FIMBank plc - Full-Year Results & Dividend Announcement

On 3 March 2008, FIMBank plc published its Preliminary Profits Statement for the year ended 31 December 2007.

The key highlights are:
• Net fee and commission income up 31 per cent to US$14.2 million;
• Total income of US$26.8 million (+12.1 per cent);
• Share of profits from factoring companies of US$4.6 million (+81.6 per cent);
• Profit for the year up 38 per cent to US$10.5 million;
• Shareholders’ funds of US$97.9 million.

The Directors will be recommending a 1 for 5 bonus share issue as well as the payment of a net dividend of US$0.038 per share (2006: US$0.035 per share) at the forthcoming Annual General Meeting scheduled to take place on 10 April 2008. Shareholders will have the option of receiving the dividend either in cash or in new shares at a price which is yet to be determined. Shareholders as at close of trading on 10 March 2008 will be entitled to the bonus issue and the dividend. The shares will trade ex-dividend as from Tuesday 11 March.

During the twelve months ended 31 December 2007 the total operating income generated by the FIMBank Group increased by 12.1 per cent to US$26.8 million. Net interest income grew by 14.1 per cent to US$10.5 million with non-interest income rising by 10.8 per cent to US$16.3 million. The Directors reported that net interest income grew in line with the increase in the Bank’s activity due to more lines of credit, a rise in customer and bank deposits and longer term funding sources.

Net fee and commission income, the largest component of the Group’s total operating income, climbed 31 per cent to US$14.2 million on an increase in activity at the Bank and its fully-owned subsidiary London Forfaiting Company (LFC). The Directors revealed that fee income booked by LFC doubled during the year to US$3.5 million. Meanwhile, net trading income dropped from US$3.1 million in 2006 to just under US$2.0 million during the period under review as the turbulence in international financial markets impacted the Bank’s bond portfolio. However this was offset by unrealised profits resulting from foreign exchange activities. The drop in the net trading income was also effected by a decrease in realised and unrealised gains in forfaiting assets to US$0.8 million (2006: US$1.8 million). Dividend income was minimal during the year while in 2006 the Group benefited from a one-time dividend income of US$0.58 million from Eastern Prospect BV.

Non-interest expenses, comprising administrative expenses and depreciation, rose 21.8 per cent to US$19.8 million mainly attributable to the start-up costs of new joint-venture associates in Egypt and Dubai and the rise in staff complement within the Group.

The share of profits from the factoring associate companies (38.5 per cent shareholding in Global Trade Finance Ltd. in India as well as the participations in the two recently formed factoring companies – 40 per cent in EgyptFactors and 50% in MENAFactors) amounted to US$4.6 million, 81.6 per cent higher than the contribution in the previous year. The Group’s cost to income ratio after taking into account the share of profits from the factoring associate companies is marginally higher than last year at 63 per cent.

Net impairment losses during 2007 dropped to US$0.8 million from US$1.9 million in 2006. This resulted from a decrease in specific impairment provisions which in turn was partly offset by a rise in collective impairment charges. In 2006, FIMBank had taken a specific charge on an impaired forfaiting asset within LFC’s portfolio. Meanwhile, LFC recognised a further deferred tax asset of US$1.4 million, significantly lower than the US$3.4 million in 2006. US$1.1 million of the deferred tax asset was used as a final adjustment to the carrying amount of goodwill. As a result of the depletion of goodwill in the Group’s balance sheet, FIMBank can start benefiting from the unutilised tax credits at LFC, which amounted to over US$22 million in 2007. FIMBank’s profitability during 2007 increased by 38 per cent to US$10.5 million giving a diluted earnings per share of US$0.115.

The Group’s balance sheet as at 31 December 2007 shows total assets of US$571.3 million (2006: US$463.5 million) with shareholders’ funds increasing to US$97.9 million following the US$25 million rights issue in December 2007. This is reflected in an increase of US$11.5 million in the issued share capital and a US$13.8 million rise in the share premium account. The proposed 1 for 5 bonus share issue will capitalise circa US$11 million from the share premium account. Group commitments outstanding as at 31 December 2007, representing documentary credits, commitments to purchase assets and confirmed letters of credit, amounted to US$308 million (2006: US$245 million).

In the Preliminary Profit Statement no mention was made of the shareholding in Global Trade Finance in India. On 29 January FIMBank announced that the State Bank of India (SBI) intends to acquire FIMBank’s 38.5 per cent shareholding in Global Trade Finance together with the shares held by Export-Import Bank of India and the International Finance Corporation. Various articles in the local and international media claimed that SBI’s purchase of a 91 per cent shareholding in GTF was agreed to at a value of INR5,250 million (equivalent to circa US$135 million).