Bahrain's GFH reports Q4 profit drop as impairment charges climb

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

GFH Financial Group, a Bahrain-based investment bank, reported a 38.7 per cent drop in its fourth-quarter net profit, dragged down by a rise in impairments charges.

Net profit attributable to the shareholders of the bank in three months to the end of December slumped to $6.5 million (Dh23.8m), the bank said in a statement on Wednesday. Higher provisions for credit losses from the group’s commercial banking subsidiary impacted the quarterly earnings, it said without providing the provision figures.

The bank’s full-year 2019 profit also declined 29.8 per cent to $80.1m. GFH’s revenue last year, however, climbed to $335.7m, up from $286.2m reported at the end of 2018, it said.

The rise in revenue reflects “continued growth and progress in the group’s core investment banking business, increased contributions from real estate activities and strong performance in the group’s growing treasury business,” the bank said.

Total assets of GFH rose to $5.9 billion for the reporting period, up from $5bn recorded a year earlier. Its total assets along with the funds under management increased to $10bn at the end of last year from $8.5bn the previous year.

Earnings per share for 2019 dropped to 2.37 cents compared with 3.22 cent from a year earlier. Total equity attributable to shareholders slid to $1bn from 1.06bn for the same period due to additional acquisition of an infrastructure project and treasury share buyback programs, the bank said.

“We have achieved good growth and results from across our core business lines, which characterised the group’s performance in 2019,” Hisham Alrayes, chief executive of GFH, said. “We had to restructure our commercial banking operations for stronger contributions in the future hence we have been impacted by provisions.”

Investment banking income for the year has more than doubled on the back of the group’s success in “identifying and placing unique income generating investments”, he said without giving the income figure.

GFH earlier in February said it acquired a hospitality portfolio in the US in partnership with investment firm Arbor Lodging Partner. The deal worth $250m was executed through GFH Capital - a fully-owned subsidiary of the group.

GFH has increased its investment in the US over the last year. In July, the company acquired a portfolio of office buildings for Dh367m in the US that pushed the value of its investments in the country and in the UK real estate sector to more than $1bn.

The company in the fourth quarter also approached the debt capital market and priced its $300m five-year sukuk in January. The deal, its first debt capital market transaction since 2008, was oversubscribed 2.5 times, with the order book exceeding $750m.

“These proceeds will be used to fund our next phase of development in 2020 and beyond. With solid foundations and the strides we have made over the past year, the group’s focus now continues on growth, diversification and value creation for our investors and shareholders,” said Jassim Alseddiqi, chairman of GFH.