Bahrain's Gulf Finance House has reported a $11.9 million profit in the first quarter, reversing nine straight quarters of losses.
The rebound could mark a turning point for the Islamic investment bank, one of the hardest-hit companies in the Gulf by the global financial crisis.
GFH absorbed more than $1bn of losses before inching back to profitability in the first three months of this year.
"We accept that we have had a tough two years as a result of the global financial crisis, but we have had around 10 good years before that where we built our reputation and an impressive track record in creating Islamic financial institutions and pioneering a series of infrastructure projects that aim to fill the growth gap in developing economies," Esam Janahi, the GFH executive chairman, said in a statement.
Before its business model cracked under the stress of the crisis, GFH had been one of the Gulf's most energetic companies, arranging mammoth infrastructure projects across the region and using its considerable financial might to buy stakes in banks and property companies.
It was behind a series of Energy City projects in Qatar, India and Libya worth billions of dollars each. It also launched the Tunis Financial Harbour, an offshore financial centre said to cost $3bn.
The company ran aground as the result of a model that relied on charging premiums to investors who put money in its large property projects and private equity deals. When those investors retreated after the financial crisis, GFH's primary sources of revenue went up in smoke. Many of its projects were also put on hold, dealing a further blow to investors and partners.
After repaying much of its debt last year and extending maturities on the remainder, GFH began a comprehensive retooling of the business under which it planned to make money by establishing and nurturing Islamic financial institutions in the region. Last March it launched Syria Finance House, a first since the beginning of the restructuring.
In the future, Mr Janahi said, "we will be using our expertise and excellent track record to create more financial institutions ensuring a steady and continuous income stream from management fees and on our proprietary investments. Also, as part of this new business model we will be looking at new projects serving the economical needs in certain economies, while being fully committed to the completion of our existing projects and achieving profitable client exits."
The company said its first-quarter profit came thanks to a 50 per cent reduction in expenses to $14.5m from $25.9m in the same period last year. Income was boosted further by the reversal of an award of shares in Balexco, a Bahraini aluminium extrusion company, to employees as part of a bonus scheme in 2008.
Another factor that helped profits was recent sales of legacy investments, the bank said, including its stakes in the Bahrain Financial Harbour, the Qatari investment bank Qinvest and a Saudi property company.
Those exits raised about $300m. As it shops off investments of the past, GFH is now pushing investors to fund its transition with a capital increase. The company is hoping to raise $500m, and has so far secured about $120m from investors.
GFH is listed on the Bahrain Stock Exchange, the Kuwait Stock Exchange and the Dubai Financial Market. Trading in its shares has been suspended since the recapitalisation proposal last October. firstname.lastname@example.org