FIMBank plc - Interim Directors’ Statement

Monday, November 17th, 2014

On 17 November, FIMBank plc published its Interim Directors’ Statement with an update to the market on its performance since 1 July 2014. 

The prolonged geopolitical tensions at the Russia-Ukraine borders, North Africa and the Middle East, as well as the fall in commodity prices that have negatively affected exports and revenues, have resulted in a weaker trade finance sector, which has historically been the core business of the FIMBank Group. The Bank reported that in this scenario, FIMBank maintained a selective and cautious approach, while strengthened its risk structures, in particular within the factoring subsidiaries and joint ventures. 

The Group reported that it has seen an increased demand in supply chain factoring services, which allowed the Group to bank on its expertise and network to be able to service this demand. Earlier on in October, the Bank announced that it acquired a controlling interest in First Factors SA (Chile) and that it proceeded with the opening of a branch in Greece. Moreover, the consolidation of the Indian and Russian factoring companies within the Group are reportedly challenging for FIMBank as they bring along compliance and regulatory challenges to the Group’s international presence. 

The Group acknowledged that despite the increased interest and fees generated from the main component entities and associates of the Group during the period under review when compared to the same period in 2013, there are new impairments that have been identified across the Group, which nonetheless have not yet been quantified. The Group also reported that recovery efforts have not yet resulted into any reversal of impairments, and that the resultant impairment situation is materially challenging. 

In conclusion, the directors reported that the outlook for the performance of the Group is difficult and negative, and that the backing of the major shareholders – the Kuwaiti Burgan Bank SAK and the Bahraini United Gulf Bank BSC – is encouraging to the Group for it to face these challenging situations and absorb their negative impact.

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