FIMBank plc - Interim Results

On 29 August 2024, FIMBank plc published its interim financial statements covering the six-month period ended 30 June 2024. The company explained that the comparative results for the first half of 2023 were reclassified to conform with requirements emanating from IFRS 9. The changes solely resulted in reclassifications of revenues and expenses and did not alter profit figures.

Net interest income fell by 3.7% to just under USD27.4 million (H1 2023: USD28.5 million) as the 12.6% (or USD5.80 million) growth in gross interest income to USD51.9 million was offset by a 28.1% (or USD6.87million) surge in interest expense to USD24.4 million.

Non-interest income streams translated into a loss of USD0.48 million, which however was lower than the loss of USD0.71 million recognised in the first half of 2023. In this respect, net trading losses and negative fair value movements from equity investments outweighed net fee and commission income and other operating income.

Furthermore, the financial performance was dented by a net impairment loss of USD2.0 million which is higher than the loss of USD0.80 million recorded in the first half of 2023.

As a result, operating income amounted to USD25 million compared to USD27 million in the same period last year.

Meanwhile, total operating costs remained practically unchanged at USD21.0 million. Nonetheless, the cost-to-income ratio worsened to 77.7% compared to 75.6% in H1 2023.

Overall, FIMBank reported a profit before tax of USD4.02 million compared to the pre-tax loss of USD6.01 million in H1 2023. After accounting for a tax charge of USD3.19 million and non-controlling interests of USD0.25 million, the net profit for the period under review amounted to USD0.58 million (H1 2023: USD3.74 million).

The Statement of Financial Position as at 30 June 2024, when compared to the corresponding figures as at 31 December 2023, shows that total assets eased by 18.4% (or USD 290.9 million) to USD1.29 billion as the Group recorded reductions in bank and customer loans , trading assets, financial investment, and balances with the Central Bank of Malta. Total liabilities contracted by 20.8% (or USD291 million) to USD1.11 billion driven by lower bank and institutional deposits and customer deposits. Total equity remained practically unchanged at USD179 million, which translates into a net asset value per share of USD0.343. From a capital perspective, FIMBank noted that its CET1 and  Capital Adequacy Ratio both stood at 19.3% (31 December 2023: 18.3%), above regulatory requirements.

Outlook

In their commentary, the Directors of FIMBank explained with the help of external advisors the Group is undergoing transformational change by reassessing its business model, portfolio allocations and subsidy strategies, while also reducing organisational complexity and identifying investment areas. Furthermore, the Group aims to maintain more diverse funding and adequate liquidity to enhance revenue generation, improve profitability and build sustainable capital origination capabilities.

As part of the transition, FIMBank aims to enhance its balance sheet structure by optimising pricing and maturities on both assets and liabilities.  Consequently, the Group has reduced its balance sheet size by 18% with the most significant decreases observed in treasury assets and liabilities. The Directors noted that the transition is expected to improve net interest margins, capital efficiency and liquidity management, and also positions the Group to rebuild its balance sheet for the foreseeable future.