On 19 August 2022, FIMBank plc published its interim financial statements covering the six-month period ended 30 June 2022.
Net interest income surged by 9.9% to just under USD14 million as the 11% growth in gross interest income to USD 21.2 million outweighed the 13.3% increase in interest expense to USD7.23 million. In this respect, FIMBank explained that the improved interest rate environment resulted in higher income whilst the Bank also increased its lending activity as customer loans increased by 7.5% to USD626.3 million whilst the loan-to-deposit ratio climbed to 63.1% compared to 57.9% as at the end of June 2021.
In contrast, non-interest income contracted by almost 18% to USD7.74 million largely reflecting the drop in net fee and commission income (-3.8%) and the loss of USD1.79 million from trading activities (H1 2021: gain of USD1.86 million) which offset the marked increase in dividend income.
The financial performance of FIMBank was also dented by a net impairment loss of USD4.4 million compared to the net release of USD0.91 recorded in the first half of 2021, reflecting the prevailing macroeconomic uncertainties as well as delays in recovery progress.
Meanwhile, total operating costs fell by 10.5% to USD18.6 million on the back of the Bank’s focus to optimise its processes and structures, as well as the favourable impact of the US Dollar strength when converted to the euro currency. As a result, the cost-to-income ratio improved to 85.6% compared to 93.8% in H1 2021.
Overall, FIMBank reported a loss before tax of USD 1.26 million compared to the pre-tax profit of USD2.28 million in H1 2021. After accounting for a tax charge of USD1.67 million and non-controlling interest, the Bank’s net loss for the period under review amounted to USD 3.02 million.
The Statement of Financial Position as at 30 June 2022, when compared to the corresponding figures as at 31 December 2021, shows that net assets eased by 1.7% to USD219.6 million which, in turn, translates into a net asset value per share of USD0.42. Total assets and liabilities contracted minimally to USD1.78 billion and USD 1.56 billion respectively. Meanwhile, from a capital perspective, FIMBank noted that at 19.8% (31 December 2021: 18.7%), its CET 1 and Capital Adequacy Ratio are 380 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 despite the challenging macroeconomic conditions, the recent decision by the FATF to remove Malta from the ‘greylist’ has opened business opportunities which were previously suspended. Indeed, the Bank is projecting moderate growth in business lines and geographies that provide superior returns at less risk. Moreover, as FIMBank continues to simplify its organisational structure, including the recent closure of a branch in Greece, the Bank is also solidifying its presence in Malta.
In terms of capital adequacy, FIMBank noted that the conclusion of a ‘Supervisory Review and Evaluation Process’ (SREP) resulted in a reduction in the Pillar II requirement by 150 basis points. This allows the Bank to pursue growth in asset portfolios and creates an opportunity for incremental tangible revenue streams. In addition, the Bank’s balance sheet is positioned favourably for the increasing interest rate scenario which is expected to strengthen FIMBank’s underlying profitability.
Going forward, the Bank will also continue with its efforts in reducing the absolute amount of non-performing assets and in improving its non-performing coverage ratios, principally by addressing legacy non-performing assets that are outstanding as well as those that were previously written-off.
In conclusion, FIMBank noted that its ongoing drive to improve governance and controls will be a source of future sustainable growth. As the Bank progresses further towards its strategic objectives in a steady and sustainable manner, FIMBank will continue to remain vigilant to the evolving macroeconomic scenario and be prepared to rapidly adapt to market pressures and business opportunities.