Fitch Ratings on July 5 revised the outlook on Bahrain's GFH Financial Group BSC to stable from positive, while affirming its long- and short-term issuer default ratings at B.

The outlook revision and the ratings reflect the continuing asset concentration in illiquid investments, including significant exposure to real estate of potentially fluctuating value. They also factor in the weakened operating environment in Bahrain and an increase in consolidated impaired financing assets in 2017.

The group intends to revamp its business model, especially focusing on fee generation and low-risk investments, Fitch noted. It also reported material net income in 2017 for the second time in a row after years of constrained positive returns. The ratings took into consideration both those factors.

An upgrade of the company is possible if it were to dissolve its real estate investments and replace them with more stable and less concentrated assets. The long-term issuer default ratings could also be positively impacted by consistent profitability and reduced reliance on capital gains.