FIMBank plc - Full-Year Results

Thursday, March 15th, 2018

On 14 March 2018, FIMBank plc published the preliminary statement of annual results for the year ended 31 December 2017. It is important to highlight that the comparative 2016 financial results were restated after FIMBank changed the method for valuing its properties in 2017 (mainly the Group Head Office located in St Julian’s) as well as the reclassification of the 50%-owned Brasilfactors S.A. as a “discontinued operation”. Moreover, during 2017, FIMBank did not exercise the Call Option which would have enabled it to increase its current shareholding of 51% in Latam Factors S.A. The latter is a factoring and leasing company operating in Chile. As a result, the Directors of FIMBank determined that the Group lost sole control over Latam Factors S.A. and accordingly it is now classifying and measuring the Group’s investments in Latam Factors S.A. differently by using the Equity Method rather than consolidating the company with the results of the Group.

Performance Overview

During 2017, FIMBank generated USD24.9 million in net interest income, representing an increase of 13.5% over the previous comparable period as the 13.6% (or +USD6.14 million) growth in gross interest income outweighed the 13.8% (or +USD3.17 million) increase in interest expense. Similarly, non-interest income rose by 10.6% to USD26.7 million largely on the back of the increases in net fee and commission income (+24.8%, reflecting improved fees on documentary credits and forfaiting), a USD3.44 million positive fair value movement on investment property, as well as a much lower loss in net trading results. On the other hand, the Group registered a net gain from other financial instruments of only USD0.11 million compared to USD3.37 million in 2016, whilst other income dropped markedly to USD1.14 million from USD 2.61 million in the previous comparable period reflecting lower gains made from the disposal of non-core assets. Overall, total operating income for 2017 amounted to USD51.7 million which is 12% higher than the USD46.1 million figure recorded in 2016.

On the expenditure side, non-interest expenses grew by 9.6% to USD42.3 million (FY2016: USD38.6 million) reflecting higher mandatory regulatory costs and staff-related expenses. In contrast, FIMBank registered an impairment reversal of USD2.3 million against an impairment charge of USD2.3 million in 2016. In this respect, the Group explained that its efforts towards recovering legacy delinquent exposures yielded positive results, with significant recoveries being made throughout 2017 (in particular in India and Egypt) which however were partly offset by increases in coverage on other impaired legacy credits.

In total, FIMBank reported a pre-tax profit of USD11.7 million which is more than double the USD5.22 million figure for the previous comparable period. After accounting for a tax charge of USD0.56 million, minority interests of USD0.21 million and a USD3.4 million loss from discontinued operations, the Group’s net profit for the year amounted to USD7.52 million compared to USD5.02 million in 2016. This translates into an earnings per share of USD0.024 (2016: USD0.0162).

The Statement of Financial Position shows a 5.8% drop in total assets to USD1.64 billion as the Group restrained asset growth in anticipation of a planned capital injection. Similarly, total liabilities contracted by 6.1% to USD1.47 billion. The loans-to-deposit ratio jumped to just under 67% from 45% as at 31 December 2016, reflecting a 32.8% surge in customer loans whilst customer deposits fell by 10.7% to USD847.2 million. Overall, the Group’s equity base (excluding minority interests) expanded by 13.1% to USD174.6 million. The latter translates into a net asset value per share of USD0.555 (31 December 2016: USD0.491). FIMBank also made reference to the improvements in its capital ratios. In fact, the CET1 ratio increased by 1.6 percentage points to 11.3% whilst the Total Capital Ratio improved to 15.5% from 13.3% as at the end of 2016.

Dividend

Similar to the previous four financial years, the Directors of FIMBank are not recommending the payment of a dividend.

Outlook

Looking ahead, FIMBank explained that 2018 is expected to be characterised by a capital injection directed towards addressing a more stringent regulatory landscape whilst at the same time allowing the Group to grow and achieve improved economies.

Download 

FIMBank plc – Preliminary Statement of Results for the financial year ended 31 December 2017.

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