GFH announces second quarter results

The Bank reported a net loss for the second quarter of $54m ($92m loss for the year to date), which compares to a profit of $104m made during the second quarter of 2008 ($220m for 2008 year to date).

The results are due in part to the continued challenges faced in regional placement activity with total income of $18m for the second quarter ($68m year to date) compared to $199m in the second quarter of 2008 ($386m for 2008 year to date) and provisions taken against balance sheet assets.

Total provisions for the quarter amounted to $38m ($81m year to date) representing write downs of investments and receivables.

Throughout the second quarter the Bank focused not only on the origination of new projects but increasingly on the management and oversight of existing initiatives.

In addition, management continued its focus on careful cost controls across the organization with an operating cost reduction of 20% during the second quarter of 2009 when compared to the first three months of the year and a reduction of 60% on the second quarter of 2008.

GFH Chairman Dr. Esam Janahi commented on the results today saying: "Unsurprisingly, given prevailing global economic conditions, raising funds for any financial institution has remained extremely challenging in recent months. Caution amongst the investment community has carried through to the second quarter and this trend has dictated our activity."

"We have used this period to reinforce prudent measures that secure the Bank's position and prepare it for a new growth period in the years ahead. During the second quarter of the year we’ve focused not only on the origination of new projects, but increasingly on the management and oversight of existing initiatives."

"Naturally we continue to pay close attention to emerging high value investment opportunities across a changing marketplace and we're optimistic about the future. Our new CEO Mr. Ahmed Fahour, is devoting his energy and vast experience to the pursuit of continued diversification and new international investor audiences."

Incoming Gulf Finance House CEO Ahmed Fahour added:

"In one of the toughest trading years on record, GFH has continued to absorb the harshest effects of the downturn, adapt the business model to market conditions and lay the groundwork for the future."

"The global recession is creating some excellent investment opportunities right now and this factor has given rise to our planned rights issue. The capital raising exercise which is still subject to shareholder approval but has now received the CBB's 'in principal' approval, gives notice of our determination to take full advantage of opportunities on behalf of our loyal investors."

"The steps we're taking and the announcements we anticipate over the next few months are focused entirely on building the strongest organization possible. We make no secret of our plan to establish GFH as the world's leading Islamic investment bank and all our efforts will be driven towards this goal."