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Moody's affirms Shuaa Capital ratings

Dubai, December 18, 2013

Shuaa Capital, a leading financial services company in Dubai, said Moody's Investors Service has affirmed its long-term foreign and domestic currency issuer ratings of 'B1' and changed its outlook to stable from negative.

The ratings agency also affirmed Shuaa's not-prime short-term ratings.

Moody's affirmation primarily reflects Shuaa's good capitalisation and liquidity levels that provide an adequate buffer against future losses.

The change in outlook to stable from negative reflects its recovering profitability and efficiency, owing to the stabilisation of the operating environment and ongoing restructuring programme.

The rating actions also took into account the following moderating factors: dependencies on key management personnel during its transformational period; and the firm's dependency on the rapid and unseasoned loan growth from its SME financing subsidiary Gulf Finance Corporation (GFC).

According to Moody's, the primary driver of the rating affirmation at the upper end of the 'B' range is the Dubai company's good capital and liquidity buffers. Its liquid assets comprised 28 per cent of total assets, while shareholders' equity to total assets stood at around 75 per cent.

Although Shuaa's capital levels will decrease, as the company boosts leverage to fund asset growth, the rating agency expects capital to remain sufficient to provide an adequate buffer against future asset-quality weakness, said Moody's in its review.

The change in outlook to stable from negative reflects its recovering profitability and efficiency, owing to the stabilisation of the operating environment and ongoing restructuring programme.

On the ratings outlook change to stable from negative, Sheikh Maktoum Hasher Al Maktoum, the executive chairman of Shuaa Capital, said: “We see this as an acknowledgement that Shuaa has indeed reached a new level of stability following a period of restructuring and volatility.”

“The company has executed on a number of turnaround initiatives and the market is starting to recognise their tangible outcomes,” he added.

Moody's expects Shuaa to report a profit for 2013 after reporting sustained losses for five consecutive years, as a result of its new business strategy where the company has increased its focus on recurring interest income generated by GFC; and stable fee and commissions income generated through its asset management, capital markets and other advisory business lines.-TradeArabia News Service




Tags: Dubai | Shuaa capital | Ratings |

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