Fitch affirms GFH long-term rating at "B-", short-term at "B"

Manama, Oct. 10 (BNA): GFH Financial Group (GFH), the Bahrain-based Islamic financial group, announced today that Fitch Ratings, the international credit rating agency, has affirmed GFH’s Long-term Issuer Default Rating (IDR) at 'B-' with a Stable Outlook and Short-term IDR at 'B'. Fitch has primarily taken into account GFH's success in raising capital in 2014, its improved funding and liquidity profile and the progress it has made so far in building a profitable and cash flow generative business. Fitch noted that although GFH’s balance sheet still has high single name and sector concentration primarily in legacy real estate projects, GFH is planning to complete these real estate projects and either sell them (profitably) or retain them as an income-producing asset. However the rating agency also said that completion and eventual exit of these real estate projects might take many years. In affirming the ratings, Fitch has placed considerable weightage on the fact that GFH's liquidity, leverage and funding profile have stabilised providing flexibility to work out legacy asset exposures, although it also noted that GFH's capacity for continued operation is vulnerable to deterioration in the overall business and economic environment. Factors constraining the rating include profitability that remains weak and volatile and is unlikely to improve materially and sustainably until significant balance sheet and business model reshaping has taken. Commenting on Fitch’s rating, Mr. Hisham AlRayes, CEO of GFH Financial Group said, "The affirmation of the rating by Fitch, a leading international credit rating agency, is further recognition by the market of the Group’s solid foundations and steady performance and progress. We have taken significant steps to strengthen our balance sheet as well as our leverage and liquidity profile. We are also actively working to improve and drive greater cash flow generation from across our existing assets and business lines. This is an important focus for the Group and one that will ensure the further strengthening of our financial and operational position and also contribute towards future upside to our ratings. At the same time we also continue to pursue promising new investments and opportunities that are income yielding and can help to generate steady streams of income for the Group, our investors and shareholders."