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Wed 3 Oct 2012 05:00 PM

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Shuaa Capital chief eyes break-even in 2013

Dubai-based investment bank says it will look to grow lending as it moved to reverse losses

Shuaa Capital chief eyes break-even in 2013
Sheikh Maktoum bin Hasher Al Maktoum

Shuaa Capital, the Dubai-based investment bank, will look to grow its credit business as part of a strategy aimed at turning the loss-making bank around, its executive chairman has said.

Revenues from Shuaa’s credit business are expected to account for 47 percent of overall income by the end of 2012 and 68 percent in 2013, Sheikh Maktoum bin Hasher Al Maktoum told reporters on Wednesday.

“Our growth engine going forward will be Shuaa Credit. The growth will come from different advisories….credit funds that we will launch, credit advisory mandates,” he said.

“Results in 2012 won’t be in the profit number but it will be a significant improvement on all historical data… We are striving to break even for 2013.”

The bank is concentrating on providing capital to the region’s private sector, particularly family-run offices and SMEs, added Al Maktoum.

Shuaa Capital, once one of the Arab world’s largest investment banks, was hit hard by the global economic downturn. The firm cut jobs and slashed operating costs in the wake of the downturn.

The company, which has had several management changes in recent years, appointed former ABN Amro banker, Colin Macdonald, as its new chief executive in April.

Shuaa Capital on Aug 9 reported a second-quarter net loss of AED15.9m ($4.3m) for the three months ending June 30 compared with an AED0.6m profit in the same period last year.

The company said it had reduced its cash outflow from AED10.2m per month in 2011 to AED4.3m per month at the end of the first half of the year.

“This is expected to be reduced further to AED3.5m per month by the end of the current financial year; overall a targeted 67 percent reduction,” it said in a statement.

Operating expenses are expected to run at AED42.5m a quarter, including Gulf Finance, for the remainder of 2012 and 2013, it added.

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