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MENAFN - Khaleej Times - 04/10/2012

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(MENAFN - Khaleej Times) DUBAI - Shuaa Capital on Wednesday announced its new strategic, operational and financial roadmap to turnaround the loss-making investment bank into a profitable unit in 2013.

The Dubai-based listed firm said it would focus more on growing its lending business as part of new turnaround strategy aimed at transforming the company into a client-centric fully integrated investment bank that will provide capital to the region's growing small- and medium-sized businesses.

The private investment bank said it would offer commercial finance, credit asset management products and corporate debt advisory services. The bank's integrated approach will service high net worth individuals, SME businesses, family offices and conglomerates as well as institutional clients.

"Access to capital remains a serious challenge for regional private companies and the SME sector in particular. Shuaa's strong balance sheet position allows the company to respond to the markets needs for credit products, solutions and advice," Shaikh Maktoum bin Hasher Al Maktoum, Executive Chairman of Shuaa Capital, said at a Press conference on Wednesday.

Shuaa Capital, which was established in 1979, is among the region's investment banks hit by the global financial crisis. The company recorded a 4.3 million loss in the second quarter and it expects a full-year operating loss in 2012.

The bank - which cut jobs, replaced four CEOs and moved away from retail brokerage in Saudi Arabia, Egypt, Jordan and Turkey - is confident to regain the confidence of investors after the successful completion of restructuring programme. It also pins hopes on new strategy aims at expanding credit facilities to become profitable again next year.

"We are starting to see the results from our restructuring programme fall through to the bottom line. We are confident that the work we have done and the new revenue generating strategy will continue to improve the profitability trend, with the aim of generating consistent returns for shareholders in the coming years," Al Maktoum said.

"The bank is aiming to reach positive territory in 2013 and attain consistent profitability thereafter. We are planning to achieve a return on equity of 7.5 per cent by the end of 2016," he said.

"We are starting to issue market estimates to act as milestones in our further recovery and to show the market our clear intention."

The UAE's biggest investment bank has improved operating efficiency reducing cash outflow from Dh10.2 million per month in 2011 to Dh4.3 million per month by the end of first half of 2012. This is expected to be reduced further to Dh3.5 million per month by the end of the current financial year; overall a targeted 67 per cent reduction.

"Group operating expenses are expected to run at Dh42.5 million a quarter, including Gulf Finance, for the remainder of 2012 and 2013. Group operating expenses were Dh44.7 million in second quarter of 2012, a major reduction on previous years," a Shuaa statement said. "We will continue to drive down operating expenses where possible and bring our target cost/income ratio to 75 per cent by the end of 2014 and into line with the international peer group," Al Maktoum said.

Shuaa has also de-risked its balance sheet by reducing the risk exposure to non-core assets. Non-core assets have been reduced to Dh264.1 million from Dh564.5 million at the end of December 2010, helping to ease earnings volatility.

"Today, Shuaa has a strong balance sheet and liquidity position which remains a significant competitive advantage. Total assets as at first half of 2012 were Dh1.47 billion and liabilities were Dh329 million, down from Dh447.6 million in 2010," the statement said.

Shuaa Capital's shares rose 3.66 per cent to 62 fils yesterday. The stock prices have gained 13 per cent this year.


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