Gulf Finance House credit rating upgraded to BBB+ by Capital Intelligence

CI has termed the Bank's Sovereign, Foreign Currency and Financial Strength outlooks as stable.

CI highlighted GFH's solid equity base, the increase in capital in 2006 and the capitalization of a part of retained earnings in the first half of 2007, exceptionally robust returns, sound investment portfolio, high level of liquidity and its experienced management team as the key drivers for the one notch increase in the credit rating.

The CI report states, "Backed by a proficient management team, GFH has built a very sound business franchise since its inception eight years ago. The Bank's relative success in growing the balance sheet over the years reflects its improving fund raising capability supported by a focused investment placement team. The risk profile of the asset base remains sound, with GFH having undertaken some additional Islamic financing activities in 2006."

Elaborating on the asset diversification and capital base, the report states that "Asset diversification, in terms of amount, is reasonable. The risk exposure in the case of the majority of the investments is considered moderate given the low ownership percentage and the absolute amount of investments. The balance sheet is very liquid due to the large stock of Murabaha receivables. GFH's sources of funds are adequately diversified with short-term Murabaha payables to financial and non-financial institutions making up most of the third party funds. Moreover, the solid capital base was reinforced during 2006 following an injection of shareholder funds."

Commenting on the ratings, Mr. Peter Panayiotou, Acting CEO of GFH, said: "We are very pleased with CI's decision to raise GFH's credit ratings, particularly against the background of turbulence in the credit markets. This is a one notch upgrade and is good news for our business, for our Sukuk holders, and for the Bahrain financial services industry."

"The new CI ratings will reinforce GFH's standing in the international debt capital markets. This is another positive step towards better accessibility to long term funding to achieve future growth in our business," Mr. Panayiotou added.

Last year, GFH also gained the distinction of becoming one of the first Islamic Investment Bank in the world to receive an investment grade credit rating (BBB-) by Standard & Poor.