GFH swings to small profit in 2011

Gulf Finance House (GFH) has announced its financial results for the year ending December 31, 2011, during which the bank returned to profitability despite a challenging year underscored by shortfalls in market liquidity and rising political tension throughout the region. The bank’s return to profitability in 2011 was the result of strong shareholder support, investor loyalty and a dedicated management team committed to seeing through the significant restructuring and recapitalisation plan that was set in motion in 2010, and which has seen the bank return to a net profit of $381 thousand in 2011 as compared to a net loss of $349 million in 2010. Operating profit before provisions were $ 9 million in 2011 as compared to a loss of $ 93 million in 2010, signaling a restart in GFH income. Additionally, the bank saw a 37% reduction in operating costs during 2011. During the fourth quarter of 2011, GFH had a net loss of $ 4 million as compared to a net loss of $187 million in 2010, primarily because of $ 8 million of impairment provisions. The bank has focused its efforts since 2009 on cleaning up its balance sheet by clearing most of its outstanding debts.  GFH was among the first investment banks in Bahrain and the region to take this move, which was seen as being very controversial in the beginning with negative effects on the Bank’s financial standing in the short term. As part of its restructuring plan, GFH also reduced its liabilities by 33% in 2011. Additionally, GFH continued to pursue its recapitalization plan, targeting GCC sovereign funds and investors.  These efforts have born fruitful results to date. Moreover, GFH managed to build significant forward momentum on its major projects during 2011. The first of these projects was the signing with the Wadhwa Group in Mumbai, India for the development of the Mumbai Economic Development Zone project to the next phase. On another front, the Tunis Financial Harbour (TFH) project has began the prequalification process for prospective contractors following the announcement made by the Government of Tunisia in support of the project’s external infrastructure work.