Fitch maintains GFH's IDR rating at 'B'; outlook stable

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Fitch Ratings affirmed the long- and short-term Issuer Default Ratings (IDR) rating of GFH Financial Group at ‘B’, with the outlook on the long-term IDR remaining stable.

Fitch has also maintained the senior unsecured long-term rating of the $500 million sukuk due 2025 issued through GFH Sukuk Company Limited (GFH SCL) at ‘B’, according to a press release.

Fitch attributed the group’s ratings reaffirmation to the management’s focus on developing more stable fee-based revenue streams.

It was also driven by the company’s strategy to lower volatility in the business model by disposing of illiquid real estate investments and increasing recurring income from investment management and treasury activities.

Fitch underlined that investment banking activities contributed to the group’s net profit in recent years and increased fee-earning assets under management (FAUM) to around $9.90 billion from $7.80 billion at end-2022.

The rating agency also highlighted the establishment of the group’s global real estate investment subsidiary, GFH Partners, and its focus on developing income yielding investments, including acquisitions of Roebuck Asset Management in the UK and Student Quarters Asset Management, and Big Sky Asset Management in the US.

The group’s commercial and retail banking activities, through Khaleeji Bank, boosted its revenue and net profit, which secured a more stable income.

Following a balance sheet clean-up exercise in recent years, Khaleeji Bank’s asset quality was also noted to be gradually improving.

Fitch also noted that GFH’s liquidity coverage ratio and net stable funding ratio are above regulatory requirements at 233% and 148%, respectively.

Suryanarayanan Hariharan, Group Chief Financial Officer at GFH, said: “The affirmation of the group’s ratings and stable outlook demonstrates the continued progress we continue to make as we focus on executing our strategy and diversification efforts.”

“We look forward to building on this momentum to further build our portfolio of revenue-generating assets and deliver enhanced performance throughout 2024 and beyond,” Hariharan added.

In the first quarter (Q1) of 2024, GFH logged 13.03% higher net profits attributable to the shareholders at $27.13 million, compared to $24 million in Q1-23.