FIMBank announces results for 2014

11.03.2015

Positive outlook after high impact of impairments

The FIMBank Group’s Consolidated Audited Financial Statements for 2014, published on the 11th March 2015, show considerable growth in the Group’s Balance Sheet during that year,  with Consolidated Assets as at 31 December 2014 standing at USD1.41 billion, an increase of 14% over the USD1.24 billion reported at end 2013. Consolidated Liabilities stood at USD1.23 billion, an increase of 13% over end-2013. Net Operating Income increased at both Group and Bank level, helped by markedly improved net interest margins, contrasted by weaker net fee income. In fact, Net Interest Income rose by 77.9%, from USD 15.9 million to USD 28.4 million, while Net Fee and Commission income decreased by 9.3%, from USD 22.9 million to USD 20.76 million. Bank customer deposits increased by 19.8%, from USD 414 million in 2013, to USD 496 million in 2014.

However, 2014 created significant challenges for some of the Group’s international business, with a combination of economic issues, adverse market conditions and credit defaults leaving their mark. Consequently, FIMBank experienced significant impairment events across various Group entities, making the year one of the most challenging in FIMBank’s existence. As a result, the Group registered an after-tax loss of USD45.23 million, compared to a loss of USD4.22 million in 2013.

Commenting on developments in 2014, Acting CEO Simon Lay said that “The prolonged geo-political tensions in Eastern Europe continued to increase economic uncertainty in Russia, which impacted our operations in this country; this happened in conjunction with credit impairments in a number of other markets.” Elaborating on the principal factors which affected FIMBank’s financial performance in 2014, Mr Lay explained that “The Group’s positive operating results were completely wiped out by impairments of USD 51 million, emanating particularly from India and Russia, but also from FIMBank’s solo performance.  Nonetheless, Group liquidity remains strong, while  capital adequacy, measured in terms of Basle III/CRD 4 requirements, stood at 13.8% for Total Capital, of which 13.3% is Tier 1 - significantly above the minimum regulatory requirements.”

Reflecting on FIMBank’s strengths and prospects for the future, Mr Lay stated that “At FIMBank we have a robust global trade finance platform which places us in a strong position to capture a good share of a large global trade finance market. Resources will be deployed in a controlled manner towards key business sectors which offer profit potential. I am committed to leading this organisation towards a performance-driven culture.”  Mr Lay reiterated that “For 2015 and beyond we will be focusing our energies on strengthening further our business model, including our approach to governance, risk structures and internal control capabilities, as well as deploying the appropriate resources to maximise recoveries. Whilst the Group previously invested heavily in the development of our global footprint, we will now be consolidating these investments in order to focus on profitability and generate returns for our shareholders.”

On his part, FIMBank Chairman Dr John C. Grech stated that “The Bank’s turnaround strategy implies a period of consolidation where the focus will be on a rapid improvement in financial performance, the implementation of measures that aim at reversing the current causes of distress, and overcoming internal constraints, all the while retaining our customers at the centre of our strategic considerations. The Board and Management are encouraged by the support of the shareholders, in particular Burgan Bank and United Gulf Bank.  Our controlling shareholders believe in FIMBank’s business model, and are committed to supporting the Group in overcoming the difficulties experienced in 2014, and a return to better times.”

Meanwhile, FIMBank’s Board of Directors will not be recommending a cash dividend. However, subject to regulatory approval, the Board will be recommending a 1 for 10 Bonus Issue of Ordinary Shares by way of capitalisation of the Share Premium Account. Moreover, in line with the stated aim of consolidating the Group’s international footprint, the Board of Directors also approved a decision which will lead to discontinuing investments such as the one in FactorRus (Russia), which will no longer form part of the Group’s investment strategy.

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