The Founder’s Statement

THE FOUNDER’S STATEMENT

On behalf of the Board of Directors, I am pleased to welcome you to the 20th Annual Report of Finance House P.J.S.C and its subsidiaries (FH Group), and I am pleased to present the Annual Report for the financial year ended 31 December 2024.

2024 will be remembered in history as a paradoxical year where, despite a fluctuating global environment marked by geopolitical tensions and economic uncertainties, global equity markets delivered total shareholder returns in excess of 18% per annum. The robust expansion of the UAE’s GDP (circa 3.8%)
in 2024, reflects the nation’s clear vision for economic progress, underpinned by its focus on non-oil sectors.

During 2024, the FH Group continued to focus its energies on strengthening Capital Ratios, maintaining Liquidity buffers, improving asset quality, leveraging cloud technology for improved operational efficiencies and in building digitally enabled Products & Services.

For the year ended 31 December 2024, the FH Group has posted a Consolidated Net Profit before tax of AED 8.26 million (net Profit after Tax: AED 7.49 million), compared to AED 14.81 million registered in the previous financial year ended 31 December 2023.

Net Interest Income and Income from Islamic Financing & Investing Assets were lower at AED 123.81 million in 2024 compared to AED 137.80 million in the previous year. This is primarily due to the fact that the increased cost of funding as a result of the elevated interest rates scenario could not be fully passed on to customers. Net Fee and Commission income earned in 2024 was AED 16.41 million compared to AED 17.95 million in the previous year.

Our insurance subsidiary registered a substantially improved overall performance, with a reduced Net Insurance Loss of AED 14.75 million in 2024 compared to a Net Insurance Loss of AED 40.35 million in the previous year. Net Investment Income from group-wide investing activities was substantially higher at AED 44.91 million compared to AED 5.20 million in the previous year.

Continued robust recoveries from the Non-Performing Portfolio (both Corporate & Retail) boosted Other Operating Income to AED 21.88 million in 2024.

In line with the expected credit loss model (ECL) for loan impairment provisioning under IFRS 9, net impairment charge for the year 2024 was AED 47.36 million compared to AED 22.23 million in the previous year.

As a combined result of the above factors, Net Operating Income for 2024 was lower at AED 144.91 million compared to AED 156.11 million in the previous year.

Total Operating Expenses for 2024 at the Group level were lower at AED 137.95 million compared to AED 140.91 million in the previous year. We continued to maintain a strict vigil on operating expenses to ensure that they stay within budget.

Net Loans & Advances including Islamic Financing & Investing Assets as of 31 December 2024 steadily grew by 10% to AED 2.08 billion compared to AED 1.89 billion as at the end of the previous year. Customers’ Deposits & Margin Accounts grew by nearly 22% to AED 1.90 billion as of 31 December 2024, compared to AED 1,56 billion as at the end of the previous year.

At the consolidated level, Shareholders’ equity as at 31 December 2024 stood at AED 638.95 million. Cash & Cash equivalents as of 31 December 2024 stood at a healthy 11 .1% of Total Assets, highlighting the Group’s conservative approach to liquidity management.

With the objective of preserving the cash resources of the Group for investments in upcoming strategic initiatives, the Board does not recommend distribution of any cash dividend for the financial year ended 31 December 2024.

We continue to fine-tune our strategies and strategy execution capabilities on a regular basis to take advantage of improving market conditions. We remain optimistic that we will continue to spot and exploit profitable opportunities, adapt quickly to changing market conditions, manage risks prudently and
maximize returns for our shareholders.