On 15 March, FIMBank plc published its preliminary financial statements for the year ended 31 December 2016.
During 2016, the FIMBank Group managed to turn profitable for the first time in the last four financial years reflecting the initiatives undertaken as part of the turnaround process initiated in 2015. Under this new business plan, the Group improved its risk and governance structures enabling itself to start transforming its origination business by aiming to offer the right products in the different geographies it operates in. Additionally, the Group diversified its funding base, reduced the overall cost of funding whilst also implementing a cost management discipline across its businesses to streamline operations. These efforts were also recognised by the international rating agency, Fitch, which upgraded the credit rating of FIMBank plc by one notch to ‘BB’.
The financial statements show a 25.8% decrease in net interest income to USD21.96 million (2015: USD29.60 million) reflecting the 14.3% drop in gross interest income to USD45.02 million (2015: USD52.52 million) and the 0.6% increase in interest expense to USD23.05 million (2015: USD22.92 million). On the other hand, non-interest income grew by 46.8% to USD24.18 million (2015: USD16.48 million). The Directors explained that these figures were achieved on the back of temporary higher levels of idle liquidity, a higher stock of regulatory liquidity assets tightening of margins in the Group’s markets and products as well as reduced income on forborne or delinquent assets. On the other hand, the Group registered an increase in dividend income from the Group’s investment in a trade-finance fund, improved fee levels on documentary credits as well as forfaiting and was also in receipt of income from the disposal of non-core assets in the United Arab Emirates and Malta. The announcement further explains that whilst the results of the FIMBank Group were boosted by significantly improved trading income these were mostly offset by higher losses from other financial instruments carried at fair value.
Overall, the total operating income for 2016 amounted to USD46.15 million which is practically unchanged from the USD46.07 million recorded in 2015.
The Group’s results were boosted by a 17.7% decline in operational expenses to USD38.68 million (2015: USD46.98 million) largely due to one-off expense items incurred in 2015 (related to business organisation and professional fees) which were not repeated during the year under review.
Net impairments dropped for the second consecutive year to USD2.3 million in 2016 compared to USD10.3 million in 2015 reflecting the continuous recovery efforts across the Bank and its subsidiaries, most of which were offset by the run-off provisions incurred on already impaired legacy exposure at the Dubai subsidiary.
Furthermore, the Group incurred a USD0.41 million share of loss from its associate companies (2015: USD0.81 million). This figure represents the performance of the 50% Brasilfactors only since, during 2016, the FIMBank Group acquired a controlling interest in EgyptFactors and therefore its results are were consolidated in 2016 but formed part of this line item in 2015.
Overall, the FIMBank Group reported a pre-tax profit of USD4.75 million compared to the pre-tax loss of USD12.05 million in 2015. After accounting for a tax credit of USD0.6 million, minority interests of USD0.34 million and USD0.01 million in losses from discontinued operations (FactorRus LLC), the Group’s net profit for the year amounted to USD4.92 million compared to the net loss of USD6.39 million in 2015. This translates into an earnings per share of USD0.0161 [2015: USD(0.0213)].
The Statement of Financial Position shows a 20.6% increase in total assets to USD1.74 billion mainly due to the growth in the Group’s loans and advances to banks as well as the trading book managed by the Group’s UK subsidiary, London Forfaiting Company Limited (LFC).
Similarly, total liabilities grew by 23.4% to USD1.57 billion as deposits from corporate and retail clients grew by USD526.6 million whilst deposits from banks and wholesale funding only decreased by USD238.4 million. Overall, the Group’s equity base (excluding minority interests) grew by 1.6% to USD151.49 million (2015: USD149.08 million), largely reflecting the profit for the year. The net asset value per share as at 31 December 2016 is of USD0.4879 (2015: USD0.4802).
Dividend & Bonus Issue
Similar to the previous three financial years, the Directors did not recommend the payment of a final dividend.
The Directors are recommending a 1 for 80 bonus issue to all shareholders as at the close of trading on Friday 7 April subject to regulatory as well as shareholder approval. The Annual General Meeting (AGM) is scheduled to be held on 11 May 2017.
Looking ahead, the Directors explained that, in 2017, the Group is expected to continue pursuing the transformation plan initiated in 2015. As such, the Group is now able to leverage the transformation achieved to date to achieve growth whilst consolidating its existing geographical footprint and driving down structural costs.