Bahrain's GFH gets 'B' long-term S&P rating on earnings and cash flow strength

Bahrain-listed GFH FInancial Group on Wednesday reported a drop in its full year net profit. Shutterstock

GFH Financial Group, a Manama and Dubai-listed financial institution, received a 'B' long-term issuer credit rating from S&P Global Ratings on the strength of its earnings and the company's ability to generate cash flows.

The rating agency assigned GFH  a stable outlook after a review of the company's four distinct business segments, GFH, said in a statement to the Dubai Financial Market, where its shares trade.

S&P also took note of the company’s ability to develop a stable pipeline of deals as well as its focus on undertaking income-generating transactions in its investment banking division and its efforts to exit legacy assets within its real estate portfolio, GFH added.

S&P defines a ‘B’ rating as one which is below investment grade, but one where the issuer “currently has the capacity to meet its financial commitments on the obligation”.

GFH is "pleased with the continued recognition from ratings agencies and the market, of the steady progress and ongoing development of the group’s business,” the company’s chief executive Hisham Alrayes said on Thursday. The company will continue to implement its current policies to "even further enhancing results and delivering greater value to the group’s shareholder and investors in the coming year”, it noted.

The S&P report, the company said, also underlined GFH Group's ability to generate cash flows and its improving earnings, and said a new treasury function and progress in its subsidiary Khaleeji Commercial Bank would likely contribute to an increase in income and its headline margins.

GFH earlier this year acquired six income-generating healthcare properties in the US worth Dh661 million. The portfolio, which caters to senior citizens, is located in California, Washington and Michigan states.

The deal was done in partnership with Madison Marquette, a Washington-based real estate developer, which controls 6 per cent stake in the properties, while the remaining 91 per cent is held by GFH along with its investors.

The Bahrain-headquartered company also plans to invest $200m (Dh734.5m) in the privately-owned schools sector through its new investment platform, Britus Education.

The company’s net profit in the nine months to September 30, fell 29 per cent to $73.5m despite a 24 per cent increase in total income to $254m. Total assets of the group increased to $6.14 billion as at 30 September 2019 from $4.43bn from a year earlier.