Total capital invested in investment and financial services companies listed on local equity markets rose to AED 58.2 billion at the end of last year, an increase of 9% compared to AED 53.3 billion at the end of 2016, according to a study by Truth Economic Consultancy.
According to the study, the gross domestic product of the investment and financial services sector in the country reached 138.5 billion dirhams by the end of 2017, with an average growth of 6.3% compared to 130.3 billion dirhams by the end of 2016. The listed companies in the financial markets contributed about 42% of the sector’s contribution to GDP Total State.
Reda Mosallam, partner manager of Truth said, The study of indicators and financial performance of listed investment and financial services companies showed that the value of non-current assets (fixed assets) at the end of last year increased to AED 28.9 billion, an increase of 14 percent compared to the end of 2016, Due to the increase in investment deposits as well as the property and equipment of these companies.
He added: The value of current assets in the sector increased to AED 29.1 billion at the end of 2017 compared to AED 27.9 billion at the end of 2016, an increase of 4%. Current liabilities increased by AED 2 billion to AED 22.5 billion, an increase of 10%.
“Shareholders’ equity, capital, reserves and profits reached AED 32.1 billion at the end of 2017, an increase of AED 1.9 billion compared to the value of 2016,” said Reda Mosallam. The increase was due to increased reserves in various forms as well as accumulated profits.
According to the study, the income of investment companies and listed financial services decreased by 1.6 billion dirhams to reach 6 billion dirhams by the end of 2017, down 21%.
And he said, with revenues falling, sector companies witnessed a decline in their total direct costs by the end of December 2017 by AED 602.6 million to AED 2.5 billion at the end of last year, and general, administrative and sales expenses fell to AED 1.5 billion, down AED 230 million.
The profits of listed investment and financial services companies also increased by AED 1.9 billion by the end of 2017. The return on capital of these companies was 10% in 2017, the return on equity was 7% and the return on total investment by investment and financial services companies was 4% On average, the ratio of operating costs to total revenue from the current activity of investment and financial services companies 41%.
The ratio of general, administrative and sales expenses to the investment and financial services companies listed in the Dubai and Abu Dhabi markets was 24%. The net profit margin of companies operating in the investment and financial services sector registered at Abu Dhabi and Dubai Financial Markets was 31% These companies in general.
The study recommended that the «return on capital» be a general indicator of the performance of the investment sector and financial services in the country, pointing out that the sector achieved a rate of return on capital approximately 11% per year, meaning that the investor interested in this sector will achieve a return on investment of about 11% .
The study included nine listed companies: 5 companies in the Dubai market: Shuaa Capital, AlRamz Corporation, Dubai Market, Dubai Investment and Gulf Public Investments, and 4 companies in the Abu Dhabi market: Waha Capital, Gulf Investment Company, Al Qudra Holding and Umm Al Quwain General Investments.