FIMBank on verge of substantial shareholding buyout

09.03.2007

By David Lindsay
Extract  from The Malta Business Weekly date 8th March 2007

FIMBank this week announced that its board of directors have approved a move by a third party to take up a substantial shareholding in the bank following the recent announcement of substantially improved financial results for 2006.

At a meeting on 21 February, the board “considered and accepted” the terms of an offer dated 10 February 2007 it had received from the Kuwaiti Burgan Bank to take up a “substantial shareholding” in the company of not less than 33 per cent.

The shareholding will consist of an issue of new shares for cash, and the new shares will be purchased at a price of 170 US cents each. FIMBank share were trading on the Malta Stock Exchange at $1.875 each, yesterday. The stock market was seen reacting positively to the news on Tuesday.

FIMBank and Burgan Bank have discussed and agreed to undertake a due diligence exercise beginning this week. The final acceptance of the offer will be subject to the due diligence, regulatory approvals being obtained by the competent authorities in both Malta and Kuwait, as well as to any approvals that might be required by FIMBank and any other conditions which might be agreed between the two parties.

Burgan Bank describes itself as the youngest commercial bank in Kuwait, having acquired a leading role in the retail, corporate and investment banking sector through its innovative product offers and technologically advanced delivery channels.

Burgan Bank, according to its most recent financial statement, has continuously improved its performance over the years by applying an expanded revenue structure, good asset quality, diversified funding sources and a strong capital base. The adoption of state-of-the-art services and ground-breaking technology has positioned the bank as a trendsetter in the domestic market.

The bank recently announced record profits for 2006, up 31 per cent.

The FIMBank Group, meanwhile, last week announced it had nearly tripled its post-tax profits for 2006, having posted $7.59m in profits after tax as against $2.7m for 2005, on the back of “continuous efforts to develop further the strategic mix of trade-finance related products and services through geographic and product diversification”.

The group’s directors at the next annual general meeting are to recommend the payment of a scrip dividend of $3,036,929, more than triple 2005’s $811,726. The amount represents a net dividend per ordinary share of $0.035244, as against last year’s $0.011377.

The FIMBank Group comprises FIMBank plc, the London Forfaiting Company Limited, and the subsidiary companies, FIMFactors B.V., FIM Business Solutions Limited, as well as associated undertakings Global Trade Finance Limited and Egypt Factors.

The group reports that overall, the bank’s pre-tax profit increased by 17 per cent from $3.25m in 2005 to $3.81m.

Over the period the bank increased its net interest income by 21 per cent, from $4.18m to $5.07m, while interest income grew mostly due to increased funding support to the London Forfaiting Company, increased money market and bank exposures, and a growth in the trading bond book.

Over 2006 FIMBank registered also registered growth of 32 per cent in net fee and commission income, comparing favourably with the 21 per cent growth of achieved over 2005. Net trading income, particularly foreign exchange earnings, meanwhile increased significantly during 2006 due to better foreign exchange business opportunities.

FIMBank also recorded dividends of $1.17m from its available-for-sale investments and associated undertakings. Impairment losses increased from $0.37m to $0.88m, mainly due to an increase in collective impairment charges compensated by a drop in the specific impairment losses.

The bank’s net operating income grew by 38 per cent from $11.59m to $16.03m, while operating expenses – largely made up of staff and administrative overheads – also grew by 46 per cent. This expenditure includes the absorption of the support the bank provides to subsidiary and associated companies.

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