Financial statements for Q2 2024

Independent auditors' report on review of condensed consolidated interim financial information

To the Board of Directors of

GFH Financial Group BSC

Kingdom of Bahrain

We have reviewed the accompanying 30 June 2024 condensed consolidated interim financial information of GFH Financial Group BSC (the "Bank") and its subsidiaries (together the "Group"), which comprises:

· the condensed consolidated statement of financial position as at 30 June 2024;

· the condensed consolidated statement of income for the three month and six-month periods ended 30 June 2024;

· the condensed consolidated statement of total comprehensive income for the three-month and six-month periods ended30 June 2024;

· the condensed consolidated statement of income and attribution related to quasi-equity for the three-month and six-month periods ended 30 June 2024;

· the condensed consolidated statement of changes in owners' equity for the six-month period ended30 June 2024;

· the condensed consolidated statement of cash flows for the six-month period ended 30 June 2024;

· the condensed consolidated statement of changes in off-balance-sheet assets under management for the six-month period ended 30 June 2024; and

· notes to the condensed consolidated interim financial information.

The Board of Directors of the Bank is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with FAS 41, "Interim Financial Reporting". Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Auditing standards for Islamic Financial Institutions and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the accompanying 30 June 2024 condensed consolidated interim financial information is not prepared, in all material respects, in accordance with FAS 41, "Interim Financial Reporting".

12 August 2024

Note

30 June

2024

31 December 2023

30 June

2023

(reviewed)

(audited)

(reviewed)

ASSETS

Cash and bank balances

290,253

376,884

398,578

Treasury portfolio

8

4,768,073

5,135,032

4,944,127

Financing contracts

9

1,795,753

1,544,810

1,535,395

Real estate investment

10

1,244,496

1,371,932

1,320,989

Co-investments

11

278,371

254,610

169,471

Proprietary investments

12

1,183,067

 1,044,727

1,033,743

Receivables and other assets

13

1,046,358

825,331

726,535

Property and equipment

282,243

229,534

207,223

Assets held for sale

-

338,619

-

TOTAL ASSETS

10,888,614

11,121,479

10,336,061

LIABILITIES

Clients' funds

148,596

206,222

151,190

Placements from financial institutions

1,939,146

2,323,217

2,959,023

Placements from non-financial institutions and individuals

1,183,290

960,050

1,182,960

Customer current accounts

474,507

203,697

225,831

Term financing

14

1,981,348

2,124,307

1,975,706

Other liabilities

15

404,165

548,056

630,094

Liabilities directly associated with assets held for sale

 -

230,562

-

TOTAL LIABILITIES

6,131,052

6,596,111

7,124,804

QUASI EQUITY

16

3,606,931

3,451,006

2,159,380

OWNERS' EQUITY

Share capital

1,015,637

1,015,637

1,015,637

Treasury shares

(85,705)

(125,525)

(123,293)

Statutory reserve

47,518

47,518

36,995

Investment fair value reserve

(39,270)

(46,103)

(55,527)

Cash flow hedge reserve

-

(2,135)

-

Other reserve

(16,020)

(13,612)

-

Retained earnings

41,821

105,831

90,860

Share grant reserve

5,440

7,930

8,530

Total equity attributable to shareholders of the Bank

969,421

989,541

973,202

Non-controlling interests

181,210

84,821

78,675

TOTAL OWNERS' EQUITY

1,150,631

1,074,362

1,051,877

TOTAL LIABILITIES, QUASI EQUITY AND OWNERS' EQUITY

10,888,614

11,121,479

10,336,061

Six months ended

Three months ended

Note

30 June

2024

(reviewed)

30 June

2023

(reviewed)

30 June

2024

(reviewed)

30 June

2023

(reviewed)

Investment banking

Deal related income

59,902

80,890

26,670

38,726

Asset management

28,226

9,627

15,300

6,704

88,128

90,517

41,970

45,430

Commercial banking

Income from financing

 62,394

53,704

 31,187

 26,485

Treasury and investment income

 49,293

45,464

 23,135

 19,951

Fee and other income

 15,463

14,629

 7,522

 9,161

Commercial banking finance cost

(54,607)

(45,170)

(28,060)

 (26,592)

72,543

68,627

33,784

29,005

Treasury and Proprietary Investments

Finance and treasury portfolio income, net

 89,070

 121,990

 48,487

 64,308

Direct investment income, net

 79,149

 4,152

 19,531

 1,097

Income from co-investments

 14,696

 21,629

 7,883

 13,933

Share of profit from equity-accounted investees

 12,589

 17,244

 5,556

 10,426

Income from sale of assets

 46,850

 5,713

 36,727

 5,641

Leasing and operating income

 14,147

 8,877

 9,275

 4,447

Other income

 1,713

 2,340

 832

 390

Finance expenses - Repo and FI

 (86,655)

 (124,875)

 (34,788)

 (63,518)

171,559

 57,070

93,503

36,724

Total income

332,230

216,214

169,257

111,159

Finance expense - term financing and others

33,448

 31,359

 19,666

 10,598

Impairment allowances, net

17

18,605 

 6,952

 4,819

 6,316

Other expenses

 111,814

 78,266

 50,202

 37,166

Total expenses

163,867

116,577

74,687

54,080

Profit for the period before attribution to quasi equity

168,363

99,637

94,570

57,079

Less: Net profit attributable to quasi-equity

 (100,466)

(42,448)

(57,016)

(24,328)

Profit for the period

67,897

57,189

37,554

32,751

Profit attributable to:

Shareholders of the Bank

 60,747

54,616

 33,612

30,609

Non-controlling interests

 7,150

2,573

 3,942

2,142

67,897

57,189

37,554

32,751

Earnings per share

Basic and diluted earnings per share (US cents) 18

1.71

1.55

0.93

0.86

Six months ended

Three months ended

30 June 2024

30 June 2023

30 June 2024

30 June 2023

(reviewed)

(reviewed)

(reviewed)

(reviewed)

Profit for the period

67,897

57,189

37,554

32,751

Other comprehensive income (OCI)

Items that may subsequently be classified to income statement

Fair value changes on debt investments carried at fair value through OCI

6,013

2,311

3,035

(3,092)

Fair value changes on equity investments carried at fair value through OCI

(3,977)

(5,122)

(5,545)

(22)

Attributable to quasi-equity

(290)

-

(427)

-

Total other comprehensive income for the period

1,746

(2,811)

(2,937)

(3,114)

Total comprehensive income

69,643

54,378

34,617

29,637

Total comprehensive income attributable to:

Shareholders of the Bank

67,307

52,284

31,405

27,707

Non-controlling interests

2,336 

2,094

3,212

1,930

69,643

54,378

34,617

29,637

Six months ended

Three months ended

30 June

2024

30 June 2023

30 June 2024

30 June

2023

(reviewed)

(reviewed)

(reviewed)

(reviewed)

Net operating income attribution to quasi equity

168,363

99,637

94,570

57,079

Adjusted for:

Less: income not attributable to quasi-equity

(152,463)

(184,363)

(76,707)

(115,694)

Add: Profit expense on due to banks and non-banks

60,944

52,223

30,496

28,939

Add: expenses not attributable to quasi-equity

157,952

152,886

72,335

90,389

Less: institution's share of income for its own/ share of investments

(79,968)

(55,428)

(38,944)

(25,846)

Less: allowance for impairment allowances attributable to quasi-equity

5,570

(9,610)

3,289

(9,597)

Total income available for quasi-equity holders

160,398

55,345

85,039

25,270

Profit equalization reserve - net movement

-

-

-

-

Total income attributable to quasi-equity holders (adjusted for reserves)

160,398

55,345

85,039

25,270

Less: Mudarib's share

(5,074)

(8,375)

(1,850)

(942)

Less: Wakala fees

(54,858)

(4,522)

(26,173)

-

Net income attributable to quasi-equity

100,466

42,448

57,016

24,328

Investment risk reserve -net movement

-

-

-

-

Profit distributable to quasi-equity

100,466

42,448

57,016

24,328

Other comprehensive income that may subsequently be classified to statement of income

290

-

427

-

Total comprehensive income - attributable to quasi-equity

100,756

42,448

57,443

24,328

Add: Other comprehensive income not subject to immediate distribution

(290)

-

(427)

-

Net profit attributable to quasi-equity

100,466

42,448

57,016

24,328

Attributable to shareholders of the Bank

Total owners' equity

30 June 2024 (reviewed)

Share capital

 Treasury shares

 Statutory reserve

Cashflow hedge reserve

Other reserve

Investment fair value reserve

Retained earnings

Share grant reserve

Total

Non-Controlling Interests (NCI)

Balance at 1 January 2024

1,015,637

(125,525)

47,518

(2,135)

(13,612)

(46,103)

105,831

7,930

989,541

84,821

1,074,362

Profit for the period

-

-

-

-

-

-

60,747

-

60,747

7,150

 67,897

Other comprehensive income

-

-

-

2,135

(2,408)

6,833

-

-

6,560

(4,814)

1,746

Total comprehensive income for the period

-

-

-

2,135

(2,408)

6,833

60,747

-

67,307

2,336

 69,643

Issue of shares under incentive scheme (net)

-

-

-

-

-

-

-

(2,490)

(2,490)

-

(2,490)

Transfer to zakah and charity fund

-

-

-

-

-

-

(7,037)

-

(7,037)

-

(7,037)

Dividends declared for 2023

-

-

-

-

-

-

(61,000)

-

(61,000)

-

(61,000)

Sale of treasury shares

-

174,422

-

-

-

-

(20,941)

-

153,481

-

153,481

Purchase of treasury shares

-

(134,602)

-

-

-

-

-

-

(134,602)

-

(134,602)

Additional NCI without a change in control (note 1)

-

-

-

-

-

-

(35,779)

-

(35,779)

124,650

88,871

Sale of shares in subsidiary

-

-

-

-

-

-

-

-

-

(37,937)

(37,937)

Reduction in NCI due to additional stake in subsidiary (note 1)

-

-

-

-

-

-

-

-

-

(4,947)

(4,947)

Additional NCI on acquisition of subsidiary (note 23)

 -

-

-

-

-

-

-

-

-

12,287

12,287

Balance at 30 June 2024

1,015,637

(85,705)

47,518

-

(16,020)

(39,270)

41,821

5,440

 969,421

 181,210

 1,150,631

Attributable to shareholders of the Bank

30 June 2023 (reviewed)

Share capital

Treasury shares

Statutory reserve

Investment fair value reserve

Retained earnings

Share grant reserve

Total

Non-Controlling Interests

(NCI)

Total owners' equity

Balance at 1 January 2023

1,015,637

(105,598)

36,995

(53,195)

95,831

6,930

996,600

74,794

1,071,394

Profit for the period

-

-

-

-

54,616

-

54,616

2,573

57,189

Other comprehensive income

-

-

-

(2,332)

-

-

(2,332)

(479)

(2,811)

Total comprehensive income for the period

-

-

-

(2,332)

54,616

-

52,284

2,094

54,378

Long Term Incentive Plan (LTIP)

-

-

-

-

-

1,600

1,600

-

1,600

Transfer to zakah and charity fund

-

-

-

-

(1,000)

-

(1,000)

-

(1,000)

Dividends declared for 2022

-

-

-

-

(56,261)

-

(56,261)

-

(56,261)

Purchase of treasury shares

-

(47,169)

-

-

-

-

(47,169)

-

(47,169)

Sale of treasury shares

-

29,474

-

-

(2,326)

-

27,148

-

27,148

Additional NCI without a change in control

-

-

-

-

-

-

-

5,747

5,747

Reduction in NCI due to loss of control

-

-

-

-

-

-

-

(3,960)

(3,960)

Balance at 30 June 2023

1,015,637

(123,293)

36,995

(55,527)

90,860

8,530

973,202

78,675

1,051,877

30 June 2024

(reviewed)

30 June 2023

(reviewed)

OPERATING ACTIVITIES

Profit for the period

67,897

57,189

Adjustments for:

Treasury and proprietary investments

 (258,214)

(181,945)

Foreign exchange loss

 2,608

2,238

Finance expense

275,176

201,403

Impairment allowances, net

18,605

6,952

Depreciation and amortisation

6,333

4,299

112,405

90,136

Changes in:

Placements with financial institutions (original maturities of more than 3 months)

68,074

418,680

Financing assets

(145,944)

(106,914)

Receivable and other assets

(214,592)

(142,303)

CBB Reserve and restricted bank balance

(4,974)

(8,230)

Clients' funds

(57,626)

27,890

Customer current accounts

270,810

94,597

Placements from financial, non-financial institutions and individuals

(160,831)

(713,145)

Quasi equity

155,925

945,706

Other liabilities

(236,903)

168,750

Net cash (used in) / generated from operating activities

(213,656)

775,167

INVESTING ACTIVITIES

Payments for purchase of equipment

(2,973)

(2,581)

Purchase of proprietary investment securities, net

-

(52,891)

Purchase of treasury portfolio, net

(8,500)

(237,445)

Cash acquired on acquisition of subsidiary

5,584

1,346

Cash paid on acquisition of subsidiary

-

(7,000)

Cash paid on acquisition of additional stake in subsidiary

(4,000)

-

Proceeds from sale of real estate

64,224

11,771

Dividends received from proprietary investments and co-investments

28,790

20,659

Payment for Purchase of real estate

 (1,208)

(12,026)

Net cash generated from /(used in) investing activities

81,917

(278,167)

FINANCING ACTIVITIES

Financing liabilities, net

(75,872)

33,773

Finance expense paid

(244,051)

(153,228)

Dividends paid

(58,865)

(57,860)

Sale/(Purchase) of treasury shares, net

39,827

(17,694)

Net cash used in financing activities

(338,961)

(195,009)

Net (decrease) / increase in cash and cash equivalents during the period

(470,700)

301,991

Cash and cash equivalents at 1 January

1,687,727

1,041,064

Cash and cash equivalents at 30 June *

1,217,027

1,343,055

Cash and cash equivalents comprise:

Cash and balances with banks (excluding CBB reserve balance and restricted cash)

209,130

320,958

Placements with financial institutions (original maturities of 3 months or less)

1,007,897

1,022,097

1,217,027

1,343,055

 30 June 2024 (Reviewed)

Opening Balance

Additions during the period

Distribution/ NAV Movement

Income

Expenses

Group fees

Closing Balance

Real Estate

 9,142,438

 438,273

 (394,512)

 98,339

 (78,623)

 (19,716)

 9,186,199

Private Equity

 709,755

 155,500

 (168,053)

 27,586

 (19,627)

 (8,510)

696,651

As at 30 June 2024

 9,852,193

 593,773

 (562,565)

 125,925

 (98,250)

(28,226)

9,882,850

 30 June 2023 (Reviewed)

Opening Balance

Additions during the period

Distribution/ NAV Movement

Income

Expenses

Group fees

Closing Balance

Real Estate

 7,132,745

 542,722

 (447,877)

 35,131

 (26,353)

 (8,777)

 7,227,591

Private Equity

 584,187

 380,854

 (323,858)

 7,864

 (7,014)

 (850)

 641,183

As at 30 June 2023

 7,716,932

 923,576

 (771,735)

 42,995

 (33,367)

 (9,627)

 7,868,774

Investee name

Country of incorporation

Effective ownership interests as at

30 June 2024

Activities

GFH Partners Ltd

(formally known as GFH Capital Limited)

United Arab Emirates

100%

Investment management

GFH Capital S.A.

Saudi Arabia

100%

Investment management

Al Areen Hotels W.L.L.

Kingdom of Bahrain

100%

Hospitality management services

Khaleeji Bank BSC ('KHALEEJI')*

57.95%

Islamic retail bank

GFH Equities BSC (c)**

76.63%

Investment management

No.

Item

 No Specified Maturity

 Less than 6 months

 More than 6 months and less than one year

 Over one year

 Total weighted value

Available Stable Funding (ASF):

1

Capital:

2

Regulatory Capital

953,060

-

-

73,471

1,026,531

3

Other Capital Instruments

-

-

-

-

-

4

Retail deposits and deposits from small business customers:

5

Stable deposits

161,520

42,773

2,964

197,043

6

Less stable deposits

-

2,457,037

734,449

133,885

3,006,223

7

Wholesale funding:

8

Operational deposits

9

Other Wholesale funding

-

3,650,787

1,342,099

873,354

4,830,111

10

Other liabilities:

11

NSFR Shari'a-compliant hedging contract liabilities

-

-

-

12

All other liabilities not included in the above categories

-

370,447

-

61,802

61,802

13

Total ASF

9,121,709

Required Stable Funding (RSF):

14

Total NSFR high-quality liquid assets (HQLA)

1,953,905.05

-

-

-

98,293

15

Depsoits held at other financial institutions for opetational purposes

16

Performing financing and sukuk/ securities:

-

1,301,248

-

1,160,492

1,181,605

17

Performing financial to financial institutions by level 1 HQLA

-

-

-

-

-

18

Performing financing to financial institutions secured by non-level 1 HQLA and unsecured performing financing to financial institutions

-

74,928

77,516

1,146,167

1,050,465

No.

Item

 No Specified Maturity

 Less than 6 months

 More than 6 months and less than one year

 Over one year

 Total weighted value

19

Performing financing to non- financial corporate clients, financing to retail and small business customers, and financing to sovereigns, central banks and PSEs, of which:

-

124,931

123,120

366,961

362,550

20

With a risk weight of less than or equal to 35% as per the CBB Capital Adequacy Ratio guidelines

-

-

-

-

-

21

Performing residential mortgages, of which:

-

-

-

-

-

22

With a risk weight of less than or equal to 35% under the CBB Capital Adequacy Ratio Guidelines

-

-

-

-

-

23

Securities/sukuk that are not in default and do not qualify as HQLA, including exchange-traded equities

-

962,862

146,125

444,612

999,106

24

Other assets:

25

Physical traded commodities, including gold

-

-

26

Assets posted as initial margin for Shari'a-compliant hedging contracts contracts andcontributions to default funds of CCPs

-

-

-

-

27

NSFR Shari'a-compliant hedging assets

-

-

-

896

28

NSFR Shari'a-compliant hedging contract liabilities before deduction of variationmargin posted

-

-

-

-

29

All other assets not included in the above categories

3,144,346

-

-

-

3,144,346

30

OBS items

-

-

-

74,655

31

Total RSF

2,463,970

346,761

3,118,232

6,911,916

32

NSFR(%)

132%

No.

Item

No Specified Maturity

Less than 6 months

More than 6 months and less than one year

Over one year

Total weighted value

Available Stable Funding (ASF):

1

Capital:

2

Regulatory Capital

1,023,275

-

-

64,133

1,087,409

3

Other Capital Instruments

-

-

-

-

-

4

Retail deposits and deposits from small business customers:

5

Stable deposits

-

159,304

36,446

3,763

189,725

6

Less stable deposits

-

1,964,119

518,381

503,663

2,737,913

7

Wholesale funding:

8

Operational deposits

-

-

-

-

-

9

Other Wholesale funding

-

4,157,571

544,672

1,438,472

5,452,622

10

Other liabilities:

11

NSFR Shari'a-compliant hedging contract liabilities

-

-

-

12

All other liabilities not included in the above categories

-

481,509

-

36,139

36,139

13

Total ASF

9,503,808

Required Stable Funding (RSF):

14

Total NSFR high-quality liquid assets (HQLA)

1,761,766

97,918

15

Depsoits held at other financial institutions for opetational purposes

16

Performing financing and sukuk/ securities:

1,841,985

791,830

949,354

17

Performing financial to financial institutions by level 1 HQLA

-

-

-

-

-

18

Performing financing to financial institutions secured by non-level 1 HQLA and unsecured performing financing to financial institutions

-

19,610

934

1,041,445

895,500

19

Performing financing to non- financial corporate clients, financing to retail and small business customers, and financing to sovereigns, central banks and PSEs, of which:

-

254,059

76,796

364,685

402,473

20

With a risk weight of less than or equal to 35% as per the CBB Capital Adequacy Ratio guidelines

-

-

-

-

-

21

Performing residential mortgages, of which:

-

-

-

-

-

22

With a risk weight of less than or equal to 35% under the CBB Capital Adequacy Ratio Guidelines

-

-

-

-

-

No.

Item

No Specified Maturity

Less than 6 months

More than 6 months and less than one year

Over one year

Total weighted value

23

Securities/sukuk that are not in default and do not qualify as HQLA, including exchange-traded equities

-

1,048,701

25,995

578,308

1,115,656

24

Other assets:

-

-

-

-

-

25

Physical traded commodities, including gold

-

-

26

Assets posted as initial margin for Shari'a-compliant hedging contracts contracts andcontributions to default funds of CCPs

-

-

-

-

27

NSFR Shari'a-compliant hedging assets

-

-

-

2,195

28

NSFR Shari'a-compliant hedging contract liabilities before deduction of variationmargin posted

-

-

-

-

29

All other assets not included in the above categories

2,908,175

-

-

-

2,908,175

30

OBS items

-

-

-

62,381

31

Total RSF

3,164,354

103,726

2,776,269

6,433,652

32

NSFR(%)

148%

Average balance

30 June 2024

(reviewed)

31 December 2023

(audited)

Stock of HQLA

561,223

444,865

Net cashflows

237,299

196,313

LCR %

240%

233%

Minimum required by CBB

100%

100%

30 June 2024

(reviewed)

31 December 2023

(audited)

CET 1 Capital before regulatory adjustments

1,002,368

1,023,275

Less: regulatory adjustments

-

-

CET 1 Capital after regulatory adjustments

1,002,368

1,023,275

AT1 Capital

9,862

-

T 2 Capital adjustments

73,471

64,133

Regulatory Capital

1,085,701

1,087,409

Risk weighted exposure:

Credit Risk Weighted Assets

5,328,436

4,585,950

Market Risk Weighted Assets

153,717

90,135

Operational Risk Weighted Assets

511,093

506,408

Total Regulatory Risk Weighted Assets

5,993,246

5,182,493

Investment risk reserve (30% only)

2

2

Profit equalization reserve (30% only)

3

3

Total Adjusted Risk Weighted Exposures

5,993,241

5,182,488

Capital Adequacy Ratio (CAR)

18.12%

20.98%

Tier 1 Capital Adequacy Ratio

16.89%

19.74%

Minimum CAR required by CBB

12.50%

12.50%

30 June

2024

31 December 2023

30 June

2023

(reviewed)

(audited)

(reviewed)

Placements with financial institutions

1,011,100

1,458,368

1,079,143

Derivatives

At fair value through statement of income

896

2,195

3,035

Equity type investments