GFH Financial Group announced that Standard & Poor's Global Ratings has upgraded the group's long-term issuer credit rating to B from B-, with a stable outlook. At the same time, the agency upgraded the credit rating of the sukuk issued by GFH Sukuk Limited to B from B-.
It is noteworthy that raising the group's ratings reflects the strength of GFH's business and its financial performance. The report indicated that GFH's revenues proved resilient during the period 2020-2022, and indicated that the return on shareholders' equity improved to 8.6% during the first nine months of 2022.
Despite the pressure on the treasury activities of the group due to the high interest rates, the report also indicated the ability of GFH to achieve good returns from the investment banking business, by benefiting from its activity in the real estate sector in Europe and the United States and its stable performance in the commercial banking activity after the restoration restructuring in 2020.
According to ratings agency Standard & Poor's, this stable outlook reflects the view that GFH can limit exposure to real estate assets while maintaining moderate capitalization over the next 12-18 months.
Standard & Poor's stated that the macroeconomic environment will continue to support the group's activities, and the report expects oil prices to remain high during the period 2023-2024, which supports the abundance of liquidity in the GCC region. In turn, this is expected to maintain high demand for alternative investments, support for commercial banking services, and is also likely to maintain the relative stability of regional financial markets despite the rise in interest rates.
In addition, the steady trajectory of selling real estate assets and activities of GFH contributed to the rating upgrade, as Standard & Poor's noted that the group had succeeded in reducing its real estate exposure following the separation of Infracorp.
Commenting on this, Salim Patel, Head of Investment, Debt & Capital Markets at GFH Financial Group said: We are pleased to announce GFH's ratings upgrade by Standard & Poor's and also the continued market appreciation of GFH's business and the steps we have taken to further From enhancing our results and financial condition. Despite challenging market conditions, our performance across each of the Group's core business lines has remained resilient, enabling us to generate healthy returns for the Group, our shareholders and investors. We will continue to build on this momentum and high demand for our unique and well diversified investments.
