FIMBank plc - Full-Year Results

Thursday, March 7th, 2013

On 6 March, FIMBank plc published its 2012 financial statements revealing a 6.8% increase in pre-tax profits to US$8.8 million on the back of increased income and lower costs.

Performance Review

Net interest income decreased by 4% to US$12.98 million reflecting the increased cost of funding in line with the Group’s efforts to grow its deposit base from banks and corporates.

On the other hand, net fee and commission income grew by 11.3% to US$20.7 million on the back of improved documentary credit volumes across all Group entities. The deterioration in foreign exchange earnings which led to a net trading loss of US$4.88 million was offset by the US$11.2 million (2011: US$2.64 million) in net gains from other financial instruments reflecting the improved trading results from forfaiting deals and marked-to-market recoveries on financial instruments.

Overall, the FIMBank Group reported a 6.7% increase in operating income to US$40 million.

Administrative expenses dropped by 2.7% to US$27 million reflecting the lower operational costs including staff costs. This was partially offset by the 27.9% increase in depreciation to US$1.48 million reflecting the depreciation on the Group’s new property in St. Julian’s. As a result, overall costs dropped by 1.5% to US$28.5 million.

Net impairment allowances increased to US$1.3 million from US$0.1 million in 2011 mainly due to a charge in the general provisions to better reflect a growing business portfolio.

FIMBank’s financials were also negatively impacted by the US$1.39 million loss from the Group’s associate companies (namely the factoring joint-ventures). The joint-ventures in Egypt and Russia generated negative results due to the challenging market conditions and India Factoring incurred higher provisions more consistent with the cautious economic outlook and lower growth forecasts for the region. Meanwhile, Brasilfactors completed its start-up year of operations with a break-even operating performance and a good platform to build on for 2013.

Overall, the FIMBank Group registered a pre-tax profit of US$8.8 million representing a 6.8% increase over the previous year’s comparable figure. In 2012, the Group incurred a marginal tax charge in contrast to the US$0.8 million tax credit reported in 2011. As such, the net profit figure for 2012 amounted to just below US$8.8 million compared to US$9.1 million in 2011. This translates into an earnings per share of US$0.0617.

The balance sheet as at 31 December 2012 reveals total assets of US$1,130 million (+11.1%) mainly reflecting the 34.3% growth in the Group’s loans to customers. Total liabilities also grew by US$100 million to just under US$1,000 million in line with the 18.2% increase in bank deposits to US$431.8 million. Similarly, total shareholders’ funds grew by 4.7% to US$130.6 million reflecting the profitability generated during the period under review as well as the equity retention resulting from last year’s scrip dividend issue. The announcement also noted that the Group’s Capital Adequacy ratio stands at 16.4% which is well above the regulatory minimum of 8%. Moreover, daily liquidity ratios averaged 50% in 2012 also significantly higher than the required regulatory minimums of 30%.

Dividend

The Directors proposed a final net dividend of US$0.0369 per share which is almost double the previous year’s net dividend of US$0.0193 per share. The dividend is payable in cash and in contrast with previous years, shareholders do not have a scrip dividend option. Shareholders as at close of trading on 26 March will be eligible to receive this dividend subject to approval at the upcoming Annual General Meeting scheduled to be held on 2 May. The dividend will be paid on 16 May.

Outlook

2013 will be the year when FIMBank’s new institutional shareholders, namely Burgan Bank and United Gulf Bank, come on board. The Directors commented that these new major shareholders are anticipated to increase the prospects of the Group as it will be able to take on new and bigger business, to benefit from better funding opportunities as well as improving the Group’s overall operating performance. In the meantime, the Group will remain faithful to the core business model built around a track record in trade finance.

Nonetheless, 2013 will also mark the introduction of a myriad of new stricter regulation including the first implementations of the Basle III through the Capital Requirements Directive IV.

As such, FIMBank aims to maintain strong capital ratios, enhance its credit rating, secure better access to funding and improve its operational and financial efficiency. FIMBank’s Directors are confident that the Group will meet these key targets in the year ahead whilst creating opportunities for the Bank, its subsidiaries and for the growth of its joint-venture undertakings.

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FIMBank plc – 2012 Preliminary Full-Year Results

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