On 28 August, FIMBank plc published its half-year results covering the six months ended 30 June 2012. During this period, the FIMBank Group registered a 24.5% drop in net interest income to USD5.56 million due to lower appetite for funded business as well as higher funding costs. This drop was mostly compensated for by the 17.4% increase in net fee and commission income to USD9.9 million reflecting the improved business volumes across all of the Group companies. Net trading income amounted to USD1.6 million (June 2011: loss of USD7.4 million) mainly relating to realised profits on currency instruments held by the Group to manage its exposures. Moreover, the FIMBank Group reported USD2 million (June 2011: USD10.9 million) in net income from other financial instruments carried at fair value following the efforts made to actively manage and recover the value of some illiquid transactions. In aggregate, the FIMBank Group reported a 1.2% drop in total operating income to USD19.2 million.
On the other hand, the FIMBank Group reported a 7.7% drop in non-interest expenses to USD13.3 million. This mainly reflects the 7.8% reduction in operating expenses to USD12.7 million arising from the cost savings achieved in both staff costs as well as other administrative-related expenses.
Impairment allowances increased by 13.6% to USD0.5 million as the Group experienced a number of repayment delays on a number of facilities, part of which are expected to be recovered by the end of the financial year.
The share of losses from the Group’s factoring equity accounted investments grew to USD0.66 million compared to USD0.21 in the same period last year. The increase is mainly due to the inclusion of the Group’s 40% shareholding in Brasilfactors. The other factoring ventures, including FactorRus, India Factors and Egypt Factors, are still in an overall loss-making position.
Overall, the FIMBank Group reported a pre-tax profit figure of USD4.7 million, representing an 8.2% increase over the previous comparable figure. After accounting for a tax charge of USD 0.19 million, the Group’s net profit for the period under review amounted to USD4.5 million compared to USD4.1 million in the first half of 2011.
Total assets grew by 5.7% since 31 December 2011 to just under USD1,075.8 million mainly due to the growth achieved in loans and advances to banks as well as customers. Total liabilities also grew by 6.4% to USD949.8 million reflecting the significant growth in wholesale deposits to other banks to USD504.3 million from USD365.2 million as at 31 December 2012. Shareholders’ funds increased by 1% to USD126 million reflecting the Group’s profitability during the period under review.
The FIMBank Group remains well capitalised with a Capital Adequacy Ratio of 18.1% which is well above the regulatory minimum of 8%. Likewise, the Group retains a healthy liquidity position consistently above the required regulatory threshold.
Similar to previous years, the Directors did not declare an interim dividend.
The Directors also made reference to the announcement about the proposed transfer by Massaleh Investments K.S.C.C. of its interest in FIMBank to Burgan Bank S.A.K. (Burgan) and the latter’s intention to inject new equity into FIMBank which will see it increase its prospective holding to above 50% of the issued share capital. As reported in the Interim Directors’ Statement of 16 May 2012, the transaction is now at the stage where the due diligence process by Burgan on FIMBank has been concluded. However, FIMBank reported that any further developments will be announced as they materialise.
The FIMBank Group, supported by its diversified business model, continues to follow developments in the markets in which it operates and remains focused on its core business of cross-border trade finance and services. Nonetheless, FIMBank stated that it will continue to face challenges although the implementation of Basle III in 2013 should create a safer environment for banks. However, the latter would also mean more stringent requirements with respect to the management of risk and capital.
The Directors also explained that although expectations for improved results by the Group’s joint ventures will increase, the investments made by FIMBank in large markets, such as Brazil, Russia, Egypt and India, are long-term projects which will probably result in a drag in the short-term. However, the Directors noted that these investments still preserve their long-term prospects which may also materialise in the medium term in some cases.
Overall, the Directors believe that the Group’s prudent impairment policy, strong risk culture and selective approach to new business, which have marked the results for the period under review, will help the Group maintain its performance during the second half of 2012.
Download a copy of the FIMBank plc 2012 Half-Year Report