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
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
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.