Bahrain's Gulf Finance House (GFH) has reversed nine straight quarters of losses.
The rebound could mark a turning point for the Islamic investment bank, one of the companies hardest hit in the Gulf by the global financial crisis. GFH absorbed more than US$1 billion (Dh3.67bn) of losses before inching back to profitability in the first three months of this year with net income of $11.9 million.
"We accept that we have had a tough two years as a result of the global financial crisis," said Esam Janahi, the GFH executive chairman, "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".
Before its business model cracked under the stress of the crisis, GFH had been one of the Gulf's most energetic companies, arranging huge 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.
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 dried up. 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.
It launched Syria Finance House last month, a first since the beginning of the restructuring.
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."
The company said its first-quarter profit was a result of a reduction - amounting to about 50 per cent - in expenses to $14.5m from 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.
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.