Gulf Finance House sees Q2 loss on income slump

MISSING FORECAST: Bahrain's Gulf Investment House misses analyst forecast as income from investment placements drops. (Getty Images)

Bahrain-based Gulf Finance House (GFH) on Monday missed a forecast with its third consecutive quarterly loss due to provisions and a slump in income from investment placements.

Islamic investment bank GFH said net loss in the second quarter was $54 million, compared with a net profit of $104 million a year ago. Analysts at SICO investment bank expected a quarterly net loss of $30 million in a Reuters survey in July.

GFH said income from placing investments fell to $18 million in the quarter from $199 million.

"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," Chairman Esam Janahi said in the statement.

Investors in the Gulf Arab region have been holding onto their funds since the global financial crisis reached the region late last year.

Total provisions for the quarter amounted to $38 million, representing writedowns of investments and receivables, it said in a statement.

GFH has focused on developing and collecting investor money for large infrastructure and real estate projects in the region, sectors that have been severely hit by the economic downturn.

GFH said last week it plans to raise between $300 million and $500 million in fresh capital to beef up its balance sheet during the financial crisis and make investments.

Meanwhile, the bank said it had reduced operating costs by 60 percent year-on-year during the second quarter.

GFH's stock declined for a second trading day on Monday since it announced plans for the capital increase, falling 4.6 percent in Kuwait and 6.8 percent in Bahrain. The second-quarter results were announced after the close of trading on both bourses.

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