FIMBank Group recorded a $24.7 million (€23 million) pre-tax loss in 2022, after a year blighted by impairment of legacy positions and “elevated” trading losses.
The results come following the publication of its 2022 Annual Report, and despite an improvement in its financial performance during the year, which saw its operating income from its non-trading portfolio rise by 18.7 per cent from the previous year to $45.8 million (€42.6 million). Its operating expenses were also painting a positive picture for the group, as they dropped from 2021’s $40.4 million (€37.6 million) to $37.8 million (€35.2 million) in 2022.
However, its net trading results took a turn in 2022, with a loss of $6.9 million (€6.4 million), in sharp contrast to the previous year’s $2.5 million (€2.3 million) profit. This was primarily a result of the default of two assets at the group’s subsidiary LFC, which FIMBank Group says is currently working with a wider group of creditors to negotiate with the two borrowers over the settlement of the overdue assets.
This was coupled by a significant increase of $23.9 million (€22.2 million) in the group’s net impairment losses, with this amounting to $25.8 million (€24 million). This came because a number of risks materialised, primarily related to legacy non-performing clients and goodwill write-off. It increased its provisions for performing clients, as well as its coverage for legacy non-performing exposures and legal fees incurred in the process of recovering the group’s delinquent portfolio.
FIMBank Group performed an impairment assessment of goodwill on two of its subsidiaries, Egypt Factors and India Factoring, which prompted a $5.2 million (€4.8 million) write off to bring it down to zero.
The group’s total consolidated assets stood at $1.7 billion (€1.6 billion) as at the end of 2022, down by six per cent from the figure in 2021. Its consolidated liabilities amounted to $1.5 billion (€1.4 billion) in 2022, a decrease of $73.1 million (€68.1 million) from 2021’s results. Total equity also decreased by 12.5 per cent to $195.5 million (€182.1 million).
FIMBank Group stated that since “none of the reserves are available for distribution”, the Board of Directors will not be recommending the payment of a dividend during its next Annual General Meeting.
Commenting on the results, CEO Adrian Alejandro Gostuski said that the group is “disappointed” that the progress made in its performance was “overshadowed” by the impairment of legacy positions and underperformance in its trading portfolio.
With regards to risk management, he said that the group’s “efforts have paid off”, as it did not recognise any new material non-performing loans in 2022. “This is a significant achievement for us, as it reflects our commitment to providing sustainable financial solutions that meet the needs of our customers while minimising our risk exposure. It is a testament to our ongoing efforts to identify and mitigate risks, as well as our dedication to maintaining a healthy loan portfolio,” he added.
Mr Gostuski explained that he believes that “balancing risk and reward is crucial” for the bank’s financial health, and the focus going forward will remain to “carefully manage” its assets and liabilities in order to “optimise” its capital position and support ongoing business operations.
He added that during 2022, FIMBank Group also initiated a transformation exercise to “revitalise” its strategy and “streamline operations” in response to new economic realities, as well as developments in the regulatory and compliance spheres. Mr Gostuski added that the group has also worked to improve its efficiency in its core business areas, including the closing of its branch in Athens, Greece, and the liquidation of FIM Holdings (Chile) S.p.A.
“By optimising our structure, we were able to create a more agile and flexible business model, be better positioned to respond to changing market conditions and customer needs. This ongoing effort to optimise our operations will continue to be a key focus for the group, as we strive to maintain our competitive edge,” he said.
Through these actions, the group has positioned itself for “continued success in a rapidly evolving business landscape,” he pointed out, before adding that it seeks to remain “vigilant and proactive” in monitoring market conditions, regulatory requirements, and evolving customer needs by being able to “adapt effectively”.
He concluded by stating that while FIMBank Group will continue to navigate through these uncertain times of high inflation in a “cautious” manner, its “primary mission” is still to remain “customer centric” and to provide a “superior customer experience”.
FIMBank Group Chairman John C. Grech / LinkedIn
Chairman John C. Grech said that the group remains “committed” to refining its business model to becoming more “agile and responsive” to the everchanging market landscape, and even though this is a “continuous process that requires patience and perseverance”, it will be taking “all the necessary steps” to enable FIMBank Group to achieve “long-term success”.
He added that his “unwavering confidence” in the group’s future is rooted in its focus on customers, “working tirelessly to foster meaningful relationships with them” and treating them as “partners”.
“FIMBank’s progress towards the achievement of its strategic goals is underpinned by a pool of highly skilled human capital across various specialised disciplines, ongoing investment in technology, a reduced level of legacy balance sheet items, and a strong shareholder base. These strategic pillars place the bank in a favourable position to achieve its goals in a steady and sustainable manner,” Dr Grech said.
With roots in 1994, FIMBank Group is a provider of trade finance, factoring and forfaiting solutions, with a global presence in various financial and trading centres. In 2013, United Gulf Bank and Burgan Bank, two financial institutions forming part of KIPCO Group, acquired an 80 per cent stake in FIMBank. By forming part of the group, it benefits from better funding resources that allows it to further strengthen its operating performance.
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