A Global Force in
Trade Finance

FIMBank - A Global Force in Trade Finance - April 2014

FIMBank's Margrith Lutschg-Emmenegger discussed the Bank's results and strategy.

Margrith 11. How would you describe the conditions for 2013, the year under review?
Although the growth in international trade during 2013 did not live up to expectations, the year ended on a slightly more optimistic note, with indicators increasingly pointing towards a bottoming out of the economic slowdown and the prospect of a slow  recovery. This optimism was mainly borne by the easing of the European sovereign debt crisis, a fall in unemployment in the United States, and an acceleration of Japan’s economy during the year. Meanwhile, large developing economies showed signs of a slow-down in this period, while India’s economy suffered sharp contraction. In the Middle East and North Africa, where many countries are in transition, regional conflict, heightened political tensions and delays in reforms continued to weigh on growth.

2. How  did FIMBank fare under these conditions?
Although the markets where the Group is active remained affected by generally challenging conditions for business, the year under review continued to present encouraging opportunities in international trade finance both with existing clients as well as with new products and markets. These were reflected in the substantial increase in  operating results registered for the year.

3. Could you please provide a brief review of the FIMBank Group’s performance?
For the year ended 31 December 2013, the Group registered a loss of USD4.22 million compared to a profit of USD8.80 million in 2012. Despite another positive operating performance this was negatively affected by high impairment losses. In fact, this sharp increase in impairments significantly depressed the group’s performance. However, we did end 2013 with a stronger balance sheet as well as healthy capital and liquidity ratios.

4.  Can you provide further information regarding the Group’s operating results?
Prior to impairment losses, marked-to-market adjustments and share of equity results, the Group improved its operatinperformance by 13%, from USD36.68 million to USD41.60 million. Net Interest Income increased by 23% to USD15.94 million.  Similarly, Net Fee and Commission Income increased by 11% to USD22.89 million. This was aided by improved business volumes across all Group companies.

5. Can you provide further information regarding the principal impairments that impacted these positive results?
The impairments which had the greatest impact on the Group’s financial performance were those related to unrealised marked-to market adjustments on specific distressed assets. These impairments were primarily linked to forfaiting operations by one of the Group’s subsidiary companies, and to a lesser extent, due to specific impairment losses registered by two of the Group’s joint ventures. The Group is committed to ensuring that no stone is left unturned in attempting to recover part or all of this exposure.

6. Will FIMBank shareholders be receiving a dividend?
The Directors will not be recommending the payment of a cash dividend to the Annual General Meeting of shareholders iIn 2012 the net dividend per ordinary share was of US cents 3.693149). A resolution proposing a 1 for 10 Bonus Issue of Ordinary Shares by way of capitalisation of the Share Premium Account will be presented to the Annual General Meeting.

7. How has the Bank continued to position itself internationally during the last few years?
We have remained focused on Trade Finance, which is a banking business servicing the real economy, assisting customers with their trade finance requirements, be it international or domestic.  We do this by providing customers with financing, as well as assistance to mitigate trade-related risk, while ensuring that any such operation is also structured to mitigate the risks for the Bank. We also continued to pursue our factoring joint venture strategy, and intend to expand our global network selectively.

8. Why is trade finance so important in a global context?
Trade finance is the lifeblood of the global economy and therefore a lack of adequate funding for trade would seriously impact the world’s economies. Trade relies upon accessible financing for trade transactions. FIMBank offers a comprehensive range of financial services, and our specialty is the provision of tailor-made trade finance solutions. Customers understand that they need the right partner to support their import and export as well as local sales activities, and in FIMBank they find a financial institution with an established track record and a reputation for understanding cultural differences and business practices with the adequate resources.

9. FIMBank is now settled in and operating from its modern head office in St. Julian’s. Have the new facilities improved operations?We now have close to 200 employees working from Mercury Tower, and are also benefitting from owning and managing our own office building. Throughout the development of this project we stuck to the initial four key factors defined in the original brief, namely location, functionality, flexibility and sustainability. The result is a world class facility which fully reflects FIMBank’s  international reputation. It is remarkable that after 19 years of operations, the Bank has grown, matured and diversified its trade finance activities and now boasts of a state of the art head office in Malta, supporting a global network of offices located in more than ten financial centres worldwide. 

10. What is the outlook for 2014 for the FIMBank Group?
2014 started off with the joint offer by Burgan Bank and United Gulf Bank, which resulted in these two institutional shareholders increasing their stake in FIMBank to approximately 80%. FIMBank is now a member of KIPCO, one of the premier Middle Eastern trading groups, and indeed one of the largest diversified holding companies in the Middle East and North Africa. Following this development, we are anticipating significantly improved prospects to take on new and more substantial business opportunities, to benefit from better funding resources, and to strengthen the Group's operating performance further.

11. How will forming part of the KIPCO Group impact FIMBank plc?
In today’s financial markets, it is critical to have a strong reference shareholder with a good rating. This facilitates access to funding and ensures a strong and solid equity base, coupled with substantial cross-fertilization opportunities. This development will also enhance FIMBank’s image  and provide a huge potential for growth. Malta  also stands to benefit, as this development will create  additional jobs and further the recognition and growth of the island’s  successful  financial services sector.