Manama, Bahrain, 29 January 2007: Gulf Finance House (LSE: GFH, S&P BBB-, CI BBB+) today announced that it had closed 2007 as the most profitable year in the history of the Bank with a net profit of US$ 340 million, an increase of 61% compared to the previous year. GFH Q4 net profits marked an exponential increase of 205% to US$ 109 million over the corresponding period of last year, and up 28% on Q3 2007, attributable to shareholders.
Earnings per share for the fourth quarter 2007 were 15 cents (US) compared to 5 cents (US) for the end of December 2006, while earnings per share for the entire 2007 was 48 cents (US) compared to 30 cents (US) for the entire fiscal 2006. Return on equity of 2007 stood at 44% and return on assets stood at 18%. GFH’s Board of Directors has proposed a record total dividend of 95%, payable as 85% cash and 10% bonus shares, subject to the approval of the Central Bank of Bahrain (CBB) and the Annual General Meeting (AGM).
Commenting on the results, Mr. Esam Janahi, Chairman, GFH, stated: “2007 has been a watershed year for the Bank. In addition to the Bank posting its strongest financial results, reinforcing its leading position within its core GCC market, it has achieved the status of a truly international blue chip Islamic investment bank. This is a direct result of our clear strategy focusing on innovative economic infrastructure projects in highly attractive emerging markets, especially in the Middle East, North Africa and Asia..
“Additionally, the continued success of our business model has been endorsed by the global investment community as demonstrated by the resounding success of the listings of our GDRs and of our Sukuk programme on the London Stock Exchange. Today, over 28% of the Bank’s shares are held by major international institutional investors,” Mr. Janahi commented.
In the fourth quarter GFH announced some of its most prestigious projects including the GFH Mumbai Economic Development Zone with an estimated development value of US$ 10 billion and the planned Tunis Financial Harbour at Tunis Bay with an estimated development value of approximately US$ 3 billion. The 1600-acre zone in Mumbai will include Energy City India, Telecom City Mumbai, IT City Mumbai and Entertainment City Mumbai. Tunis Bay is set to be a development area of approximately 1125 acres, and aims to become the first offshore financial centre in North Africa
Commenting on the Bank’s plans and expected growth drivers in 2008, Mr Peter Panayiotou, Acting CEO, stated: “The solid performance of 2007 is the result of senior management’s continued focus on delivering the strategic objectives of the Bank. We expect the Bank to continue delivery of its growth strategy. We have a solid pipeline of economic infrastructure projects that we expect to launch this year in the GCC, MENA, and Asia region. Although our core business will continue to be development of economic infrastructure, the Bank is also expanding its products across other business lines, particularly in the areas of asset management and private equity through an experienced team of industry professionals and these businesses will make a positive contribution to 2008’s profitability and diversified recurring income stream.”
Amongst the other significant initiatives which were instrumental in GFH’s success in 2007 was the Bank raising over US$ 630 million from investors across the GCC as equity to fund the development of Energy City India’s infrastructure, making it the most successful private equity raising in GFH’s history.
In the first half of 2007, GFH increased its investment in its wholly owned subsidiary Khaleeji Commercial Bank by raising KHCB’s capital to US$ 265 million, before selling a 60% stake to a group of regional financial institutions and high net worth individuals. GFH made a profit of $84 million on the sale of this investment during that year.