FIMBank plc - Interim Results

Wednesday, August 10th, 2016

On 10 August, FIMBank plc published its interim results covering the first six months of 2016.

The Directors noted that during the period under review, FIMBank has continued implementing the turnaround strategy focusing on improving its origination strategy, harmonizing its product offering whilst looking at new product opportunities, a market-appropriate risk appetite, and cost efficiencies across the whole Group. The success of each of these principles was varied but has provided a platform on which FIMBank was able to stabilize its performance, grow its loan book and reverse the negative performance trend by returning a half-yearly profit.

Performance Overview

During the first half of 2016, the FIMBank Group saw its net interest income fall by 39.6% to USD9.8 million (H1 2015: €16.2 million). This was a result of the holding of temporary idle liquidity and a higher stock of regulatory liquidity assets, the tightening of margins in the Group’s markets and products, as well as reduced income on forborne or delinquent assets. Indeed, whilst interest expense remained virtually flat at USD11.9 million, gross interest income decreased notably to USD21.7 million from USD28.0 million in the comparable period last year.

On the other hand, non-interest income surged by 41.5% to USD11.6 million (H1 2015: USD8.2 million) on the back of a strong increase in dividend income received from an available-for-sale investment (USD2.9 million as against USD0.5 million in the first six months of 2015). Furthermore, results from trading assets and other financial instruments improved to a profit of USD0.7 million from a loss of USD0.1 million in the comparable period last year, reflecting a higher degree of profits on the disposal of investment securities which outweighed unrealized losses on the Group’s forfaiting portfolio. On the other hand, net fee and commission income remained consistent with 2015 whilst foreign exchange income decreased reflecting lower volumes and the cost of foreign currency swaps used for risk management.

Given the larger drop in net interest income when compared to the increase in non-interest income, the total operating income of the FIMBank Group declined by 12.3% to USD21.4 million compared to USD24.4 million generated in the first half of 2015.

On the expenditure side, administrative expenses declined by 20.9% to USD17.3 million (H1 2015: USD21.9 million) reflecting an improved cost management discipline across the Group as well as a result of non-recurring legal, professional fees and staff related costs incurred in the comparative period last year. In addition, the level of impairment losses decreased significantly from USD8.6 million to just USD0.2 million as a result of the continuous recovery efforts across the Group. However, such recoveries were dampened by legacy issues from prior years of the Group’s operations in Dubai which required further provisions.

Overall, the FIMBank Group managed to return to an operating profit position as it registered a profit of USD2.4 million against a loss of USD7.5 million in the first half of 2015. After accounting for a net share of loss of USD0.2 million from factoring entities, the profit before tax of the FIMBank Group amounted to USD2.1 million compared to a loss of USD7.7 million in the comparable period last year. Accordingly, taking into consideration the share of minority interest (USD0.1 million), a tax charge of USD0.9 million and a marginal loss in relation to the Group’s factoring entity in Russia (which is very close to being disposed of), the Group’s net profit for the period under review amounted to USD1.1 million compared to a net loss of USD8.0 million during the first half of 2015. This translates into an earnings per share of USD0.0037.

The Statement of Financial Position as at 30 June 2016 shows an 11.0% increase in total assets to USD1.6 billion compared to USD1.4 billion as at 31 December 2015 spearheaded by significant increases in total trading assets (+18.0%) and loans and advances to banks (+53.1%). Similarly, total liabilities grew by 12.5% to USD1.4 billion (H1 2015: USD1.3 billion) as customer deposits doubled to USD845.9 million whilst amounts owed to banks dropped by 32.6% to USD492.3 million. Overall, the Group’s shareholders’ funds advanced slightly to USD175.3 million, translating into a net asset value per share of USD0.4827 (excluding non-controlling interests).

Dividend

The Directors did not declare an interim dividend.

Outlook

Looking ahead, the Directors aim at further consolidation in the Group’s profitability levels as they believe that the core business pillars of the FIMBank Group – Trade Commodity Finance, Forfaiting, Factoring and Treasury – have the ability to grow further within the Group’s established frameworks, supported by a strong principal shareholder and a performance-driven management team.

Download

FIMBank plc – Half-Yearly Report covering the six months ended 30 June 2016.

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