Chairman of the Board, Mr. Farouk Almoayyed, told shareholders: “I am pleased to report that NFH posted another strong financial performance in 2017. In what proved to be a highly-testing period for Bahrain’s vehicle financing sector, the Company maintained profitability above BD 1 million for the fourth consecutive year, which constitutes a significant achievement.”
Total operating income for 2017 dropped slightly to BD 3.33 million from BD 3.36 million in the previous year, while operating expenses were BD 2.13 million against BD 2.09 million in 2016. Accordingly, net profit for the year decreased by 5% to BD 1.20 million from BD 1.27 million a year earlier, with earnings per share declining to Bahraini fils 16.0 from 16.9 fils. NFH continued to maintain a strong balance sheet, with total assets of BD 53.12 million at the end of 2017 (end-2016: BD 51.23 million). Shareholder’s equity grew to BD 14.54 million (end-2016: BD 13.93 million), resulting in a return on average equity of 8.44% (2016: 9.36%).
For the three-month period ended 31 December 2017, NFH reported an improved net profit of BD 300 thousand compared with BD 298 thousand for the fourth quarter of 2016.
“In terms of implementing our strategy to diversify the Company’s business lines and revenue streams, I am pleased to report that work has commenced on the new NFH Auto Mall in Sitra,” announced Mr. Almoayyed. “Planned to be operational later this year, the Company will begin to reap the benefit of this new investment from 2019 onwards.
“Looking ahead, it is clear that we face an increasingly challenging future. Key concerns include the impact of a low oil price regime; constrained liquidity and higher cost of funding; ongoing fiscal reforms such as the introduction of a value-added tax (VAT); and continuing global and regional geo-political tensions. In response, we will maintain our prudent approach to doing business, and continue to provide the highest standards of customer service,” Mr. Almoayyed pointed out.
Putting the Company’s financial results into context, Chief Executive Officer Venkatachalam highlighted the changing market dynamics that unfolded during 2017. “New vehicle registrations in Bahrain declined by 13% compared with the previous year; while increasing customer demand for more fuel-efficient vehicles and a growing trend towards purchasing used vehicles, resulted in average auto loans dropping by around 10% during 2017. These factors affected our core vehicle financing business, with the total value of loans disbursed by NFH decreasing to BD 21.39 million from BD 22.07 million in 2016.
“However, it is pleasing to note that we successfully disbursed a higher number of loans during the year, which increased by 9%; and continued to grow our market share, which now stands at over 13%. Achieved against the backdrop of a highly-competitive and contracting market, this underlines the Company’s proactive approach and resilient performance during 2017.”