On 11 June 2021, FIMBank plc announced that Fitch Rating downgraded its credit rating on FIMBank to ‘B’ from ‘B+’ whilst maintaining a ‘Negative’ outlook on the bank.
In its report, Fitch explained that the downgrade reflects heightened pressures on the bank’s business model, performance and capitalisation. In particular, Fitch views increased pressure on FIMBank’s performance from lower margins and due to business growth constraints given thin capital buffers over regulatory minima. Meanwhile, the ‘Negative’ outlook reflects Fitch’s view that further asset quality deterioration could put additional pressure on the bank’s already weakened financial performance and limited capital buffers. It also reflects risks to the bank’s strategy to gradually support revenues with growth in relatively higher-yielding assets and by exiting unprofitable business lines.
FIMBank concluded by noting that 2020 was a challenging year for FIMBank and the entire industry. Despite this, the bank maintained strong capital buffers and liquidity position. In fact, FIMBank had a CET1 capital ratio of 18.5% as at 31 December 2020 whilst its Liquidity Coverage Ratio stood at 241%. Moreover, FIMBank added that its defined strategy will deliver sustained growth whilst the continued success in recovering non-performing loans will further improve the robustness of the organisation.