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Wed 7 Aug 2013 02:28 PM

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Bahrain's GFH sees H1 profits fall despite cost cutting

Islamic inverstment firm which bankrolled takeover of Leeds Utd announces net profit of $4.2m

Bahrain's GFH sees H1 profits fall despite cost cutting
(Getty Images - photo for illustrative purposes only)

Gulf Finance House, the Bahrain based Islamic investment bank which bankrolled the takeover of English football club Leeds United, on Tuesday announced a net profit of $4.2m for the half year of 2013.

Net profit fell compared to $5.7m in the corresponding half year period in 2012 despite a drive to reduce costs. Second quarter net profit also dropped to $2.7m from $4.7m for Q2 2012.

Total income for the second quarter was $13.4m compared to a total income of $19.7m for the second quarter of 2012, the bank said in a statement.

It said income was primarily generated from management fees from funds under management, investment income and recoveries.

It added that operating costs for the half year period reduced by 27 percent to $19.6m compared to $26.9m for the prior year period, underlining ongoing efforts in the streamlining of operations.

Hisham Al Rayes, acting CEO of GFH, said: "We continue to focus on the strengthening of the balance sheet and the realignment of projects for successful exits, which is allowing us today to establish the Bank's credit rating in the market. We believe that this will also further enhance market confidence in the bank and allow for better business making in the future."

He added: "Furthermore, during the quarter we focused on building platforms to extract value from our existing assets. In this regard, we secured a number of strategic investors alongside GFH in Leeds United FC.

"We also saw progress on a number of our development projects and expect to see positive results later this year in particular in Bahrain and Tunis... We are confident that a stronger future is ahead and are determined to deliver higher returns for our investors and shareholders as we go forward."

Last month, Gulf Finance House said it hoped a leaner balance sheet and a revamped business model can revive the fortunes of a firm which once symbolised growth of the kingdom's Islamic finance sector.

GFH's new strategy calls for it to become more involved in its investments, and to hold projects until completion rather than passing them to third parties to develop as was done in the past, Al Rayes said in an interview.

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