The year 2019 was another profitable year for FIMBank which registered a pre-tax profit of USD7.3 million (€6.4 million), compared to a profit of USD13 million (€11.4 million) in 2018.
The overall financial performance of the group reflects the execution of a de-risking process resulting in short-term asset reductions positively improving the risk profile of the key portfolios.
Following the conclusion of this process, the group strengthened the structures of its credit transactions. The period under review, saw FIMBank absorbing most of the de-risking outcome in its core trade and commodity finance portfolio, with the consequent impact on interest and fee revenues. It is also important to mention that during the year, the Bank received dividend income from a subsidiary undertaking which reduced its accumulated losses to significant levels when compared to prior years.
The group’s ‘Net operating income’ dropped by 13 per cent from USD58.7 million (€51.8 million) to USD51.3 million. Net interest income, net fees and dividend income combined together decreased by 14 per cent, from USD56.5 million to USD48.4 million.
Revenues dropped due to a combination of certain measures implemented by the group and economic conditions.
Despite having faced a challenging year, the bank remained committed to its strategic focus and the transformation of the group to one based on a culture of excellence, sustainable growth and long-term returns.
“We have been prudent in addressing the challenges from a slowing economy and reducing trade finance momentum which may bring with it potential asset quality issues if we are not careful. This has meant slower growth, and more prudent provisions while focussing on strong governance” said FIMBank Group’s outgoing CEO Murali Subramanian.
In-depth review of the Financial Statements shows that it was a challenging year for the Group, marked by a number of non-performing exposures in FIMBank and India Factoring, leading to an impairment coverage increase of USD14.2 million on legacy and new delinquent exposures. Nevertheless, the Group also managed to improve its risk profile across a number of non-performing exposures which ultimately resulted in reversal of impairments.
"The group’s management team is spearheading several efforts to address these exposures and recoveries are expected to accelerate in the near future. This is underlined by the recent engagement of a specialist Head of Recoveries to manage the impaired assets of the Group.
Reflecting on FIMBank’s performance in 2019, group chairman John C. Grech stated: “The senior management team has proven decisive towards ensuring that the group continues to respond to future challenges effectively, and to secure a more sustainable growth trajectory for FIMBank in the coming years.
More specifically, measures undertaken during this period have led to the critical transformation of the underlying portfolios of the Group, the result of which places FIMBank in a position of strength, as it makes its business model fundamentals even more sustainable and attractive.”
Dr Grech also made reference to the celebration of FIMBank’s 25th anniversary during that year: “This milestone in FIMBank’s history was an opportunity for my board and management to determine where we are heading, keeping in focus our mission. Over the years, FIMBank has established itself as a leading provider of trade finance, factoring and forfaiting solutions, and more recently, selective real estate financing. There is no doubt that our employees and management at head office and across the globe, deserve our praise for the results which have been registered over these past years.”