Fitch affirms GFH ratings at B with ‘stable’ outlook

Fitch Ratings has affirmed GFH Financial Group’s long-and short-term Issuer Default Ratings (IDR) at ‘B’.

The outlook on the long-term IDR is stable.

The ratings agency has also affirmed the senior unsecured long-term rating of the $500 million sukuk due 2025 issued through GFH Sukuk Company at ‘B’ with a Recovery Rating of ‘RR4’.

The reaffirmation of the group’s rating by Fitch takes into account the current management team’s success in its efforts to develop the business model towards a more stable fee-based revenue stream.

According to the report, key ratings drivers included GFH’s evolving business model, noting management has made progress in implementing a de-risking strategy in recent years, growing its treasury activities, increasing fee-generative business from investment management and reducing legacy illiquid real estate investments.

GFH’s overall profitability was affirmed as moderate, with capitalisation and liquidity noted to be in line with and above regulatory standards, respectively.

The group’s treasury activities (26pc of revenue in 2022), were also highlighted by Fitch as a growing area and significant profit contributor, having commenced only a few years ago.

These activities, according to the report, are believed to add stability to GFH’s earnings.

Furthermore, the report noted that the group’s investment management business was a strategic priority, with investment banking activities (approximately 27pc of revenue in 2022) cited as a significant recent contributor to GFH’s net profit.

Fitch affirmed the management’s goal of significantly increasing the group’s fee-earning assets (currently: $7.8 billion; in 2021: $5.7bn) over the medium term, primarily through inorganic growth targeted at the US and UK markets.

The agency noted other IDR drivers including GFH’s significant albeit reduced exposure to illiquid unlisted investments, primarily related to real estate investments and exposure to low-rated operating environments.




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