Fitch affirms GFH’s ‘B’ rating; Outlook Stable

TDT | Manama    

The Daily Tribune – www.newsofbahrain.com

GFH Financial Group yesterday announced that Fitch Ratings has affirmed its Longand Short-Term Issuer Default Ratings (IDR) at ‘B’. The Outlook on the Long-Term IDR is Stable. 

Fitch has also affirmed the senior unsecured long-term rating of the US$500 million sukuk due 2025 issued through GFH Sukuk Company Limited (“GFH SCL”) at ‘B’ with a Recovery Rating of ‘RR4’.

According to the report, key ratings drivers included  GFH’s evolving business model, noting  management has made progress in implementing a de-risking strategy in recent years, growing its treasury activities, increasing fee-generative business from investment management and reducing legacy illiquid real estate investments.

GFH’s overall profitability was affirmed as moderate, with capitalisation and liquidity noted to be in line with and above regulatory standards, respectively. The Group’s treasury activities (26% of revenue in 2022), were also highlighted by Fitch as a growing area and significant profit contributor, having commenced only a few years ago.  

Fitch affirmed management’s goal of significantly increasing the Group’s fee-earning assets (Currently: US$7.8 billion; in 2021: US$5.7 billion) over the medium term, primarily through inorganic growth targeted at the US and UK markets.

Fitch noted other IDR drivers including GFH’s significant albeit reduced exposure to illiquid unlisted investments, primarily related to real estate investments and exposure to low-rated operating environments. Fitch further notes that the IDR also takes into account GFH’s niche franchise in Bahrain as an Islamic wholesale investment bank and majority owner of Khaleeji Commercial Bank.

Damian White, Group Chief, Financial Institutions and Proprietary Investments of GFH, said, “We will continue to pursue expansion in key areas and markets with the aim of further strengthening our performance and building our portfolio of income-generating assets.”