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Refocused strategy yields positive results
The FIMBank Group’s return to profitability is the outcome of a successful consolidation and turnaround strategy launched in 2015. This is the highlight of the Group’s 2016 performance.
FIMBank’s Group Consolidated Audited Financial Statements show that for the year ended 31 December 2016, the Group registered a profit of USD5.3 million, compared to a loss of USD7.1 million in 2015. At 31 December 2016, total Consolidated Assets stood at USD1.74 billion, a substantial increase of 21 per cent over the USD1.44 billion reported at end 2015, while total Consolidated Liabilities stood at USD1.57 billion, up by 24 per cent from USD1.27 billion in 2015. Operating income before net impairment for 2016 stood at USD46.1 million, at par with 2015 levels. On the other hand, during the year in review, net interest income decreased by USD7.6 million to USD22.0 million. Operating expenses decreased by USD8.3 million, from USD47.0 million to USD38.7 million. Significantly, “as a result of energetic and consistent recovery efforts”, for the second year running net impairments saw a very significant decrease, this time by more than 70 per cent, to stand at USD2.3 million, compared to USD10.3 million in 2015. Meanwhile, the Board of Directors will not be recommending a dividend, however, subject to the Regulator’s approval, the Board will be recommending a 1 for 80 Bonus Issue of Ordinary Shares by way of capitalisation of the Share Premium Account.
According to the FIMBank Group’s Chairman, Dr John C. Grech, the 2016 financial results “are a vindication of our steadfast resolve to bring the Group back on the road to profitability following the bleak performance of 2014”. He explained that “after considerable effort and sound strategic decision-making, today we are in a position to witness the financial response to a successful turnaround strategy, superbly crafted and ably delivered by FIMBank’s management team, led by our CEO Murali Subramanian”. Dr Grech also referred to the fact that “on the back of consistent support of our controlling shareholders Fitch Ratings upgraded FIMBank to BB and its Support Rating to 3 from 5”.
Commenting on the financial results, FIMBank Group CEO Murali Subramanian stated that the pillars for the successful turnaround of the Group’s fortunes post-2014, included an improved origination strategy, the harmonisation of FIMBank’s product offering, exploring new product opportunities, developing a market-appropriate risk appetite, as well as the implementation of cost efficiencies across the whole Group. “These principles provided a platform from which FIMBank has, since then, been successfully stabilising its performance, growing its loan book and reversing the negative financial trend, eventually returning a full-year profit by end-2016”.
Mr Subramanian identified the strengthening of FIMBank’s management structure, the vigorous implementation of cost control measures, and the implementation of a common risk management framework, as key contributors to the success of the turnaround. From an operational perspective, during 2016 the re-alignment and streamlining of FIMBank’s international factoring strategy “proceeded as planned”, with the ongoing restructuring of business units across the factoring network. FIMBank’s CEO highlighted the Bank’s Shipping, Factoring as well as lending into selected Real Estate in Malta, as sectors expected to drive increasingly important revenue streams to the Group. He also mentioned the Group’s “successful approach to the retail depositor market, thanks to the diversification of our funding base and a reduction in the overall cost of funding”.
Referring to the immediate outlook for the Group, Mr Subramanian said that “We will evaluate further avenues to diversify the target sectors wherever viable, in order to reinforce balance, and rebuild or consolidate the different portfolios”. He referred to the macro-economic outlook as encouraging, and reiterated management’s intention to continue monitoring closely developments in all the markets, “thus allowing us to exploit opportunities and protect ourselves from potential external risks to the business”. FIMBank’s CEO stated that “The overall objective is to continue growing our business to more sustainable levels of profitability, generating greater returns to shareholders, while strengthening our balance sheet further”
