Bahrain's GFH first-half profit drops on Covid-19 impact

The company said it will focus on investing in 'defensive' sectors such as education, healthcare, technology

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Skyline of the Corniche as seen from King Faisal Highway, Muharraq side, World Trade Center buildings, left, beside the towers of the Financial Harbour Complex, Muharriq Bridge at the Sheikh Isa Causeway, capital city, Manama, Kingdom of Bahrain, Persian Gulf
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GFH Financial Group, a Bahrain-based investment bank, posted a 69.4 per cent drop in first-half profit as the Covid-19 pandemic hit its investment banking, commercial banking, real estate and treasury businesses.

Net profit attributable to the shareholders of the bank in the six months to June 30 declined to $15.05 million (Dh55.2m), from $49.13m in the prior-year period, GFH said on Monday in an emailed statement. Revenue dropped 10.4 per cent year-on-year to $146.53m.

"For the first six months of 2020, the group is pleased, despite the current challenges and the impact of Covid-19 on our business and global markets, to make steady progress," Jassim Alseddiqi, chairman of GFH, said.

"While net profit for the first six months of the year was impacted by the current conditions, the group's achievements and underlying strong financial health and operational performance was reflected in ongoing investor and market confidence," he added.

The Manama-based bank in June said it completed the issuance of its $500m sukuk programme after selling the remaining amount of $200m. Proceeds from the Islamic bond issuance will be used to strengthen its balance sheet and diversify its sources of funding.

Total assets of the group stood at $6.13 billion in the first half, up 3.1 per cent from $5.95bn at the end of 2019.

Earnings per share for the first half dropped to 45 cents compared to $1.45 for the first six months of 2019.

Total equity attributable to shareholders decreased 15 per cent to $850m at June 30, from $1bn at the end of 2019. This was because the Covid-19 pandemic resulted in "modification losses, commercial banking restructuring activities, recognition of fair value losses and foreign currency translation differences" at the group level, GFH said.

Total expenses for the reporting period rose 10 per cent year-on-year to $126.1m due to costs related to the issuance of the group’s sukuk during the first half of 2020, GFH said.

"Building on our strong momentum and liquidity, the remainder of 2020 will see the group focus on continued value creation through further growth and diversification of our operations and investment portfolios," Mr Alseddiqi said.

The company said it sees opportunities despite the pandemic.

"While market conditions remain challenging, we see opportunities to undertake promising investments and to restructure businesses to deliver strong returns and value to our investors and shareholders," Hisham Alrayes, chief executive of GFH, said.

This includes continuing to focus on "defensive" sectors such as education, healthcare, technology and other income-generating assets, the executive said.

"We...look forward to steady progress throughout the remainder of the year and beyond," Mr Alrayes said.