37.7 per cent to Dh22.2m. However, the bank's restructuring plans were having a measured effect on bringing down costs, said Sheikh Maktoum Hasher Al Maktoum, Shuaa's executive chairman.

"We have significantly reduced the overall running costs to a rational level while maintaining our operational integrity. We look forward to sharing the next phase of our strategy by the end of the current quarter."

The bank said its restructuring measures were "starting to show a real impact on results", with most of its one-off costs reported to have taken place during the quarter. The benefits were expected to materialise during the third quarter, it added.

The firm's investment banking business returned to profitability in the quarter as it booked the profits of its role as joint lead manager for NMC Health's April listing on the London Stock Exchange.

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