IIRA Reaffirms Fiduciary Ratings of GFH Financial Group BSC

Transcription

1. IIRA Reaffirms Fiduciary Ratings of GFH Financial Group B B .S.C. IIRA”) has reaffirmed the Manama, December 11, 2019– 2019 Islamic International Rating Agency (“IIRA international scale ratings of GFH Financial Group B.S.C. (“GFH” or “the Group”), incorporated in the Kingdom of Bahrain (“Bahrain Bahrain” or “the country”) at ‘BB / B’ (Double B / Single B). B) At the same time, national scale ratings have been maintained at ‘BBB-(bh) / A3(bh)’ ((Triple B Minus / A Three). Outlook on the assigned ratings aare ‘Stable’. GFH is licensed as a wholesale Islamic Bank by the Central Bank of Bahrain (“CBB”). The Group’s key business lines include investment banking, real estate development,, the recently expanded treasury and proprietary investments, investments and commercial banking undertaken through its 55.4% A large element of the Group’s holding of Bahrain - based Khaleeji Commercial Bank (“KHCB”). ( investments book is real estate assets that are at various stages of development, although this reasury products and concentration is reducing with a recent buildup of investment in treasury healthcare, increasing investments in volatility resistant sectors – including education and healthcare through its Investment Banking platform. platform GFH has also been able to achieve successful exits exit from some of its real estate projects, thereby benefitting from appreciation. ’s association with UAE-based Abu Dhabi The assigned ratings take positive note of the Group’s Financial Group (“ADFG” or “the Group”) as a controlling shareholder. GFH registered an improvement in returns on the back of the growing treasury operations in 2018. Concurrently, the the interim periods of 2019 when compared with core earnings in 2018 periods, due to increase Group’s balance sheet leverage has trended up during recent reporting periods in money market funding as well leverage against liquid assets. assets The Group’s ’s Capital Adequacy Ratio reduced to 14.48% at Q3’19, still comfortably above the ure to real estate assets and reduced internal CBB minimum of 12.5%; despite increased exposure capital generation owing to increased treasury share buy-backs buy backs and dividend distributions. It funding should also be noted that the Group is in the process of raising more medium-term medium maturity profile of over the coming quarters, which is expected to allow for a better matched mat assets and liabilities, and underpins IIRA’s expectation of improvement in the eemerging liquidity risk profile of the Group. Macroeconomic conditions in some of the Group’s project jurisdictions have posed challenges. slower business growth The Group’s local retail banking subsidiary operations have also showed slow coupled with higher asset delinquencies and weaker profitability metrics during 2018 and The information contained herein is obtained by IIRA from sources believed to be accurate and reliable. IIRA does not audit or o verify the truth or accuracy of any such information. As a result, the information herein is provided "as is" without any representation or warranty of any kind. IIRA, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s) / score(s) mentioned. Rating is an opinion and not a warranty of a rated entity's current or future ability to meet contractual obligations, nor it is a recommendation to buy, sell or hold any security. secur
2. H1 ’19. However, cost rationalization measures mea among other strategiess are expected to result in boosting of profitability over the coming periods. periods , reflective of the likely liquidity Outlook on the assigned ratings has been maintained at ‘stable’, ‘ upside with the Group’s ’s expected medium-term medium term funding plan over the coming quarters. quarters IIRA has assigned the Group an overall fiduciary score in the range of '61-65’, reflecting adequate fiduciary standards, standards wherein the rights of various stakeholders are considered to be adequately protected. Strong regulatory infrastructure in Bahrain underpins the Group’s internal governance framework. framework The Group is in thee process of enhancing its policy framework including risk assessment capabilities. Financial F reporting is deemed satisfactory while Group. The Group’s Shari’a transparency may be considered to be further enhanced by the Group governance framework complies with the CBB requirements. For further information on this rating announcement, please contact IIRA at iira@iirating.com. The information contained herein is obtained by IIRA from sources believed to be accurate and reliable. IIRA does not audit or o verify the truth or accuracy of any such information. As a result, the information herein is provided "as is" without any representation or warranty of any kind. IIRA, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s) / score(s) mentioned. Rating is an opinion and not a warranty of a rated entity's current or future ability to meet contractual obligations, nor it is a recommendation to buy, sell or hold any security. secur