Bahrain Islamic investment firm Gulf Finance House on
Tuesday said it swung to a first-quarter net profit helped by aggressive cost
cutting and the reversal of a bonus scheme granted in 2008.
GFH, which is aiming to raise $500m in new capital, said net
profit for the quarter ended March 31 was $11.9m, compared with a net loss of
$7.5m a year earlier.
The investment firm reduced expenses by about 50 percent to
$14.5m mainly due to stringent cost cuts and debt restructuring, it said in a
Total income for the quarter was $26.4m, mainly due to
reversal of an employee reward program in 2008 in which the company granted certain
bonus shares to employees.
GFH said it has so far raised $120m from investors in new
capital through issue of equity-linked convertible murabahas.
A murabaha is an Islamic money market product accounted for
on banks' balance sheets, under which a bank buys an asset from a third party
and sells it to its customer at cost plus profit, thereby providing financing
without charging interest. GFH has been hard hit by the Gulf's economic crisis
and struggled throughout 2010 to pay back the debt it took on during the Gulf
property boom that ended in 2008.
The company has been unable to find new revenue sources
after its earlier business model of earnings fees on money it raised for real
estate projects in the region collapsed with the property crash.
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