FIMBank plc - Interim Results

On 8 August 2019, FIMBank plc published its condensed interim financial statements covering the six-month period ended 30 June 2019.

Performance Overview

During the period under review, net interest income grew by 19% (or USD2.56 million) to USD16 million (H1 2018: USD13.4 million) as improvements in the liability structure of the Group offset the reduction in interest income resulting from lower asset levels. On the other hand, non-interest income contracted by 20.6% (or USD3.06 million), largely driven by lower net fee and commission income which dropped by 32.5% to USD6.35 million compared to the USD9.41 million figure generated in the previous comparable six-month period. In this respect, FIMBank explained that the substantial decline in net fees and commissions reflects lower gross fees due to a reduction in new transactions as well as higher fees payable on credit mitigation and related costs. Meanwhile, the bank also saw a reduction in dividend income which was offset by higher net results from foreign currency operations.

Overall, the total net operating income of FIMBank eased by 1.8% to USD27.8 million. Nonetheless, despite the lower average asset levels, the bank explained that both net interest margins and net revenue margins improved when compared to H1 2018.

On the expenditure side, total operating costs increased by just under 1% to USD18.7 million as the bank maintained a continuous oversight of its cost base in order to ensure the right balance between revenues developments and expenditure. The financial performance of FIMBank was boosted by much lower net impairment losses as these amounted to just USD0.58 million compared to a charge of USD2.09 million recorded in the first half of 2018. The net impairment charge taken in H1 2019 includes the successful recovery of a fully-provided exposure amounting to USD3 million which mitigated additional impairment charges. Meanwhile, net results from trading assets and other financial instruments remained relatively unchanged at USD1.11 million. Furthermore, no losses were recorded relating to assets held for sale compared to a negative fair value charge of USD2.08 million in H1 2018.

In aggregate, FIMBank reported a pre-tax profit of USD9.65 million which is almost 38% higher than the previous comparable figure of USD7 million. After taking into account a tax charge of USD2.16 million and a minimal contribution from non-controlling interests, the net profit attributable to shareholders amounted to USD7.43 million which, in turn, translates into an annualised return on average equity of 5.2%.

The condensed Statement of Financial Position as at 30 June 2019, when compared to the corresponding figures as at 31 December 2018, shows that net assets grew by 2.7% to USD287.8 million. This translates into a net asset value per share of USD0.5509. In this respect, the 6.6% (or USD105.6 million) drop in total liabilities to USD1.48 billion outweighed the 5.3% contraction in total assets to USD1.77 billion. Changes in the composition of the bank’s balance sheet reflected a risk-balanced business model as FIMBank successfully completed a de-risking exercise of its main portfolios. This led to a short-term reduction in the size of the balance sheet as key portfolios readjusted their client and market profiles, refined structuring and increased risk mitigation. On the other hand, the bank explained that it implemented a highly effective execution of the asset-liability process through the preservation of revenues which also included the pro-active structuring of funding sources and the use of various available liquidity options.

Dividend

The Directors did not declare an interim dividend.

Outlook

In their commentary, the Directors of FIMBank explained that the results achieved by the bank were below expectations as the bank re-aligned certain businesses towards a more diversified risk strategy. Nonetheless, the transformation of such portfolios places the bank in a position of strength as it makes its business model fundamentals even more attractive. In fact, for the second half of the 2019 financial year, FIMBank is aiming at returning to asset growth whilst remaining vigilant on risk, control and governance. Moreover, FIMBank noted that it has sufficient business pipeline, funding and resource structures in place to support its growth path and generate higher value and returns.

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FIMBank plc – Condensed Interim Financial Statements for the six-month period ended 30 June 2019.