8 billion expected investments of brokerage firms by the end of 2017Truth Consultancy
Source: Abu Dhabi – Abdel Fattah Montaser
Date: 02 August 2017
A total of 6% to 8 billion dirhams will be invested in brokerage firms operating in the UAE this year, compared with 7.5 billion dirhams at the end of last year, a financial report said.
Reda Mosallam, general manager of Truth, economic Consultancy , yesterday that revenue from brokerage firms operating in the country is expected to grow 20% to AED 551 million in 2017 compared to AED 453.6 million in 2016.
With a decrease of AED 76.9 million (14%) compared to 2015. Total brokerage fees increased from AED 367.3 million to AED 418.7 million in 2016.
He predicted that the brokerage firms registered with the Securities and Commodities Authority will achieve a total profit during 2017, exceeding 200 million dirhams after the total profit last year was 64.5 million dirhams. He also predicted that the equity of these companies will contribute 40% to finance the investment in the brokerage sector during 2017, equivalent to 3.2 billion dirhams.
The report stressed the need for the body responsible for the legal licensing of brokerage companies, the Securities and Commodities Market Authority, to put in place a mechanism to encourage brokerage firms to merge, as these companies may not take the initiative to merge on their own.
The report pointed out that shareholders’ equity in the brokerage firms declined by AED 27.8 million by the end of 2016 compared to AED 3.02 billion at the end of 2015. The decrease was due to the decrease in accumulated profits and revaluation reserve during 2016 compared to 2015 According to the report.
Total assets of the brokerage firms by the end of 2016 increased by AED 445.7 million to AED 7.1 billion from AED 6.7 billion in 2015, a growth of 6.7%, reflecting the increase in the rise of commercial paper and other notes.
While the current liabilities of brokerage firms operating in the Abu Dhabi and Dubai markets increased by AED 498.4 million from AED 4 billion to AED 4.5 billion in 2016, a growth of 12.6%, due to growth in trade payables and loans.
The report stressed the need to review the legislation and decisions governing the affairs of brokerage companies as well as the fees charged by the Securities and Commodities Authority and the capital markets and make the necessary adjustments to improve the environment and work environment and reduce the burdens and restrictions.
The report on the performance of brokerage firms operating in the country over the past two years called for the encouragement of brokerage firms operating in the UAE to merge to create strong brokerage firms that combine the expertise of these small companies and raise their ability to face future difficulties, Integrated.
Stressing the need to raise the financial solvency of financial brokerage companies by building reserves and allocations to be able to cope with unexpected crises and attract capital by obtaining investor confidence and raising the ability of these companies to manage risks by diversifying their portfolios.