GFH reports H1 Profit

GFH Financial Group (GFH) yesterday said its firsthalf 2019 net profits were impacted by lower contribution from the Group’s commercial banking arm due to higher impairment provisions at the commercial bank during the second quarter of 2019.  However, excluding a one-off recovery income and restructuring income present in the first half of 2018, the total income of the Group for the first half of 2019 grew by 114.3 per cent compared to the comparative period. Revenues rose 21.9pc to reach US$163.5 million from US$134.1m in the first half of 2018. 

Net profit attributable to shareholders was US$49.1m compared with US$72.5m in the prior-year period, a decrease of 32.3 per cent. Earnings per share for the first half of 2019 was US cents 1.45 compared to US cents 2.02 in the comparative prior-year period.  Consolidated net profit was US$48.4m, compared with US$73.4m in the first half of 2018, a decrease of 34.1pc. Excluding gains in 2018, Net profit attributable shareholders grew by 234.0pc in the first half of 2019.  

Contributing to income growth for the first half of 2019 was the enhanced performance across the Group’s core investment banking and real estate business lines in addition to income from the treasury and proprietary investments. During the first half of 2019, investment banking contributed 26.6pc to the total income of the Group mainly from placement activities. The Group’s strategy for its Treasury business line has shown significant improvement with Treasury contributing to 15.8pc of the total income while a solid performance from proprietary investments generated 24.5pc of the total income and real estate 9.1pc for the first half of 2019.

Commercial banking contributions were low due to provisions. Total expenses including provision for impairment were at US$114.7m compared to US$63.7m in the comparative previous period, an increase of 80pc, primarily due to an increase in the impairment provisions in the commercial banking business of 99 per cent and an increase in the treasury portfolio of the Group. Financing costs saw a gradual reduction over the period to US$3.0m from US$ 3.8m during the first half of 2018.

 An increase in the money market as part of the Group’s growing treasury portfolio and increased revenue generation from that business line also led to an increase in related costs from US$11.7m during the first half of 2018 to US$50.7m during 2019. Operating expenses were US$48.8m compared with US$42.5m in the first half of 2018, an increase of 14.8pc.

Second-quarter results

For the second quarter of 2019, revenues rose 34.4pc to US$92.9m versus US$69.1m in 2018. Earnings per share were US cents 0.84 compared to US cents 1.00 in the comparative prior-year period. Net profit attributable to shareholders was US$27.8m versus US$36.0m in the second quarter of 2018, a decrease of 22.8pc. Consolidated net profit was US$27.7m compared with US$36.5m in the second quarter of 2018, a decrease of 24.1pc. 

Total expenses including provisions for impairment were US$65.2m compared to US$34.4m in the comparative prior-year period, an increase of 89.5pc. Operating expenses were US$26.9m versus US$21.8m in the prior-year period, an increase of 23.4pc.  

Total assets of the Group grew to US$6.1 billion at 30 June 2019 from US$5.9 billion as at 31 March 2019, an increase of 3.9pc, while the Group’s liabilities increased to US$3.8 billion at 30 June 2019 from US$3.6 billion at 31 March 2019, an increase of 5.9pc. This increase was primarily due to an increase in the money market and a growing treasury portfolio.