Portfolio Update June 2013 - GMFA · 2013-08-04 · USD 28.36mn, compared to USD 41mn in FY2012, which included USD25.9mn of profit on sale of an investment. Adjusting for the investment

Portfolio Update – June 2013

GMFA Stake: 69.60% Investment Date: July 2008 Company Website: www.bindar-jo.com Background and Performance: Bindar Trading and Investment (“Bindar”) is one of the largest consumer finance companies in Jordan. Bindar finances vehicles for

personal and commercial use, durable assets and real estate properties.

For Q1 2013, interest income improved by 20% to reach USD 1.5mn, while new financing and net interest income increased by 20% and

17%, respectively. Loan portfolio increased by 5.5% and net profit improved to USD 458k, compared to USD 246k, for the same period

last year. Besides top line growth, profitability improvement (over Q1 2012) is also attributable to loss on sale of an investment in Q1

2012. In line with its growth strategy, Bindar is growing by offering new products, including student loans and expanding its branch

network--a new branch in East Amman has commenced operation since November 2012. The Company is in the process of setting up an

Ijarah leasing company catering to the real estate Ijarah finance market. To reliably finance its growth strategy, Bindar is diversifying its

financing sources to achieve better asset liability management and to enhance returns. In this context, management is considering

issuing a 5 year bond with the assistance of Global Jordan.

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Bindar Trading and Investment

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Financial Highlights:

Financial Year Ended 31st December FY2009 FY2010 FY2011 FY 2012 FY 2012 FY 2013

(in USD '000) Q1 Q1

Net Profit 1,783 (345) 1,463 1,721 246 458 Net Worth 30,804 29,046 30,468 31,218 34,142 31,632 Total Assets 48,794 43,157 42,306 46,244 43,470 46,481 ROE 5.79% -1.19% 4.80% 5.58% 2.88% 5.79%

ROA 3.65% -0.80% 3.46% 3.89% 2.26% 3.94%

Source: Audited financial statements for FY2009-FY2012 and management accounts for Q1 2012 & Q1 2013.

GMFA Stake: 87.30% Investment Date: July 2008 Company Website: www.jtf.com.jo Background and Performance: JOTF provides financing for vehicles and durable assets and is one of the first companies to enter the consumer finance business in

Jordan. JOTF is diversifying its product portfolio and has ventured in credit cards and SME financing.

For Q1 2013, interest income improved by 70% to reach USD 1.8mn, compared to USD 1.1mn for Q1 2012. Net interest income improved

by 85.3%, clocking at USD 1.4mn, while loan portfolio increased by 9.7%, over Q1 2012. Sequentially, net profit improved to USD 530K

against USD 235K for Q12012. In the beginning of FY 2013, JOTF successfully repaid its 5 year bond and raised USD 7mn by issuing a new

five year bond. For the FY 2012, JOTF distributed dividend of USD 2.1mn (GMFA received USD 1.8mn), equivalent to a dividend yield of

8.3%. JOTF is diversifying the product suite-- efforts are afoot to expand the leasing businesses and open new branches. A new branch in

Aqaba has commenced operations since June 2013. In addition, JOTF is considering expanding its SME portfolio and is looking to

collaborate with Multilateral donors for this purpose.

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(in USD '000) Q1 Q1

Net Profit 370 2,045 1,965 1,994 235 530

Net Worth 25,630 27,661 27,772 27,909 27,894 28,565

Total Assets 42,196 41,433 44,016 49,137 42,295 45,259

ROE 1.44% 7.39% 7.08% 7.15% 3.36% 7.42%

ROA 0.87% 4.94% 4.46% 4.06% 2.22% 4.68%


Jordan Trade Facilities Company

GMFA Stake: 3.68% Investment Date: March 2011 Company Website: www.ptcfinancial.com Background and Performance: PTC India Financial Services Ltd (“PFS”) is a non-banking financial institution promoted by PTC India Limited (“PTC”) to make principal

investments in, and provide financial solutions to companies with projects across the energy value chain.

For the FY 2013 (ended March 2013), PFS posted an interest income of USD 46.2mn compared to USD 26.1mn for FY 2012, registering a

growth of 77%. Net Interest Income (NII) increased to USD 27.6mn from USD 13mn last year, while the profit before tax (PBT) stood at

USD 28.36mn, compared to USD 41mn in FY2012, which included USD25.9mn of profit on sale of an investment. Adjusting for the

investment gain in FY 2012, the profit before tax recorded a growth of 88% over last year. As of 31st March 2013, the effective term loans

sanctioned by PFS aggregated to USD 1.68bn, supporting capacity creation of more than 30,000MW. In view of recent uncertainties in

the power sector, PFS has been consciously diversifying the portfolio and offering advisory services with focus on lending to renewable

power projects. The Board of Directors of PFS has recommended 4% dividend for the financial year 2012-13-- Rs.0.40 per equity share of

Rs.10 each.

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Financial Year Ended 31st March FY2010 FY2011 FY2012 FY2013

(in USD '000)

Net Profit 5,659 8,339 30,278 19,162

Net Worth 141,399 229,210 228,647 225,580

Total Assets 213,239 382,648 384,387 533,351

ROE 4.01% 3.64% 13.24% 8.50%

ROA 2.65% 2.18% 7.88% 3.59%

Source: Audited financial statements.

PTC India Financial Services Ltd.

http://www.ptcfinancial.com/index.php

GMFA Stake: 13.7% Investment Date: July 2008 Company Website: www.almanar.com.kw Background and Performance: Al Manar Financing and Leasing Company (“Al Manar”) is an Islamic financial institution providing Islamic Shari'ah compliant financial

products and services across variety of sectors, including consumer, real estate and fleet financing.

Al Manar recorded USD10.4mn of net interest income during 2012, compared to USD11.69mn for the FY2011. The Company’s overall

profitability for the period stood at USD4.2mn compared to losses of USD13.1mn for FY 2011. The management continues to improve

operational efficiency by optimizing G&A expenses and refinancing existing loans with new ones at lower rate (interest expense up by 2%

despite 22% increase in ending debt balance). Net interest margin for 2012 stood at 10.43% compared to 12.76% last year. Interest

spread decreased to 1.33% compared to 2.08% for the FY2011. The Board of Al Manar has stressed on reducing funding cost and

diversifying funding sources. Introduction of fiduciary accounts is likely to positively impact the company’s cost of funding and is expected

to help raise significant amounts. Management is also considering automobile trade financing options for large fleet transactions.

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Financial Year Ended 31st December FY2009 FY2010 FY2011 FY 2012

(in USD '000)

Net Profit (14,511) 2,709 (13,131) 4,187

Net Worth 116,190 121,120 109,061 111,900

Total Assets 282,629 212,715 172,823 190,631

ROE -12.49% 2.24% -12.04% 3.74%

ROA -5.13% 1.27% -7.60% 2.19%

Source: Audited financial statements. Q 1 2013 performance was not available as of the date of finalization of this update.

Al Manar Financing & Leasing

GMFA Stake: 12.4% Investment Date: July 2008 Company Website: www.alsoorfinance.com Background and Performance: Al-Soor Financing and Leasing Company KSCC (“Al-Soor”) is a closed Kuwaiti shareholding company offering consumer finance, trade

finance, and supplementary home improvement finance.

For the financial year ended 31 Mar 2013, Al Soor recorded net interest income of USD 25.5mn compared to USD 22.3mn for the last

year. Non-interest income, comprising of mainly management fees, improved to USD 782k. Net profit stood at USD 13mn against USD

7.1mn in FY 2012. The improvement is on account of lower bad debt provision and higher net interest income for FY 2013. New financing

for the year increased by 30% to clock at USD 293mn, against USD 224mn in FY 2012. The increase is due to improvement in retail

operations where financing increased from USD 68mn to USD 128.5mn. During the year, Al Soor managed to sell USD 48mn of its

receivable portfolio to a Kuwaiti Commercial Bank. Al Soor will retain the management of the portfolio, earn a management fee and

share the interest income with the Bank.

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Financial Year Ended 31st March FY2010 FY2011 FY2012 FY2013

(in USD '000)

Net Profit 18,454 14,808 7,069 13,006

Net Worth 227,529 252,953 247,128 253,297

Total Assets 377,878 390,924 411,636 445,206

ROE 8.11% 5.85% 2.86% 5.13%

ROA 4.88% 3.79% 1.72% 2.92%


Al Soor Financing & Leasing

GMFA Stake: 6.67% Investment Date: July 2008 Company Website: www.asianfinancebank.com Background and Performance: Asian Finance Bank (AFB) is one of the three licensed foreign Islamic banks operating in Malaysia offering full range Shari’ah compliant

banking products for retail and corporate clients. It also provides some investment banking services.

For Q1 2013, AFB’s finance income improved by 8.3% to reach USD 7.5mn, net finance income however reduced to USD 1.87mn from

USD 2.07mn in Q1 2012. The drop is attributable to increase in depositors rate by 19bp while the lending rates on the average dropped

from 5.94% to 4.94%. Net profit during the quarter improved to USD1.27mn over USD 367K for Q12012. The improvement is attributable

to a provision reversal of USD 377k due to improved collections on certain impaired accounts, besides streamlining of G&A and

personnel expenses. In line with its growth strategy, AFB is leveraging on its Middle Eastern connection to create and bridge business

opportunities between Malaysia and the Middle East as well as regionally, especially for funding in the oil and gas, shipping, aviation,

infrastructure and real estate sectors. Qatar Islamic Bank (“QIB”) is actively assisting the bank to set up an investment banking arm which

will share some of QIB’s infrastructure for Middle Eastern clients.

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(in USD '000) Q1 Q1

Net Profit 461 (10,420) (1,892) (2,298) 367 1,272

Net Worth 95,525 124,746 151,374 158,291 155,399 152,484

Total Assets 605,233 727,545 770,575 940,562 889,477 868,885

ROE 0.48% -8.35% (1.25%) (1.45%) 0.24% 0.83%

ROA 0.08% -1.43% (0.25%) (0.24%) 0.04% 0.15%


Asian Finance Bank

GMFA Stake: 10.0% Investment Date: July 2008 Company Website: www.bmibank.com.bh Background and Performance: BMI Bank (previously Bank Muscat International) is engaged in commercial banking activities through its eight branches in Bahrain, Qatar,

and Seychelles. BMI currently offers a wide range of financial solutions through retail banking including SME banking, corporate banking,

private banking, global trade services, international business development, financial institutions, correspondent banking, Islamic financial

services and treasury services.

For Q1 2013, the Bank posted net profit of USD 894 K against USD 387K for Q1 2012 and budgeted net profit of USD 565K. Q1 2013

turned out to be the seventh consecutive quarter of profit for BMI. Net interest income clocked at USD12mn, compared to USD10.5mn

for Q1 2012, registering a growth of 15%. On the other hand, non interest income comprising of investment income, trade finance and

fee reduced to USD 2.88mn from USD 3.756mn last year, a near 23% drop. Provision for bad debt reduced to USD 1.2mn from USD

2.82mn in Q1 2012. There has been a modest growth in the asset portfolio-15% across all lines of business despite customers staying

cautious in drawing down limits due to political uncertainty.

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Financial Year Ended 31st December

FY2009 FY2010 FY2011 FY 2012 FY 2012 FY 2013

(in USD '000) Q1 Q1

Net Profit (44,936) (70,242) (8,960) 1,324 387 894

Net Worth 298,732 229,087 220,016 229,674 221,064 229,146

Total Assets 1,786,089 1,565,989 1,654,867 2,027,860 1,848,273 2,026,419

ROE -15.04% -30.66% -4.07% 0.58% 0.7% 1.56%

ROA -2.52% -4.49% -0.54% 0.07% 0.08% 0.17%


BMI Bank BSC

GMFA Stake: 2.50% Investment Date: July 2008 Company Website: www.ibkuwt.com Background and Performance: The Industrial Bank of Kuwait (“IBK”) was established with the initiative of Government of Kuwait for the purpose of supporting industrial

projects in Kuwait. The company provides medium and long-term financing for the establishment, expansion, and modernization of the

industrial sector in Kuwait.

For the year ended December 2012, Bank’s net income marginally decreased to USD29.9mn from USD30.1mn in FY 2011. There has been

no significant change in IBK’s net interest income and net profits, whereas the financing portfolio has decreased by 4.4% due to

conservative lending policies pursued in the wake of sluggish growth in the Kuwait Economy. In 2012 the Bank approved the financing of

25 industrial projects for sectors including manufacturing chemical products, paper manufacturing, printing and publishing, and electrical

equipment. In December 2012, Fitch Ratings re-affirmed IBK’s Long-term Issuer Default Rating (IDR) at 'A+' with a Stable Outlook. For FY

2012, IBK’s Board has recommended a distribution of 20% of the share capital as a dividend which translates to USD 355 K dividend for

GMFA, equivalent to a dividend yield of 1.3%.

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Financial Year Ended 31st December FY2008 FY2009 FY2010 FY2011 FY 2012

(in USD ‘000)

Net Profit 34,161 10,623 28,621 30,135 29,571

Net Worth 716,051 671,981 722,311 745,979 740,378

Total Assets 2,073,553 2,196,251 2,162,396 2,342,537 2,346,118

ROE 4.77% 1.58% 3.96% 4.04% 3.99%

ROA 1.65% 0.48% 1.32% 1.29% 1.26%


Industrial Bank of Kuwait

http://www.ibkuwt.com/ibk/web/en

GMFA Stake: 18.2% Investment Date: July 2008 Company Website: www.gulftakaful.com Background and Performance: Gulf Takaful Insurance Company(“GTIC”) is a closed Shariah compliant shareholding company offering motor, property, general accident

insurance, re-insurance products and insurance appraisals. Gulf Takaful has the largest medical provider’s network in Kuwait, which

includes over 74 hospitals, clinics, pharmacies and labs.

For the FY2012, gross written premium stood at USD 18mn, a near 4% increase over last year. Net deficit in insurance operations

remained at USD 2.5mn (same as FY 2011), while investment losses for the year stood at USD 5.68mn, compared to USD 454 K for the previous year. Investment losses coupled with lower interest income contributed to losses of USD 3.59mn against a profit of USD 1.35mn for FY 2011. GMFA continues to emphasize on the management to enhance the quality of the insurance portfolio, in addition to improving top line by introducing new products, increasing client base, achieving cost reduction, improving portfolio quality. To enhance organizational and management efficiency and consolidate risk management framework, the Board of GTIC has recommended implementation of enterprise risk management system.

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Financial Year Ended 31st December FY2009 FY2010 FY2011 FY2012

(in USD '000)

Gross Premiums 15,769 14,245 17,320 17,918 Net Profit (5,318) (2,514) 1,346 -3,591

Net Worth 49,821 49,016 50,533 45,945 Total Assets 52,720 51,971 52,273 47,778

ROE -10.7% -5.1% 2.66% -7.82%

ROA -10.1% -4.8% 2.57% -7.52%

Source: Audited financial statements. Q 12013 performance was not available as of the date of finalization of this update.

Gulf Takaful Insurance Company

GMFA Stake: 20% Investment Date: January 2010 Company Website: www.alfajerre.com Background and Performance: Al Fajer is the first retakaful company in Kuwait. The company has a paid up capital of KD 50mn (US$175.1mn), and a license to operate

reinsurance business for all kinds of takaful insurance.

For the FY 2013 (ending March 2013), gross written contributions improved by 5.5%, totaling to USD 67mn, compared to USD 63.7mn for FY 2012. However the surplus in insurance operations reduced to USD 1.4mn from USD 3mn in FY 2012. The decline is attributable to currency losses on the policies written for some of the European clients. Net Investment income (shareholders fund) stood at USD 3.5mn

compared to USD 791k for the last year. This was achieved despite impairment in investments in some of the third party investment funds during the year. Net profit for shareholders stood at USD 9.1mn compared to USD 789K in FY 2012. The outlook rating for Al Fajer has been revised from negative to stable by leading rating agencies. Efforts are afoot to establish a new entity in DIFC – Dubai and to relocate the operation of the Company to DIFC before the beginning of the renewal season. The rationale of the move is to operate from a better regulated environment offered by DIFC.

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Financial Year Ended 31st March FY2010 FY2011 FY2012 FY 2013

(in USD '000)

Gross Contributions 44,290 56,280 63,764 67,265

Net Profit (19,578) 122 789 9,129

Net Worth 163,150 159,166 160,201 164,897

Total Assets 163,150 160,177 169,406 177,034

ROE -12.8% 0.08% 0.5% 5.54%

ROA -12.8% 0.08% 0.47% 5.16%

Source: Audited financial statements

Al Fajer Retakaful Insurance Company

http://www.alfajerre.com/home.aspx

For more information please contact:

Rajiv Nakani, CFA Managing Partner Global Capital Management Ltd. T: +965 2295 1201 F: +965 2295 1268

Global Capital Management Ltd., 100% subsidiary of Global Investment House KSCC Global Tower, Sharq, Al Shuhada’a Street, Kuwait www.globalinv.net

Documents

Portfolio Update June 2013 - GMFA · 2013-08-04 · USD 28.36mn, compared to USD 41mn in FY2012, which included USD25.9mn of profit on sale of an investment. Adjusting for the investment