GFH Financial BSC : Arqam Capital Coverage report on GFH

CMP/JUN/2024/0014

نﻼﻋإ

Announcement

	Date		06/06/2023		ﺦﯾرﺎﺗﻟا
	Company Name			.ب.م.ش ﺔﯾﻟﺎﻣﻟا شﺗإ فإ ﻲﺟ ﺔﻋوﻣﺟﻣ		ﺔﻛرﺷﻟا مﺳإ
			GFH Financial Group B.S.C.
	Trading Code		GFH			لوادﺗﻟا زﻣر
	Subject			شﺗا فا ﻲﺟ نﻋ لﺎﺗﯾﺑﺎﻛ مﺎﻗرأ نﻣ ردﺎﺻﻟا ﺔﯾطﻐﺗﻟا رﯾرﻘﺗ		عوﺿوﻣﻟا
			Arqam Capital Coverage report on GFH
				ﺎﻣﻛ ،*ﺔﯾﻟﺎﻣﻟا شﺗإ فإ ﻲﺟ ﺔﻋوﻣﺟﻣ مﮭﺳﻷ ﺔﯾﻠﯾﻠﺣﺗﻟا ﺔﯾطﻐﺗﻟا رﯾرﻘﺗ لﺎﺗﯾﺑﺎﻛ مﺎﻗرأ تردﺻأ
						.ﻖﻓرﻣ وھ
				نﯾﻠﻠﺣﻣ نﻣ ﺔﻣدﻘﻣ لﺎﻛﺷﻷا نﻣ لﻛﺷ يﺄﺑ ءارآ وأ/و تﺎﻌﻗوﺗو تارﯾدﻘﺗو تﺎﯾﺻوﺗو نﯾﻠﻠﺣﻣﻠﻟ ﺔﯾطﻐﺗ يأ *
				.نﯾﻠﻠﺣﻣﻟا ءﻻؤھ يأر لﺛﻣﺗو طﻘﻓ ﺔﯾﻣﻼﻋإ ضارﻏﻷ ﺎھرﯾﻓوﺗ مﺗﯾ (تﺎﯾﺻوﺗﻟا) هﺎﻧدأ نﯾﺑﻣﻟا وﺣﻧﻟا ﻰﻠﻋ نﯾﯾﺟرﺎﺧ
				وأ ﺎﯾﻌﻠطﺗً ﺎًﻧﺎﯾﺑ وأ تﺎﻌﻗوﺗ وأ ﺎﯾأرً وأ اًدﯾﯾﺄﺗ ،ﻲﻧﻣﺿ وأ ﺢﯾرﺻ لﻛﺷﺑ ءاوﺳ ،ﺎﻧھ ةروﺷﻧﻣ ﺔﯾﺻوﺗ يأ لﻛﺷﺗ ﻻ
				.رﯾﯾﻐﺗﻠﻟ ﺔﻠﺑﺎﻗو ةرﻣﺗﺳﻣﻟا ﺔﻌﺟارﻣﻟا دﯾﻗ تﺎﯾﺻوﺗﻟا .ب.م.ش ﺔﯾﻟﺎﻣﻟا شﺗإ فإ ﻲﺟ ﺔﻋوﻣﺟﻣ نﻣ ﺔﯾﻟﺎﻣ ةروﺷﻣ
	Information			Arqaam Capital issued Analyst Coverage Report on GFH shares*.		ﺔﻣوﻠﻌﻣﻟا
				Please refer to the attached report.
				*Any analyst coverage, recommendations, estimates, forecasts and/or opinions in any form
				whatsoever provided by third party analysts as set out below (the Recommendations) are
				provided for informational purposes only and represent the opinion of such analysts. Any
				Recommendation reproduced herein does not constitute, either expressly or impliedly, an
				endorsement, opinion, forecast, forward looking statement or financial advice by GFH
				Financial Group BSC. The Recommendations are under continuous review and subject to
				change.
	Expected Financial			ﻖﺑطﻧﯾ ﻻ			ﻊﻗوﺗﻣﻟا ﻲﻟﺎﻣﻟا رﺛﻷا
	Impact			Not Applicable
	Name		Mariam Jowhary	يﺮھﻮﺟ ﻢﯾﺮﻣ		ﻢﺳﻹا
	Title		Head of Compliance & AML	لاﻮﻣﻻا ﻞﺴﻏ ﺔﺤﻓﺎﻜﻣو ماﺰﺘﻟﻹا ﺲﯿﺋر		ﻲﻔﯿظﻮﻟا ﻰﻤﺴﻤﻟا
	Company Seal ﺔﻛﺮﺸﻟا ﻢﺘﺧ		Signature ﻊﯿﻗﻮﺘﻟا

GFH Financial Group

EPS growth continues as the treasury and proprietary segment picks up, while the IB segment remains resilient.

• In Q1, the strong performance was supported mainly by the income stemming from treasury and proprietary segment, up by c. 4x y/y, despite higher OpEx and impairment charges.
• The IB segment remains a key contributor to revenue generation, but income was only up by 2.4% y/y, while the commercial banking segment (-2.2% y/y) continues to be impacted by higher CoF. EPS still grew by 24% y/y and 25% q/q, yielding a RoE of 11.3% (vs 9.8% in Q1 23).
• The balance sheet was down by 5% YtD mainly due to the sale of real estate assets, with AUMs of USD20.6bn as of Q1 24 (vs. 21.1bn at YE 23).
• Maintain BUY on broad-based RoE expansion, de-risking, and growing AuM base. The stock trades at P/tNAV 24e of 1.1x while offering RoE of 11.4%. Next catalyst: Potential listing in KSA, expanding IB platform, and recovering commercial banking performance.

We pencil in an EPS CAGR of 16% for FY23-28e,with RoE expanding from 9% in FY22 to 16% in FY28e. EPS grew by 24% y/y mainly thanks to higher income from the treasury and proprietary segment, up by c. 4x y/y, through a significant surge in direct investment income (USD 59m in Q1 24 vs. USD 3m in Q1 23) and the sale of assets, primarily real estate (USD 10m vs. USD 0.1m). The IB segment remains a crucial support to revenue generation, accounting for 28% of the total in Q1 24, although growth was limited to 2.4% y/y. Finally, the commercial banking segment, representing 24% of total revenue generation in Q1, was down by 2.2% y/y as higher CoF amidst an elevated rate environment offsets higher interest income. Total income jumped by 55%, though it was partially offset by higher other OpEx (+50% y/y) and impairment charges ($14m vs. $0.6m).

Ambitious targets on track. GFH continues to expand its assets and AUM base, reaching USD 20.6bn in Q1 24 vs. 17.6 in FY22. GFH is on track to achieve its USD 25bn target by YE25e, through organic and inorganic growth, reflected by the launch of GFH Partners, a dedicated global real estate investment arm currently USD 6bn in assets across US and Europe. The momentum in the IB segment is resilient, with five investment banking deals successfully closed in Q1 24 (total fund size of over USD 200m). We expect a revenue CAGR FY24-28e of 12%, an operating profit growth of 19%, and EPS CAGR of 17%, with RoE gradually improving from 10.4% in FY23 to 15.8% in FY28e and RORWA from 1.98% to 2.39%.

De-riskedstrategy. GFH cut its real estate portfolio (23.6% of assets in FY 21 to 10.7% in Q1 24A). The group plans to improve return generation by enhancing existing business lines through ii) refocusing on financial assets across the rest of the group, iii) enhancing Khaleeji's asset base, iv) expanding treasury operations and investment banking, and v) expanding international footprint.

Slight contraction in the asset base (mainly due to RE sales). The asset base declined by 5% YtD on contracting treasury portfolio and investment in real estate, down by 12% and 18% YtD, respectively, and sales of assets (USD 338m, mostly RE). This is reflected by a reduction in funding from financial institutions, down by 24% YtD. GFH targets to grow the AuM base to USD 25bn through organic/inorganic growth, focusing on recession-proofsectors and high-growthregional and global markets.

C o m p a n y R e p o r t

J u n e 6 2 0 2 4

Jaap Meijer, MBA, CFA

[e-mail] [phone]

Ribal Hachem

[e-mail] [phone]

BUY	USD 0.41/ AED 1.51/ Kwd 0.13
	Banks / BAHRAIN
	Bloomberg code				GFH BI/ GFH UH/ GFH KK
	Market index			Bahrain Brse/ DFM/ ADX/ Boursa Kuwait
	Target Price			USD 0.41/ AED 1.51/ Kwd 0.13
	Upside (%)					33.3
	Market data	6/3/2024
	Last closing price (USD)				0.31
	52 Week range					0.2-0.3
	Market cap (USD m)				1,180
	Free float (%)					92%
	Year-end (local m)	2022	2023	2024e	2025e
	Revenue		221	273	294	334
	Pre-provisioning profit	73	91	116	147
	EPS		0.02	0.03	0.03	0.04
	P/E (x) (mkt price)		13.2	11.6	10.2	8.5
	BVPS		0.3	0.3	0.3	0.3
	Tangible BVPS		0.3	0.3	0.3	0.3
	P/B (x) (mkt price)		1.2	1.2	1.1	1.1
	P/TBVPS (x) (mkt price)	1.2	1.2	1.1	1.1
	DPS		0.02	0.02	0.02	0.02
	Div. yield (%)		5.1	5.1	5.5	6.4
	RoAA (%)		1.0	1.0	1.0	1.1
	RoRWA (%)		1.2	2.0	1.7	1.9
	RoATE (%)		9.2	10.4	11.4	12.9
	RoEcC (%)		9.7	14.0	12.9	14.6
	RAROC (%)		9.4	14.0	12.9	14.9
	Net LtD ratio (%)		106.7	42.1	43.0	42.9
	Risk Weighted Assets	7.3	5.2	6.9	7.4
	(bn)
	Core Equity T1 ratio (%)	13.9	19.6	17.1	17.0
	Tier 1 capital ratio (%)	14.0	19.7	17.2	17.1
	Total capital ratio (%)	14.7	21.0	18.1	18.0
	NPL ratio (%)		3.5	7.9	8.0	8.0
	Coverage ratio (%)		124.4	56.8	56.6	58.7
	Number of shares		3,833	3,833	3,833	3,833

Price Performance

127	GFH BI		Bahrain Brse
119
111
103
95
87
79
May/23	Aug/23	Nov/23	Feb/24

© Copyright 2024, Arqaam Capital Limited. All Rights Reserved. See Important Notice.

June 6 2024

Abacus Arqaam Capital Fundamental Data

Profitability

3%				2.32%	2.45%
			2.00%
	1.76%	1.68%
2%
				2.28%
1.01%	1.98%		1.90%	2.18%
	1.69%
1%
1.24%	0.20%	0.17%	0.20%	0.20%	0.20%
0.10%
0%
FY22A	FY23A	FY24e	FY25e	FY26e	FY27e
PPP/RWA	Cost of risk/RWA		RORWA

NIM

1.0%
0.5%
0.0%	0.40%
-0.5%	FY23A	FY24e	FY25e	FY26e	FY27e
FY22A
-1.0%					-0.52%	-0.32%
-1.5%
-2.0%				-1.35%
-2.5%		-2.02%	-1.78%
			Net interest margin

Credit Quality

65%							10.0%
60%							8.0%
						6.0%
55%							4.0%
							2.0%
50%								0.0%

	FY24e	FY25e		FY26e	FY27e
	NPL Cov ratio (%)	NPL as % of tot loans
Capital Ratios
30%		21.0%
		18.1%	18.0%	18.0%	18.0%
	14.7%
20%
		0.20	0.17	0.17	0.17	0.17
10%	0.14
0%
	FY22A	FY23A	FY24e	FY25e	FY26e	FY27e
	Core Tier 1 (Base III)		CAR
Growth
200%
150%
100%		172%
50%	9%	7%	8%	8%	8%	8%
0%
-50%	FY22A	FY23A	FY24e	FY25e	FY26e	FY27e
-10%		6%	8%	8%	8%
		Loan growth		Deposit growth

GFH Financial Group

Year-end	2022	2023	2024e	2025e	2026e	2027e
Performance analysis
Net Interest Margin (%)	0.40	(2.02)	(1.78)	(1.35)	(0.52)	(0.32)
Asset yield (%)	4.38	5.07	4.50	4.30	4.10	4.10
Cost of Funds (%)	1.38	1.97	1.50	1.40	1.20	1.20
Risk Adjusted Margins (%)	0.08	(2.50)	(2.36)	(1.99)	(1.13)	(0.91)
Cost / Income (%)	66.9	66.6	60.6	55.9	52.2	50.8
Net Interest Income / total income (%)	3.9	(15.6)	(12.2)	(9.2)	(3.5)	(2.2)
Fees & Commissions / operating income (%)	4.2	10.0	10.2	9.9	9.5	9.5
Trading gains / operating income (%)	73.3	91.3	87.5	85.2	80.5	79.2
RoATE (%)	9.2	10.4	11.4	12.9	14.7	15.2
Pre-prov. RoATE (%)	9.8	11.4	12.3	13.8	15.4	16.0
RoAA (%)	1.0	1.0	1.0	1.1	1.3	1.3
Revenue / RWA (%)	3.04	5.26	4.26	4.54	4.86	4.99
Costs / RWA (%)	2.03	3.50	2.58	2.54	2.54	2.54
PPP / RWA (%)	1.01	1.76	1.68	2.00	2.32	2.45
Cost of Risk / RWA (%)	0.10	0.20	0.17	0.20	0.20	0.20
RoRWA (%)	1.24	1.98	1.69	1.90	2.18	2.28
RoRWA (%) (adj. for gross-up of associates)	1.24	1.98	1.69	1.90	2.18	2.28

Year-end	2022	2023	2024e	2025e	2026e	2027e
Asset Quality
Provisions charge / avg. gross loans (%)	0.5	0.7	0.7	0.8	0.8	0.8
Past due not impaired / gross loans (%)	4.8	4.0	4.1	4.2	4.3	4.5
NPL / gross loans (%)	3.5	7.9	8.0	8.0	8.0	8.0
NPL coverage ratio (%)	124.4	56.8	56.6	58.7	60.9	63.2
Provisions / avg. gross loans (%)	4.8	4.0	4.1	4.2	4.3	4.5
Provisions charge / operating income (%)	9.5	11.2	10.1	9.8	8.6	8.2

Year-end	2022	2023	2024e	2025e	2026e	2027e
Funding and Liquidity
Net Loans / Deposits (%)	106.7	42.1	43.0	42.9	42.8	42.7
Cash and interbank / assets (%)	8.8	3.4	-	(1.9)	(3.5)	(5.1)
Deposits / liabilities (%)	15.5	36.4	35.5	35.5	35.5	35.5

Year-end	2022	2023	2024e	2025e	2026e	2027e
Capital and leverage ratios
Core Tier 1 ratio (Basel III) (%)	13.9	19.6	17.1	17.0	17.1	17.1
Tier 1 ratio (%)	14.0	19.7	17.2	17.1	17.2	17.2
Total capital ratio (%)	14.7	21.0	18.1	18.0	18.0	18.0
Tangible equity / assets (%)	11.0	9.7	9.5	9.4	9.5	9.4
RWA / assets (%)	74.6	46.6	57.4	56.7	56.1	55.5

Year-end	2022	2023	2024e	2025e	2026e	2027e
Growth
Revenues (%)	(15.5)	23.2	7.7	13.8	14.4	9.8
Cost (%)	10.8	22.6	(2.0)	5.0	6.9	6.9
Pre-Provision Operating Profit Growth (%)	(42.8)	24.3	27.0	27.3	23.9	12.9
Provisions (%)	(57.7)	47.2	14.7	23.4	8.0	8.0
Net Profit (%)	7.2	14.0	13.1	20.0	22.7	12.1
Assets (%)	20.7	13.9	8.0	8.0	8.0	8.0
Loans (%)	9.5	7.1	7.9	7.8	7.8	7.8
Deposits (%)	(9.8)	171.7	5.7	8.0	8.0	8.0
Risk Weighted Assets (%)	(11.9)	(28.9)	33.0	6.7	6.8	6.9

GFH Financial Group	© Copyright 2024, Arqaam Capital Limited. All Rights Reserved. See Important Notice.	2

June 6 2024

Abacus Arqaam Capital Fundamental Data

Company Profile

GFH is a Bahrain-domiciledSharia-compliant financial group that is focused on investment banking, treasury activities, commercial and retail banking in Bahrain via Khaleeji Bank BSC (Khaleeji) and proprietary investments.

GFH Ratings affirmed by Fitch at "B"; Outlook stable. GFH is listed on four stock exchanges.

Geographical breakdown

		11%
0%	5%
	4%	GCC
		MENA
		Asia
		North America
		Other
		80%

Revenue Breakdown

24%

GFH Financial Group

Year-end	2022	2023	2024e	2025e	2026e	2027e
Income statement (USDmn)
Interest income	95	107	91	97	105	118
Interest expense	86	149	127	128	118	128
Net Interest Income	9	(42)	(36)	(31)	(13)	(9)
Fee income	9	27	30	33	36	40
Net investment income	43	29	54	66	71	77
Other operating income	160	259	245	266	288	312
Total operating income	221	273	294	334	382	419
Total operating expenses	148	181	178	187	199	213
Pre-provision operating profit	73	91	116	147	183	206
Net provisions	7	10	12	14	16	17
Other provisions / impairment	(4)	10	4	4	5	5
Operating profit	70	71	100	128	162	184
Associates	28	35	20	20	20	20
Pre-tax profit	98	105	120	148	182	204
Taxation	-	-	-	-	-	-
Net profit	98	105	120	148	182	204
Minorities	7	2	4	9	11	12
Others	-	-	-	-	-	-
Attributable net profit	90	103	116	140	171	192
Diluted EPS	0.02	0.03	0.03	0.04	0.04	0.05
DPS	0.02	0.02	0.02	0.02	0.03	0.03
BVPS	0.26	0.26	0.27	0.29	0.32	0.34
Tangible BVPS	0.26	0.26	0.27	0.29	0.32	0.34

	Investment Banking
	Commercial Banking
54%	Treasury & Prop

21%

Management
CEO	Hisham Ahmed Al Rayes
CFO	Suryanarayanan Hariharan
COO	Salah Abdulla Sharif
Major Shareholders
Keypoint Trust	6.13%

Year-end	2022	2023	2024e	2025e	2026e	2027e
Balance sheet (USDmn)
Gross loans and advances	1,500	1,609	1,738	1,877	2,027	2,189
Less: loan loss provisions	64	72	79	88	99	111
Net loans and advances	1,435	1,537	1,659	1,789	1,928	2,079
Cash and central bank	858	377	456	616	790	979
Due from banks	-	-	-	-	-	-
Investment, net	6,644	7,806	8,420	8,984	9,593	10,251
Fixed assets, net	233	275	275	286	297	309
Other assets	590	1,126	1,201	1,297	1,401	1,513
Total assets	9,760	11,121	12,011	12,972	14,010	15,131
Customer deposits	1,345	3,655	3,862	4,171	4,505	4,865
Due to banks	-	-	460	861	1,281	1,743
Debt	5,733	4,448	4,448	4,448	4,448	4,448
Other liabilities	1,611	1,945	2,100	2,269	2,450	2,646
Total liabilities	8,689	10,047	10,870	11,749	12,683	13,702
Total equity	1,071	1,074	1,141	1,223	1,327	1,428
Risk Weighted Assets (bn)	7	5	7	7	8	8
Average Interest-Earning Assets	2,163	2,104	2,015	2,260	2,562	2,888
Average Interest-Bearing Liabilities	6,216	7,590	8,436	9,125	9,857	10,645
Common shareholders	997	990	1,045	1,120	1,215	1,307
Core Equity Tier 1 (Basel III)	1,016	1,016	1,177	1,252	1,347	1,439
Tier 1 capital	1,020	1,023	1,184	1,259	1,354	1,447

Jaap Meijer, MBA, CFA	Ribal Hachem
[e-mail]	[e-mail]
[phone]	[phone]

GFH Financial Group	© Copyright 2024, Arqaam Capital Limited. All Rights Reserved. See Important Notice.	3

June 6 2024

Improvement in stage 2 and 3 loans, though coverage remains inadequate. Nevertheless, the

impact remains limited as financing assets comprise 18% of overall assets. Stage 1, 2, and 3 loans make up 79%, 15%, and 6%, respectively, compared to 74%, 18%, and 8% at YE 23A. Stage 1, 2, and 3 loans coverage stand at 0.5%, 6.2%, and 35.3%, respectively, compared to 0.7%, 8.2%, and 30.6%, at YE 23A. We calculate a provision deficit of USD 53m vs. our standard stress test of 1% coverage on stage 1 loans, 12% on stage 2, and 60% on stage 3. However, the collateral as of YE 23A is substantial, with the average collateral coverage ratio on secured facilities at 148%.

Strong capital base with noticeable improvement in liquidity. GFH operates at a CET1 and CAR of 18.3% and 19.6%, respectively, compared to 14.0% and 14.7% at YE22, thanks to a drop in CRWA. Leverage stands at an asset/equity ratio of 9.7x, while net loan/equity is low at 1.7x. GFH reported an NSFR and LCR of 133% and 219%, respectively. The fair value of the real estate is USD 121m ahead of the book value as of YE 23.

Maintain BUY on earnings resilience thanks to a diversified business model. The stock trades at 1.1x P/tNAV24e and 10.2x P/E 24e while offering RoE of 11.4% and a 5Y EPS CAGR of 16%. Next catalyst: Potential listing in KSA, expanding IB platform and recovering commercial banking performance.

Exhibit 1:	GFH Q1 24 review table
USD mn		Q1 24A	Q4 23A	q/q 24	Q1 23A	Q4 22A	q/q 23	y/y Q1	y/y Q4
Revenue by segment
Invst. Banking	46.2	35.1	31.5%	45.1	20.4	120.8%	2.4%	71.9%
Commercial Banking	34.2	19.7	73.4%	25.5	17.1	48.9%	34.3%	15.4%
Treasury and prop.	82.6	53.4	54.7%	34.5	18.6	85.6%	139.5%	187.3%
Total Revenue		163.0	108.2	50.6%	105.1	56.1	87.2%	55.1%	92.9%
Expenses by segment
Invst. Banking	33.2	35.3	(5.8%)	33.5	22.3	50.1%	(0.8%)	58.0%
Commercial Banking	24.2	25.1	(3.8%)	15.4	5.1	201.5%	57.0%	392.2%
Treasury and prop.	61.4	16.8	265.5%	31.1	5.5	463.0%	97.7%	204.4%
Total Expenses		118.8	77.2	53.9%	80.0	33.0	142.7%	48.6%	134.3%
Impairment allowance	13.8	6.9	101.2%	0.6	-1.5	(142.9%)	nm	(561.7%)
Net Income		30.3	24.2	25.5%	24.4	24.6	(0.8%)	24.2%	(1.9%)
Assets		10,558	11,121	(5.1%)	10,401	8,520	22.1%	1.5%	30.5%
Liabilities*		9,474	10,047	(5.7%)	9,343	7,478	24.9%	1.4%	34.4%

Source: Company Data, Arqaam Capital Research *(incl. Equity of Invest. Account holders)

GFH Financial Group	© Copyright 2024, Arqaam Capital Limited. All Rights Reserved. See Important Notice.	4

June 6 2024

Exhibit 2: Valuation Table: (USD m)

Year-end	2016	2017	2018	2019	2020	2021	2022	2023	2024e	2025e	2026e	2027e	2028e	perp	subtotal
1. DCF
Net profit	217	107	114	66	45	84	90	103	116	140	171	192	214	220
Other adjustments (comprehensive income and GW amortization)	--	--	--	--	--	--	--	--	--	--	--	--	--	--
Minus: excess return excess capital	18	16	17	10	7	5	5	16	10	11	11	12	13	13
Risk free rate	4.00%	4.00%	4.00%	4.00%	4.00%	4.00%	4.00%	4.00%	4.00%	4.00%	4.00%	4.00%	4.00%	4.00%
Tax shelter	--	--	--	--	--	--	--	--	--	--	--	--	--	--
Adjusted net profit	199	91	97	56	38	79	85	87	106	129	160	180	201	206
Capital requirements	516	1,007	964	1,000	993	992	874	622	827	883	943	1,008	1,078	1,105
RoEcC	38.5%	9.1%	10.1%	5.6%	3.8%	8.0%	9.7%	14.0%	12.9%	14.6%	16.9%	17.8%	18.7%	18.7%
Cost of capital	13.0%	13.0%	13.0%	13.0%	13.0%	13.0%	13.0%	13.0%	13.0%	13.0%	13.0%	13.0%	13.0%	13.0%
Capital charge	67	131	125	130	129	129	114	81	108	115	123	131	140	144
Economic profit	132	(40)	(28)	(74)	(91)	(50)	(29)	6	(1)	14	37	49	61	63
Discount factor	--	--	--	--	--	--	--	--	1.00	0.88	0.78	0.69	0.61	0.54
NPV of Economic Profit	--	--	--	--	--	--	--	--	(1)	13	29	34	38	34
DCF EVA Forecast period															112
Perpetual growth rate (nominal GDP)														2.5%
Terminal Value														598
Terminal value discounted															325
Required Capital															622
Value of the bank operations															1,058
2. Capital surplus/deficit
Available capital:
Shareholders equity	908	1,150	1,059	1,005	913	963	997	990	1,045	1,120	1,215	1,307	1,407
Minorities	214	346	364	288	273	205	75	85	96	104	112	121	131
Less Goodwill & intangibles	(55)	--	--	--	--	--	--	--	--	--	--	--	--
Less non equity elements reported shareholders equity
Less Dividends (if included in reported equity)	(89)	(85)	(32)	(33)	(18)	(46)	(61)	(61)	(65)	(76)	(99)	(115)	(134)
Tangible equity	978	1,411	1,391	1,260	1,168	1,122	1,010	1,013	1,076	1,147	1,227	1,314	1,404
Capital needs
RWAs (Basel III)	4,299	8,388	8,031	8,330	8,272	8,268	7,285	5,182	6,895	7,360	7,861	8,402	8,986
Equity as % RWA	12.0%	12.0%	12.0%	12.0%	12.0%	12.0%	12.0%	12.0%	12.0%	12.0%	12.0%	12.0%	12.0%
Financial stakes	--	--	--	--	--	--	--	--	--	--	--	--	--
Capital Requirements	516	1,007	964	1,000	993	992	874	622	827	883	943	1,008	1,078
Surplus capital	462	404	427	260	175	130	136	392	249	264	284	305	326		392
3. Other adjustments
Real Estate hidden value															122
Underprovisionning vs. arqaam acid test (conservative)															(53)
Total adjustments															69
4. Dividends															65
Total Fair Value															1,584
Fully diluted number of shares															3,833
Fair value per share															0.41
Current share price															0.31
Upside															33.3%
Implied P/E (x)	7.3	14.8	13.9	24.0	35.1	18.8	17.5	15.4	13.6	11.4	9.2	8.3	7.4
Implied P/tNAV (x)	1.9	1.4	1.5	1.6	1.7	1.6	1.6	1.6	1.5	1.4	1.3	1.2	1.1

Source: Company Data, Arqaam Capital Research

GFH Financial Group	© Copyright 2024, Arqaam Capital Limited. All Rights Reserved. See Important Notice.	5

June 6 2024

Important Notice

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GFH Financial Group	© Copyright 2024, Arqaam Capital Limited. All Rights Reserved. See Important Notice.	6