Gulf Finance House returns to profit
Manama, March 1, 2012
Bahrain-based Gulf Finance House (GFH) returned to profitability in 2011 despite a challenging year underscored by shortfalls in market liquidity and political tension, the bank said.
The bank achievedva net profit of $381,000 in the year, compared to a net loss of $349 million in 2010. Operating profit before provisions were $9 million, compared to a loss of $93 million in 2010.
The bank’s return to profitability was the result of strong shareholder support, investor loyalty and a dedicated management team committed to seeing through the significant restructuring and recapitalization plan that was set in motion in 2010, it said.
The bank saw a 37 per cent reduction in operating costs during 2011. During the fourth quarter of 2011 GFH had a net loss of $4 million as compared to a net loss of $187 million in 2010, primarily because of $8 million of impairment provisions, it said.
The bank has focused its efforts since 2009 on cleaning up its balance sheet by clearing most of its outstanding debts. GFH was among the first investment banks in Bahrain and the region to take this move, which was seen as being very controversial in the beginning with negative effects on the bank’s financial standing in the short term, the bank said.
As part of its restructuring plan, GFH also reduced its liabilities by 33 per cent in 2011. Additionally, GFH continued to pursue its recapitalization plan, targeting GCC sovereign funds and investors. These efforts have born fruitful results to date, it said.
GFH managed to build significant forward momentum on its major projects during 2011. The first of these projects was the signing with the Wadhwa Group in Mumbai, India for the development of the Mumbai Economic Development Zone project to the next phase. On another front, the Tunis Financial Harbour (TFH) project has begun the prequalification process for prospective contractors following the announcement made by the Government of Tunisia in support of the project’s external infrastructure work, it said.
The forward movement on these projects confirms GFH’s commitment to moving existing infrastructure projects forward towards completion and achieving successful investors’ exits, the statement said.
Esam Janahi, executive chairman, said: "Global, regional and national economies were all subjected to significant stress factors during 2011, which impacted several sectors significantly, not least of which was the financial sector. We met these challenges with a solid strategy, which was put in place in 2010 to correct GFH’s trajectory.
“We have refocused our efforts on extracting value from our investment portfolios besides identifying unique opportunities in the market to secure, durable and consistent sources of income. We are also committed to ensuring that we prioritise the exit of our investors from our existing managed investments, and indeed we made significant headway on a number of key infrastructure projects in 2011,” he said.
“I am confident that GFH will continue to see positive results during 2012 as investor confidence in GFH, and indeed in the financial sector as a whole, returns. We aim to continue delivering long-term value to both shareholders and clients alike, and I, the Board and the management are singularly focused on achieving this goal,” Janahi said. – TradeArabia News Service