FIMBank announces return to profitability

12.08.2016

Significant milestone reached in turnaround strategy

The FIMBank Group has announced a return to profitability for the first time since June 2014, attributing this achievement to the continued and successful implementation of a consolidation strategy adopted in 2015. This emerges from the publication of the Group’s Interim Financial Statements for 2016, which were published recently.

The Group’s Consolidated Audited Financial Statements show that for the period ending 30 June 2016, the Group registered a profit after tax of USD1.21 million compared to a loss of USD8.64 million for the same six-month period in 2015. At 30 June 2016, Total Consolidated Assets stood at USD1.60 billion, an increase of 11% over the USD1.44 billion reported at end 2015, while Total Consolidated Liabilities stood at USD1.43 billion, up by 13% from USD1.27 billion at end 2015. 

During the period under review, operating income rose by 34%, from USD15.88 million to USD21.24 million by end-June 2016. The Group’s operating results before impairments, down by USD3.01 million, were affected by lower margins attributable to various factors. Meanwhile, in another milestone achievement, particularly in the context of the recovery efforts which the current management team set out to implement during 2015, the level of net impairments continued its steep descent during this period, down from USD8.56 million to USD0.19 million for the six months ended 30 June of this year. The period under review also saw a marked decrease in operating expenses of USD4.50 million, mainly reflecting an improved cost-management discipline across the Group. 

Commenting on the financial results, FIMBank Group CEO Murali Subramanian stated that

“The positive financial results we have announced reflect our perseverance in implementing the turnaround strategy set out in 2015. This was founded on the need to improve our origination strategy, harmonise our product offering whilst looking at new product opportunities, a market-appropriate risk appetite, and cost efficiencies across the whole Group. These principles provided a platform from which FIMBank has been successfully stabilising its performance, growing its loan book and reversing the negative financial trend by returning a half-yearly profit”. 

 The Group CEO explained that the ongoing restructuring of a number of business units across the factoring network “will provide the basis for a steady operating performance in the months to come”. Subramanian also highlighted the Group’s successful approach to the retail depositor market, thanks to the diversification of its funding base and a reduction in the overall cost of funding. He also made reference to new product offerings during the period, “which exploited existing expertise, and aimed at diversifying revenue streams geographically as well as by sector”. He concluded by stating that the growth registered by the Group was supported by the “rigorous management of the Group’s different portfolios through an enhanced governance structure and risk frameworks”.

Commenting on the immediate outlook for the FIMBank Group, Chairman Dr John C Grech stated that the Group is “very encouraged by the profits registered during the first half of 2016, adding that “we are confident that this trend will be sustained throughout 2016”. He referred to the return to profitability as “an important milestone and a tangible result, which we are confident can be sustained through the effective application of the sound business strategy we have embarked upon”. Dr Grech added that with the support of a strong principal shareholder such as the KIPCO Group, and the strong impetus given by the existing performance-driven team, the core pillars of FIMBank’s business, namely Trade Commodity Finance, Forfaiting, Factoring and Treasury, have the potential to grow even further in the months to come.

FIMBank’s Chairman stressed that the achievements reported during this period “will serve to further reinvigorate our efforts, and focus our attention on registering further improvements across the different facets of the organisation, including asset origination, funding and capital management, risk and compliance, and ultimately, superior profitability and added value to all stakeholders”.

Meanwhile, FIMBank’s Board of Directors will not be recommending an interim dividend for the period under review.

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