DUBAI: Finance House said subdued trading activity on stock markets in the UAE dragged its first quarter profit lower as commissions and income from investments dwindled.
Net income decreased 28 per cent to Dh25.53 million in the first three months of the year from Dh35.51m in the same period last year, the Abu Dhabi-based financial services firm said.
Net fee and commission income dropped more than 39 per cent to Dh9.41m versus Dh15.52 m in the corresponding quarter last year.
“This was primarily due to the disappointing performance of the domestic equity markets in the first quarter of 2015 compared to the dream bull run in the first quarter of 2014,” Finance House said in a statement.
Dubai’s benchmark index dropped 6.9 per cent in the first quarter while Abu Dhabi’s index inched down 1.4 per cent as investors worried about the effect of a 50 per cent drop in the price of oil on corporate earnings dumped stocks and traded less.
Equity prices have since partially recovered, as has the price of crude, a commodity which the UAE relies on to fund most of its budget. The UAE is the eighth-largest oil producer in the world.
Financial services companies that rely heavily on commissions from stock trading, such as the Dubai Financial Market, were also hammered in the first quarter.
Other parts however of Finance House’s business, such as its loans business, fared better during the quarter. The firm’s net loans and advances jumped 21 per cent to Dh1.99 billion versus Dh1.65bn in the corresponding period last year. That helped its net interest income and income from Islamic finance jump 47.6 per cent to Dh44m in the first quarter from Dh29.8m in the first three months of last year.
“We remain confident that our strategy of continuously seeking and addressing profitable niche segments will enable us to continue generating healthy returns to our shareholders on a sustained basis,” said Mohammed Abdulla Alqubaisi the Finance House chairman.
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