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Thu 10 Sep 2009 05:08 PM

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Gulf Finance House sees earnings recovery in H2

Islamic lender eyes recovering after suffering three consecutive quarterly losses.

Bahrain-based Islamic lender
Gulf Finance House

, which has had three consecutive quarterly losses, will see earnings recover in the second half of the year, its chief executive said on Thursday.

"The objective is, on a pre-provision base, to break even, not for the whole year but for the second half of the year," Ahmed Fahour told Reuters at a shareholders meeting, adding the bank targets a return on equity of 20 percent at some point in the next three years.

The bank, Bahrain's largest listed Islamic investment bank, has been keen to diversify its source of income, moving away from purely financing large infrastructure and real estate projects. It has set up business lines including private equity and venture capital, as well as Islamic investment banking.

GFH

last month said it would establish a Shariah-compliant joint venture in investment banking with Australia's Macquarie Group that agreed to provide
GFH

with a $100m convertible murabaha financing.

Shareholders on Thursday approved a $300m capital raising, aimed at repairing the lender's balance sheet, as well as the issuance of a second $100m convertible murabaha.

"We have approached the market and we will start negotiations now and will announce the bond in due course," Fahour said.

He said he expected
GFH

to pay a "high-single-digit" percentage for the murabaha.

He added that the lender had temporarily shelved plans to refinance a $300 million murabaha loan maturing in February 2010. An IFR report in July said
GFH

had appointed Deutsche Bank as bookrunner.

"We just did some soundings and we decided to push that to the end of the year and do the rights issue first." (Reuters)

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