On 10 March 2009, FIMBank plc published its full-year results to 31 December 2008. The Directors recommended the payment of a scrip dividend of US$0.025 per share. Shareholders have the option of receiving the dividend in either cash or by the issue of new shares at a price which still has to be announced. Those shareholders as at close of trading on Wednesday 18 March will be entitled to this dividend which will be paid following approval at the forthcoming Annual General Meeting.
During the year ended 31 December 2008, the FIMBank Group registered a 35% increase in net interest income to US$14.2 million. Gross interest income rose by 15.5% to US$32.8 million mainly due to increases in short-term money market placements, loans and advances as well as increases in the factoring book while interest expense only increased by 3.8% to US$18.6 million on higher customer and bank deposits. This resulted in a net interest margin of 43.3% (Dec 2007: 37%).
Moreover, net fee and commission income climbed 33% to US$18.9 million on improved performances at both Bank level especially from an increase in trade finance activities and also from its fully-owned subsidiaries (London Forfaiting Company and FIM Business Solutions Ltd) especially during the first three quarters of the year.
Net trading income increased by 5% to €2.1 million. On the other hand, the Group recognised €8.6 million related to mark-downs from financial instruments carried at fair value. FIMBank explained that the decline in the value of the financial assets reflects the sharp drop in bond prices during the final quarter of the year following the collapse of Lehman Brothers. During a stockbrokers’ meeting held on 16 March 2009, President Ms Margrith Lutschg Emmenegger explained that the securities portfolio was marked down due to liquidity issues and not related to any credit issues. The President explained that FIMBank only invests in emerging market securities issued by sovereign or quasi sovereign entities and until now, none of these investments have defaulted. Furthermore the duration of these securities is very short, with 50% of the securities due to mature within the next 6 months and the rest in less than 18 months. The Group’s President reassured that the mark down on these assets are not related to any deteriorating credit concerns and FIMBank should be repaid the full nominal amount of maturity and this will be positively reflected in the 2009 income statement.
The FIMBank Group generated a profit of US$33.6 million from the sale of its 38.5% stake in Global Trade Finance to the State Bank of India, which was concluded at the end of March 2008. This substantial one-time gain boosted the Group’s operating income which surged to US$60.3 million during the year under review from US$26.7 million last year.
Administrative expenses rose by 26.9% to US$24.1 million during 2008 reflecting the increased activity and operating base of the Group resulting in additional costs with respect to the start-up of new associated ventures, further recruitment and increases in performance based compensation. Depreciation and amortisation edged 0.4% higher to US$0.8 million. Net impairment losses during 2008 increased to US$1.1 million from US$0.8 million in 2007 on increased collective impairment allowances due to the strong growth in loans and advances.
In the year-end results, FIMBank again recognised the US$1.7 million provision which had originally been accounted for as at 30 June 2008. This relates to a court decision against FIMBank with respect to a payment under documentary credit. The Bank is currently appealing the judgement in court.
The share of profits of associate undertakings amounted to US$1.7 million during 2008 compared to US$4.6 million from the previous year. The decrease is mainly due to the sale of GTF and the acquisition of the entire shareholding in Menafactors. The 2008 figure relates to a full year’s contribution from the 40% shareholding in EgyptFactors while it only accounts for a 3-month contribution from GTF and Menafactors. FIMBank acquired the remaining 50% shareholding in Menafactors during the second quarter of the year and has since consolidated this investment in the Group accounts. In the half-year report, the Directors had explained that the purchase of the other 50% of Menafactors is only temporary. The factoring joint-venture in Dubai was initially set up between FIMBank and National Bank of Dubai but as a result of the merger between the National Bank and Emirates Bank, FIMBank acquired full control and opted to seek an alternative partner as the Emirates Bank already offered factoring activities. FIMBank is thus seeking to dispose of a substantial part of this equity holding.
The FIMBank Group registered a pre-tax profit of US$34 million, substantially higher than the profitability generated last year of US$9.7 million mainly as a result of the significant profit from the sale of GTF. After accounting for a tax charge of US$10 million (of which US$9.81 million were taxes held at source on the disposal of the shareholding in GTF), profit after tax for the year ended 31 December 2008 amounted to US$24.8 million.
Total assets as at 31 December 2008 amounted to US$624 million, an increase of 9.3% over last year as loans and advances to customers grew by 17.7% to US$98.5 million and loans to banks increased to US$268.6 million. On the liabilities side, deposits to customers also grew significantly by 42.5% to US$251.5 million. Shareholders’ funds increased by 19% to US$116.6 million reflecting the improved profitability and dividend retention in the form of scrip issues. This resulted in a return on equity (post tax) of 23.1% – 77% higher than 2007.
Group commitments as at 31 December 2008 showed a decline of 22% to US$240 million when compared to last year. This is mainly due to a drop in commitments to purchase forfaiting companies, documentary credits and undrawn credit facilities which were partially offset by an increase in unfunded credit-linked notes.