On 13 August 2021, FIMBank plc published its condensed interim financial statements covering the six-month period ended 30 June 2021.
Net interest income decreased by 23.2% to a five-year low of USD12.7 million (H1 2020: USD19.1 million) as the 2.1% drop in interest expense to USD6.38 million was not enough to compensate for the 17.2% contraction in gross interest income reflecting the adverse interest rate scenario. In contrast, non-interest income improved considerably to USD9.42 million (H1 2020: USD2.6 million) largely on the back of the profit of USD1.73 million recorded in relation to trading assets and other financial instruments compared to the loss of USD3.45 million reported in H1 2020. Moreover, net fee and commission income surged by 17.7% to USD5.83 million reflecting improved business volumes, whilst FIMBank also recorded a substantial increase in dividend income from its equity investments.
On the expenditure side, total operating costs increased by 12.4% to USD20.8 million (H1 2020: USD18.5 million). On the other hand, FIMBank’s financial performance was boosted by the USD0.91 million release in expected credit losses compared to the net impairment charge of USD15.9 million recorded in the first half of 2020.
Overall, FIMBank reported a pre-tax profit of USD2.28 million compared to a pre-tax loss of USD15.2 million in the previous comparable period. After taking into account a tax charge of USD1.3 million and a minimal profit of USD0.11 million from non-controlling interests, the net profit for the period under review amounted to USD0.87 million which, in turn, translates into an annualised return on equity of 0.71%.
The Statement of Financial Position as at 30 June 2021, when compared to the corresponding figures as at 31 December 2020, shows that net assets eased by 0.9% to USD230.7 million which translates into a net asset value per share of USD0.442. Total assets increased by 1.1% to USD1.86 billion mostly due to the growth in financial and trading assets. Similarly, total liabilities climbed 1.4% higher to USD1.62 billion as the USD130.4 million increase in amounts owed to banks offset the drops in amounts owed to customers (-USD94.8 million) and debt securities in issue (-USD12.3 million). Meanwhile, from a capital perspective, FIMBank noted that at 18.4%, its CET 1 and CAR ratios are 87 basis points above the regulatory requirement which includes the impact of an additional capital charge under the SREP Pillar II requirement set by the MFSA.
In their commentary, the Directors of FIMBank explained that the results achieved by the Bank in H1 2021 continued to be marked by the effects of the pandemic. Although FIMBank was successful in resolving some recoveries of non-performing legacy cases, on the other hand interest revenue generation remained negatively impacted by the very low interest rate scenario.
Look ahead, FIMBank will continue to focus on its key strategic objective of decreasing the size of its non-performing portfolio and improve asset quality. Moreover, the Bank will remain vigilant to cost efficiencies, prioritise investment so as to strengthen corporate governance, risk management and compliance functions, as well as simply operations and businesses.
On the FATF’s decision of place Malta under increased monitoring, FIMBank noted that although this development did not have any significant impact, a prolongation of the ‘grey-listing’ status could lead to longer term implications. As a result, the Bank will continue to monitor developments while remaining well prepared to execute action plans in a timely manner.