Con­firm­ing the trend to­wards prof­itabil­ity

The Malta Business Weekly - - NEWS - Noel Grima

Half-way through the cur­rent fi­nan­cial year, FIMBank con­firms the trend to­wards prof­itabil­ity which the Group es­tab­lished in 2016 and con­firmed through­out all of 2017. As a mat­ter of fact, the Group’s Con­sol­i­dated Fi­nan­cial State­ments show that for the six­month pe­riod end­ing 30 June, the Group reg­is­tered a profit af­ter tax of $6.1m, com­pared to a profit of $4.1m for the same six-month pe­riod in 2017, and a profit of $7.7m posted for the whole of 2017.

These re­sults, com­ing as they do on the back of the Group’s per­for­mance in 2017, sus­tain our con­fi­dence in know­ing that we are on the right track, and that we are ca­pa­ble of car­ry­ing for­ward this mo­men­tum into the near fu­ture, said Dr John C. Grech, FIMBank chair­man at a pre­sen­ta­tion for pro­fes­sional stake­hold­ers at the bank’s premises this week.

FIMBank’s per­for­mance over the past two years has a very spe­cific prove­nance. It is the di­rect con­se­quence of a strate­gic shift in fo­cus suc­cess­fully tuned to chang­ing mar­ket con­di­tions. This drive also aimed at es­tab­lish­ing the FIMBank Group as a more ro­bust bank­ing in­sti­tu­tion, based on busi­ness dis­ci­pline, cen­trally-aligned op­er­a­tions and ef­fec­tive man­age­ment of en­ter­prise risks. These ef­forts have been man­i­festly recog­nised and en­dorsed by ma­jor in­ter­na­tional in­sti­tu­tions such as Fitch and Sigma Rat­ings. Con­se­quently, to­day we see a Group op­er­at­ing with greater ef­fi­ciency and profit, and with a prom­ise of greater things ahead.

The Rights Is­sue an­nounced in March was a sig­nif­i­cant mile­stone in the bank’s de­vel­op­ment, Dr Grech said. This specif­i­cally brought to the fore the un­der­writ­ten agree­ment by bank ma­jor­ity share­holder United Gulf Hold­ing, and saw an in­jec­tion of $105m, al­low­ing FIMBank to strengthen its cap­i­tal base and ex­tin­guish a $50m sub­or­di­nated loan agree­ment. The back­ing, which we con­tinue to re­ceive from our ma­jor­ity share­hold­ers, both United Gulf Bank and Bur­gan Bank of the KIPCO Group, re­mains an im­por­tant pil­lar for the sus­tain­abil­ity of our suc­cess, Dr Grech said. The sup­port of our in­sti­tu­tional share­hold­ers was fun­da­men­tal in en­abling us to turn the sit­u­a­tion around at a crit­i­cal time for the bank, ul­ti­mately en­abling us to de­liver the pos­i­tive re­sults which we are en­joy­ing to­day. This re­la­tion­ship re­mains key to the fu­ture of FIMBank.

CEO Mu­rali Subra­ma­nian said: At a strate­gic level, dur­ing 2018 we have con­tin­ued to build on where we left off in 2017. Con­tin­u­ing from our sec­ond prof­itable year (and 10th con­sec­u­tive prof­itable quar­ter), we have con­tin­ued re­fin­ing mea­sures to se­cure fur­ther ef­fi­ciency en­hance­ments and im­prove our port­fo­lio qual­ity. The strong orig­i­na­tion mo­men­tum gar­nered in 2017 al­lowed us to make a ro­bust en­try to busi­ness gen­er­a­tion this year, giv­ing us an early start to build to­wards growth. Per­for­mance across the Group was strong through­out, as all avail­able as­set head­room was ded­i­cated to­wards se­cur­ing re­mu­ner­a­tive credit trans­ac­tions.

These mea­sures should con­tinue to con­trib­ute strongly to a sta­ble per­for­mance and pos­i­tive fi­nan­cial sit­u­a­tion. The man­age­ment team has con­tin­ued to lead the process to­wards up­grad­ing as­set orig­i­na­tion and prod­uct dif­fer­en­ti­a­tion. We also sus­tained the im­ple­men­ta­tion of client-cen­tric cov­er­age mod­els, cross-sell­ing across the var­i­ous Group seg­ments and ex­ploit­ing our pres­ence in key mar­kets. New ini­tia­tives such as Real Es­tate Fi­nanc­ing, Cash Man­age­ment and Cor­po­rate Risk Dis­tri­bu­tion have all shown pro­gres­sion to higher vol­umes, per­for­mance and rev­enues.

The fund­ing side of the equa­tion has wit­nessed fur­ther pos­i­tive de­vel­op­ments fol­low­ing the launch of FIMBank Di­rect as our ful­lyfledged dig­i­tal bank­ing plat­form in 2017. The suc­cess of FIMBank Di­rect has led to a re­vi­tal­i­sa­tion of as­set-li­a­bil­ity man­age­ment pro­cesses, lead­ing to more ef­fi­ciency in terms of liq­uid­ity and fund­ing, and im­prov­ing net mar­gins both on rev­enue gen­er­a­tion and cost of fund­ing.

The im­por­tance of adopt­ing ro­bust gov­er­nance and the im­ple­men­ta­tion of an ef­fec­tive risk frame­work across the Group must be em­pha­sised, due to the role these had in FIMBank’s achieve­ments over the past three years. These mea­sures have em­bed­ded a strong com­pli­ance cul­ture which has al­lowed us to main­tain a healthy re­la­tion­ship with our reg­u­la­tors, cor­re­spon­dent banks and other stake­hold­ers. As well, this re­sulted in a pos­i­tive as­sess­ment of our Fi­nan­cial Crimes Pre­ven­tion and Com­pli­ance prac­tices from the NYC-based Sigma Rat­ings, the main rat­ings agency for non-credit bank­ing and fi­nan­cial prac­tices.

There is on­go­ing ef­fort in our risk man­age­ment in­fra­struc­ture, peo­ple and frame­work. Such recog­ni­tion has en­cour­aged us to con­tinue in­vest­ing ad­di­tional time and re­sources to seek fur­ther im­prove­ments in these and other ar­eas. Cost-man­age­ment ini­tia­tives in­tro­duced in 2017 in­clude the es­tab­lish­ment of an ef­fi­cien­cy­im­prove­ment com­mit­tee, which is yield­ing de­sir­able re­sults. Mean­while, a newly formed Busi­ness Per­for­mance and Anal­y­sis team has been pro­duc­ing unit and cus­tomer-level prof­itabil­ity re­ports, lead­ing to bet­ter busi­ness fo­cus and rev­enue op­ti­mi­sa­tion.

Ser­vices re­lated to trade fi­nance, fac­tor­ing and for­fait­ing re­main key to the Group’s mis­sion and we in­tend to con­tinue de­vel­op­ing these go­ing for­ward. Fu­ture suc­cess rests on our abil­ity to adapt to the needs of our cus­tomers, while en­hanc­ing our ser­vice of­fer­ing. Progress in these ar­eas will guar­an­tee the fur­ther ex­pan­sion of share­holder value.

Mean­while, the com­pet­i­tive­ness of our bank­ing ser­vices has been spurred by our mem­ber­ship of the Tar­get2 pay­ment sys­tem, op­er­ated by the Euro­pean Cen­tral Bank. FIMBank is now a di­rect coun­ter­party for thou­sands of banks world­wide that were oth­er­wise pay­ing into the cor­re­spon­dent bank on our be­half.

Among oth­ers, they are now also able to de­liver pay­ments elec­tron­i­cally to the bank via our client por­tal FIMBank Di­rect.

This dig­i­tal bank­ing plat­form was a land­mark de­vel­op­ment in our pro­gres­sion to bet­ter adapt to the needs of to­day’s on­line con­sumers. It has also proved ef­fec­tive in im­prov­ing in­ter­nal oper­a­tional ef­fi­cien­cies, re­duc­ing trans­ac­tion costs, while en­abling us to in­tro­duce new prod­ucts to our cus­tomers. Also, dur­ing this year, our prop­erty man­age­ment com­pany, FIM Prop­erty In­vest­ment (FPI), reg­is­tered prof­itable re­sults due to bet­ter cost man­age­ment and higher rental rev­enues.

In April of this year, we saw the re­al­i­sa­tion of a mile­stone de­vel­op­ment for FIMBank, a Rights Is­sue that saw our ma­jor­ity share­hold­ers, namely United Gulf Hold­ing of the KIPCO Group con­tribut­ing al­most the en­tire $105m gen­er­ated. Apart from al­low­ing us to ad­dress reg­u­la­tory obli­ga­tions, this cap­i­tal in­jec­tion has given room for the busi­ness to grow. In the short- to medium-term, this de­vel­op­ment will al­low us to main­tain strong cap­i­tal ra­tios and en­hance our credit rat­ing.

Cur­rent suc­cess will serve as a spring­board for fur­ther mea­sures which will sus­tain these pos­i­tive trends and al­low our in­vestors to reap greater ben­e­fits in the longterm. These mea­sures will re­volve around our pur­suit for ex­cel­lence across the dif­fer­ent busi­nesses, prod­ucts and mar­kets.

Pri­or­ity will con­tinue to be given to the craft­ing of su­pe­rior client de­liv­ery chan­nels and prod­uct evo­lu­tion, while the fo­cus on risk and gov­er­nance sta­bil­ity, and the ef­fi­ciency of in fund­ing and cost struc­tures, will be sus­tained. The abil­ity of the Group to meet new chal­lenges will be en­hanced by greater flex­i­bil­ity de­rived from an im­proved scal­a­bil­ity of the busi­ness. With the sup­port of our ma­jor­ity share­hold­ers, we will also be aim­ing to com­plete the repo­si­tion­ing of the busi­ness and trans­form it into a guid­ing light in the global trade space.

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