GFH Financial Group, a leading regional financial group with interests in key sectors such as real estate and asset management, today (December 27) announced that its long-term issuer credit rating has been raised by S&P Global Ratings to ‘B’ from ‘B-‘ with stable outlook.
At the same time, the agency also raised the credit ratings on sukuk issued by GFH Sukuk Company to ‘B’ from 'B-'. The group’s ratings upgrade is said to reflect GFH's strong business and financial performance.
Announcing the upgrade, S&P Global said GFH’s revenue had proved resilient over the 2020-2022 period as well as noting that return on equity has improved to 8.6% over the first nine months.
Despite pressure on the Group’s treasury activities from rising interest rates, the report cited GFH’s ability to have delivered good investment banking revenue, building on its real estate specialisation in Europe and the US and steady commercial banking performance after a restructuring in 2020.
According to S&P, the stable outlook reflects its view that GFH can reduce its exposure to real estate assets while maintaining moderate capitalisation over the next 12-18 months.
S&P went on to highlight that the macroeconomic environment will continue to support GFH's activities. The report expects that oil prices will remain high through 2023-2024, which would support abundant liquidity in the GCC region.
"In turn, this is expected to keep demand for alternative investments elevated, support commercial banking, and likely keep regional money markets relatively stable despite higher interest rates," he added.
The steady divestment of GFH’s real estate activities was also a contributing factor to the ratings upgrade. Following the spinoff of Infracorp, S&P noted that the Group has successfully reduced its exposure to real estate.
Chief Investment Officer (Debt and Capital Markets) Salem Patel said: "We’re pleased to announce S&P’s upgraded ratings for the group and ongoing market recognition of the strength of GFH’s business and the steps we have taken to further enhance our results and financial position."
"Despite challenging market conditions, our performance across each of our core business lines has remained resilient, enabling us to deliver solid returns for the group, our shareholders and investors," noted Patel.
"We will continue to build on this momentum and strong demand for our unique and well-diversified investments," he added.
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