FIMBank plc - Full-Year Results

On 13 March, FIMBank plc published its 2011 preliminary results revealing a 35.3% rise in profitability to USD9.1 million on the back of further growth in both net interest income and non-interest income. In fact, the FIMBank Group recorded a 30.2% rise in gross interest income to USD29.2 million following growth in trade finance activities, discounting facilities, syndications, forfaiting and factoring business. This offset the 66.1% increase in interest expense to USD15.7 million reflecting the larger deposit base as well as the higher pricing due to the limited liquidity which characterised the year under review. Overall, the FIMBank Group reported a 4.1% rise in net interest income to USD13.5 million.

FIMBank registered a 4.1% drop in net fee and commission income to USD18.6 million as a result of a more prudent approach to business in the MENA region in view of the political instability and the subsequent economic turmoil in the region. Similarly, the Group reported a 50.4% decline in realised gains on derivative instruments and losses on other financial assets to USD2.6 million. These declines were counterbalanced by an increase in net trading income to USD2.7 million (2010: a negative figure of USD1.7 million) comprising a USD1.63 million increase in net profit from the Group’s forfaiting assets and net realised and unrealised foreign exchange profits of USD0.54 million (2010: loss of USD 2.29 million).

The 4.2% increase in total operating income to USD37.5 million was partially offset by a 15.6% rise in non-interest expenses mainly due to a 19.2% rise in administrative expenses to USD27.8 million. This resulted in a 21.8% rise in operating profit to USD8.6 million.

The FIMBank Group also reported net impairments of USD0.13 million which are well below the USD3.8 million incurred in 2010. The decrease in impairments is due to a reduction in the collective impairment following a decrease in the level of non-collateralised funded and unfunded lending portfolio as well as significantly lower specific impairments of USD0.61 million given that the USD2.28 million in impairments incurred in 2010 with respect to the Menafactors factoring book did not re-occur.

The pre-tax profit of USD8.3 million represents a 33.1% increase over the previous year’s figure. After accounting for the tax credit of USD0.8 million (2010: USD0.5 million), the FIMBank Group’s profitability amounted to USD9.1 million, up 35.3% from last year, which translates into an earnings per share of USD0.0669.

Notwithstanding the rise in profitability, the Directors recommended a final net dividend of USD0.02 per share which is 19.2% lower from the previous year’s dividend thereby also translating into a lower payout ratio to 30% in 2011 from 50% in 2010. Shareholders as at close of trading on 3 April will be eligible for this dividend and will also have the option to take up the dividend either in cash or in the form of new shares. The attribution price will be announced at a later date. The Directors also recommended a 1 for 25 bonus share issue which will be financed through the capitalisation of the Group’s share premium reserve account. Shareholders as close of trading on 3 April will also be eligible to this bonus share issue. Both the dividend and the bonus issue, which require the approval of shareholders at the next Annual General Meeting scheduled to be held on 10 May, will be settled by not later than 21 May 2012.

Looking ahead, the Directors stated that although current market conditions continue to call for prudence as well as attention to strong risk management and compliance, 2012 should bring much needed hope that the worst may indeed be over. Nonetheless, FIMBank will undoubtedly face challenges during this year particularly those related to the impact of the introduction of Basle III’s more stringent capital requirements on the business environment in which the Group operates. In conclusion, the FIMBank Directors explained that the Group has now established a wide and diversified product range which, driven by strong fundamentals, will continue to provide it with growth and profit opportunities.

Download a copy of the FIMBank plc 2011 Preliminary Results