Dubai's Shuaa Capital posts $54m Q1 net loss

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NET LOSS: Shuaa Capital posted a AED577.4m loss in the fourth quarter of 2008. (Getty Images)

Dubai-based investment bank Shuaa Capital posted a net loss of AED197.9m ($53.88m) in the first quarter as it booked losses on investments, it said in a statement on Thursday.

"Despite significant efforts to enhance profitability through cost-cutting measures, and focus on growing our fee businesses, book losses from investments still overshadowed the overall results," the statement said.

Shuaa Capital's private equity, asset management and finance businesses were all profitable in the quarter, the statement said, but its investment banking unit, brokerage and corporate segment, which controls all cash related to the group, posted losses in the period.

The investment bank said total assets stood at AED3.8bn and said it had over AED400m in cash and deposits with banks. Clients' funds under management stood at AED4.5bn, down from AED4.7bn in the previous quarter.

Shuaa Capital made a net profit of AED67.08m in the first quarter of 2008.

"The continued market turmoil during the first quarter strained our results but there has been a significant improvement in market sentiment since the beginning of March, and we are positive on the rest of this year," said the company chairman, Majid Saif Al Ghurair, in the statement.

Dubai's economy is suffering from a slowdown in the real estate sector, which has led to thousands of job cuts and prompted developers to cancel billions of dollars in projects.

In the fourth quarter, banks across the United Arab Emirates took provisions for bad loans and wrote down investments in their fourth-quarter financial reports.

Shuaa Capital posted a AED577.4m loss in the fourth quarter of 2008.

Last month, the bank's shareholders voted to support the investment bank, rejecting a measure that would have forced the bank to dissolve itself as a result of its earnings performance.

Regulators asked the company to put the question to shareholders in compliance with local commercial law, where shareholders must decide whether to dissolve a company if their losses exceed half of its capital. (Reuters)

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