FIMBank plc - Interim Directors’ Statement

On 19 May, FIMBank plc issued its Interim Statement reporting that the improved cost management has ensured profitability to be maintained in line with forecasts. The Directors’ also revealed that during the period between 1 January and 15 May 2009, the Group’s joint-venture companies, namely the ones in Dubai and Egypt, continued to register steady and encouraging progress. On the other hand interest and fee-based services have not shown the same levels of improvement as registered in the same period last year. Moreover the Bank stated that although the unrealised mark-downs on its financial assets incurred last year were not repeated, prospects of any substantial reversals are difficult to time.

Nonetheless FIMBank confirmed that it still has healthy liquidity and capital ratios which are well above regulatory standards. Furthermore, the Balance Sheet is strong with more diversified sources of funding.

In their statement the Directors’ also made reference to the recent successful bond issue. The Directors’ believe that the positive feedback of the bond issue can be considered as a vote of confidence in the Group’s business model and strategy, which is mainly based on selective international expansion in the form of ‘greenfield’ joint ventures and acquisitions.

In fact, with the proceeds of the bond issue, FIMBank reached an agreement, in April, with the International Finance Corporation (IFC) and the Joint Stock Bank Transcapitalbank (TCB) of Russia for the establishment of a joint venture company offering factoring services in Russia. The ownership of this new venture will be segregated as follows: 40% FIMBank, 40% TCB and 20% IFC. The new venture is still subject to the approvals of the boards, regulatory authorities and the respective shareholders as applicable.

TCB has total assets of US$2 billion and equity of about US$200 million, and its principal shareholders include the European Bank for Reconstruction and Development (EBRD) and DEG, one of Germany’s and Europe’s largest government-sponsored development institutions. TCB has strong SME lending and trade finance operations.

For the future, the Directors foresee additional prudence and caution in developing the business but at the same time recognise that flexibility is important to take advantage of opportunities, as risk premia in promising markets, ventures and undertakings are now priced more realistically.