LONDON, 18 February 2007 — Bahrain-based Gulf Finance House (GFH), one of the first banks to report 2006 results, is set to expand substantially into Europe and Asia in 2007 with the UK, France, Spain, Malaysia, Singapore, India and China the target markets.
GFH, which in February reported a 51 percent increase in net profits to $212 million for the year ending Dec. 31, 2006 — up from the $140 million in 2005, marks another widely projected good year for Islamic banks, and the prospects for many Islamic banks in 2007 are even better. This despite the fact that in terms of clients’ money raised, 2006 has been a bit more difficult because of the stock market crash in the GCC and nervousness on the part of local investors. GFH, nevertheless, raised up to $2.111 billion of equity funds under management for the products which were on offer till end December 2006.
GFH Chairman Dr. Fuad Al-Omar, a former vice-president of the Islamic Development Bank, stressed that “the results for 2006 are a clear demonstration of the success of our unique business model. We are expanding our geographic reach to include Europe and Asia, specializing in project origination backed by our capability in raising new equity funding for our investment products and projects from our strong base of private clients.”
GFH assets similarly increased by 36 percent from $1.1 billion in 2006 to $1.5 billion in 2006; earnings per share increased from 25 cents to 34 cents; and recommended dividend to shareholders from 60 percent to 75 percent. Some of the major achievements in 2006 for GFH included successfully raising $1 billion of new private client equity; $190 million of new share capital; and arranging $390 million of revolving facilities from the international debt markets.
GFH also acquired a 10 percent stake in Asia Finance House, an Islamic bank authorized in Malaysia by Bank Negara (the central bank) and whose other promoters are Rusd Investment Bank, Global Investment House; and Qatar Islamic Bank. GFH has also got approval in principle from the Qatar Financial Center to set up the first Islamic investment bank there. The bank also launched three major projects — the $2.6 billion Energy City Qatar; the $1.4 billion Gateway to Morocco Project; and the proposed $2 billion Energy City India project. In Saudi Arabia, GFH is also participating in the $8 billion Prince Abdulaziz bin Mousaed Economic City. In Egypt, GFH has signed an exclusive master agreement with the Ministry of Transport for the development of all transport infrastructure in the country. GFH is also in the process of establishing a London office subject to regulatory approval.
“In 2007 we see things picking up,” stresses Peter Panayiotou, deputy CEO of GFH. “Certainly, the equity capital markets are bottoming out. They are at a critical point in our region. If they bounce from here, they are going to go up. If they break where they are now, and there are key resistance points where they are now especially in Kuwait and Saudi Arabia, then we could be in for a rough time. I don’t think they would break however. With interest rates likely to come down, with real estate quite buoyant in our region, it could be that the equity markets are due a bounce now. Certainly if you look at the national markets in the GCC with global benchmarks, you can see now that some of our markets, particularly Kuwait, are falling below international levels and it will only be a matter of time before the international investors know this. I expect some correction upward in 2007. They are already below their benchmarks now.”
From London, the bank’s intention is to repeat its success in the Middle East and North Africa (MENA) region in Europe, by continuing to focus on the origination of investment opportunities in the European real estate and infrastructure markets. GFH has already appointed Joe McGrane to head the London office. He was formerly managing director of Royal Bank of Scotland Development Capital Limited. The aim is also to start a European private equity and asset management business.