Shuaa Capital reported a significant increase in its losses for the fourth quarter, which it attributed to a poor performance from Gulf Finance, its SME lending unit.
The financial services firm’s losses rose to $44 million (AED161.8 million), a steep rise on the $4 million loss recorded in the same period last year. Revenues rose by 58 percent during the quarter to $10.9 million.
For the year as a whole, Shuaa posted a loss of $51.8 million, compared to a $7 million profit in 2014.
In a statement, Shuaa said that the majority of last year’s loss was attributable to Gulf Finance, which had set aside provisions of $42 million against bad loans.
Research released by Gulf Finance earlier this month showed worsening sentiment in the UAE’s small business sector, with many firms finding it tough to win new orders, arrange financing and collecting payments.
“Despite this market volatility, Gulf Finance remains committed to servicing the SME sector and has succeeded in cautiously growing the business during the course of the year,” the statement said. “Demand for SME financing products in the UAE remains robust. The business will continue to closely monitor developments in the SME sector and adjust its growth strategy thereafter.”
Shuaa also stated that revenues had increased by 21 percent to $43.5 million over the year, helped by the performance in its Saudi division.
“The difficult market conditions driven by the decline in oil prices, global economic instability and continued political uncertainty in the region witnessed during the course of 2015 created a challenging operating environment for Shuaa’s business units, particularly in the second half of the year” said the firm’s chairman, Abdul Rahman Hareb Rashed Al Hareb.
Total assets at the end of last year remained steady on $437 million, the same as 2014. The firm also said that operating expenses had remained roughly the same as the year before, while general and administrative expenses dropped by 9 percent.