GFH announces annual profits of $291m

For the majority of the year, the bank continued a trend of strong earnings in comparison to 2007 despite turmoil in the global economy and a more cautious investment community.

Following three strong quarters of earnings in 2008, GFH reported a loss of $10m in the fourth quarter primarily due to conservative provisions on investments. While annual profits have technically fallen, $84m of the $340m profits in 2007 were accounted for by the sale of 60% of GFH's holding in Khaleeji Commercial Bank - a non recurring exceptional item.

Earnings per share were 37.01 cents (US) compared to 42.79 cents (US) for 2007. Return on equity of 2008 stood at 31.62% and return on assets stood at 10.19%. GFH's Board of Directors has proposed a total dividend of 40%, payable as 20% cash and 20% bonus shares, subject to the approval of the Central Bank of Bahrain (CBB) and the Annual General Meeting (AGM).

Annual profits have been driven both by investment in our economic infrastructure initiatives - namely Tunis Financial Harbour, Energy City Libya and Caspian Energy Hub - and the success of Cemena and First Energy Bank which underline the increasing importance of our diversified product range. Further income was derived from GFH's share of the net income of Khaleeji Commercial Bank and Qinvest.

Gulf Finance House Chairman Esam Janahi commented by saying:

"Relative to the global investment banking sector we have reason to be very pleased with our year end results. While the fourth quarter proved challenging, it is important to view our results in the context of the global economic crisis. We've recorded a serious and competitive profit for the year in a difficult market. As a Sharia'a compliant bank we are not directly exposed to CDOs and similar asset classes and we continue to offer visionary investment opportunities in some of the world's fastest emerging economies."

"We have much to be optimistic about and we'll study developments closely over the next few months with an opportunistic eye on undervalued assets and the defensive sector across the region."

Deputy CEO Mehran Jamsheer added: "Following a decade of exceptional growth we should not be unduly surprised by the effects of the most serious global economic downturn in living memory. The fundamentals of our business remain strong. With over $1bn in liquid assets we are well placed to weather the downturn. Indeed, we strongly believe that a changing financial landscape will deliver a range of new opportunities. Thanks to our diversified Venture Capital and Private Equity operations, we are poised to capitalize on the emerging potential in undervalued opportunistic assets in the region."

"With an historic focus on the conception and execution of economic infrastructure initiatives, 2008 has seen GFH move towards a diversified product portfolio and a broader revenue base. Venture capital, private equity and asset management functions will broaden the income streams in the months and years ahead, alongside a component focused on the conceiving specialist financial institutions."

Standard & Poor's (S&P) have affirmed GFH's BBB-/ A-3 long and short term ratings as a reflection of the bank's strong financial performance and satisfactory liquidity and capitalization. In changing the outlook from stable to negative S&P cite the deteriorating operating environment which has affected banks across the world. However, they also point out the nature of GFH assets mean they are less subject to market-to-market deterioration than those of GFH's peers.