Following the announcement of interim results on 27 August and the analysts’ meeting held on 9 September, Rizzo, Farrugia & Co. (Stockbrokers) Ltd. (‘RFC’) compiled its customary analysis of FIMBank’s results. The stockbroking firm concludes that FIMBank’s equity, which is denominated in US Dollars, is classified as a LONG-TERM BUY proposition for those clients who wish to diversify their portfolio and include some foreign currency denominated equity into their local investment portfolios.
Due to its specialised business this Bank cannot be readily compared to the other commercial banks that have an equity listing on the Malta Stock Exchange. RFC believe however that the Group’s top management team and its strategy of becoming a leading trade finance group should translate into an increased return to shareholders by way of dividends and capital appreciation in the years ahead.
FIMBank was established in Malta in November 1994 and commenced business operations in June 1995. The company is licensed to carry on the business of banking as a credit institution in terms of the Banking Act. It is licensed to conduct full banking activities in all currencies, except the Maltese lira, with both residents and non-residents. The company’s core activities are international trade finance, including ship scrapping finance, trade finance services provided to banks and to trading companies, and commercial lending to trade related customers.
In September 2003, FIMBank acquired for approximately GBP31 million London Forfaiting Company (LFC), a forfaiting specialist listed on the London Stock Exchange which was originally established in 1984. LFC was delisted from the London Stock Exchange and was re-registered as a private company forming part of the FIMBank Group.
In March 2004, FIMBank announced that it agreed the terms of acquisition of a 38.5% shareholding in Global Trade Finance Private Limited (GTF) for a cash consideration of USD4.6 million, which represents a slight premium to book value. GTF is a joint venture company with its head office in Mumbai, India. GTF is an unquoted company specialising in providing export-financing solutions to small and medium sized Indian exporters with a strong focus on products such as factoring and forfaiting. The formal completion of this acquisition is expected to be finalised by the end of November of this year.
FIMBank’s shares were admitted to the Official List of the Malta Stock Exchange on 22 June 2001 following a USD 12.5 million equity issue.
Overview of Results of FIMBank and LFC
Due to the changes that have taken place and the accounting standards that must be adopted when consolidating the individual financial statements of FIMBank and LFC in order to derive the Group accounts, it would be best to analyse the financial statements of the individual companies separately.
During the first six months of the year under review, FIMBank’s net interest income increased by 34.1% to USD1.4 million with net fee and commission income rising by 10.4% to USD2.7 million. Trading and other income amounted to USD465,619, a 51.6% rise over the income generated during the first six months of 2003. Overall, FIMBank’s operating income increased by 20.3% during the period under review to USD4.6 million. The number of inward and outward letters of credit handled increased from 601 in the period January to June 2003 to 791 during the six months period under review. More importantly, the value of these letters of credit increased by 41% to USD417 million.
The letters of credit show the work in progress for the coming months since a large number of these have not been closed and therefore no commission income would have yet been generated on this business. During the analysts’ presentation FIMBank’s new President Margrith L