FIMBank's profitability boosted by sale of GTF
Extraordinary dividend declared
FIMBank plc last week published its interim results to June 30. The directors declared a special net dividend of $0.03290924 per share following the extraordinary gain made from the disposal of its shareholding in Global Trade Finance Ltd. Shareholders have the option of receiving the dividend either in cash or through the issue of new shares at a discounted price of $1.60 per share. Those shareholders as at close of trading on Tuesday will be eligible to receive this dividend which is expected to be paid on September 29.
The key highlights are
• net interest income climbs 41.7 per cent to $7 million;
• net fee and commission income of $10.05 million (+63.6 per cent);
• profit of $29.2 million on sale of GTF ;
• pre-tax profit for the period of $34 million; and
• extraordinary scrip dividend of $0.03290924 per share.
During the first six months of this year, the FIMBank Group registered a 41.7 per cent increase in net interest income to $7 million. Gross interest income rose by 19.6 per cent to $16.3 million while interest expense only increased by 6.9 per cent to $9.2 million, resulting in a 6.8 percentage point increase in the net interest margin to 43.3 per cent.
Moreover, net fee and commission income climbed 63.6 per cent to $10.05 million on improved performances at the group's fully-owned forfaiting subsidiary and especially from increased trade finance activities at the bank. Net trading income and gains from financial instruments carried at fair value increased to $2.06 million from $1.43 million in the first half of last year. The FIMBank group generated a profit of $29.2 million from the sale of its 38.5 per cent stake in Global Trade Finance to the State Bank of India, which was concluded at the end of March.
This substantial one-time gain boosted the group's operating income which surged to $48.4 million during the period under review from $12.7 million in the same period last year. Excluding the gain made from the disposal of the factoring joint venture in India, the group still managed to register a 51.7 per cent gain in total operating income compared to the same period last year.
Administrative expenses rose by 48.2 per cent to $13.2 million during the period under review, attributable to additional costs with respect to the start-up of new associated ventures, further recruitment, increases in performance-based compensation as well as a one-time bonus to staff paid from the extraordinary profit of the GTF sale.
Depreciation and amortisation edged 1 per cent higher to $0.4 million while impairment allowances rose to $1.1 million from the 2007 interim figure of $0.4 million on increased allowances in line with the strong growth in loans and advances.
Meanwhile, in the half-year report the directors noted that following a judgment against the bank, delivered by a court of first instance, for the payment of $1.7 million (inclusive of interest and court fees), the group recognised a provision for this amount in the income statement. The directors said the bank is in the process of formalising its appeal submissions with proceedings expected to start before the end of the year.
The group accounted for its share of profits of associate undertakings amounting to $2 million in the first half of this year compared to $1.4 million in the comparative period. This relates to a six-month contribution from the 40 per cent shareholding in EgyptFactors while it only accounts for a three-month contribution from GTF and Menafactors. While FIMBank disposed of its shareholding in GTF at the end of Q1, on the other hand it acquired the remaining 50 per cent shareholding in Menafactors in Q2 and as a result, from the second quarter of the year it began consolidating this investment in the group accounts. The directors explained that the purchase of the other 50 per cent of Menafactors is only temporary following the merger between Emirates Bank and National Bank of Dubai.
This factoring joint venture was initially set up between FIMBank and National Bank of Dubai but as a result of the merger, FIMBank opted to seek an alternative partner as the Emirates Bank already offered factoring activities. FIMBank is thus seeking to dispose of a substantial part of this equity holding within the next 12 months.
The FIMBank Group registered a pre-tax profit of $34 million, substantially higher than the profitability generated in the first six months of 2007 of $3.8 million, mainly as a result of the significant profit from the sale of GTF. Excluding this gain, the group still registered a 26.7 per cent increase in profitability. After accounting for a tax charge of $10 million, group profit after tax during the first half of 2008 amounted to $23.8 million.
FIMBank's 2008 interim results are hugely impacted by the extraordinary gain of $29.2 million from the sale of the Indian factoring joint-venture company. Following the sale of GTF, the directors had stated that "the absence of GTF from the second quarter of 2008 onwards is not anticipated to have any material impact on the group results for 2008 because the increase in group business activity should have an overall compensating effect".
In the half-year report FIMBank's directors again state that these positive trends will continue for the remainder of the year together with the encouraging performances from Menafactors and EgyptFactors.
The board of directors also state that during the second half of the year they will again consider enlarging the equity base in order to support the group's further growth and international investment plans. Following the rights issue in December 2007, this capital-raising exercise could come from an international public offering in conjunction with a secondary listing of FIMBank's shares on the Dubai Stock Exchange, as announced by FIMBank's president Margrith Lütschg-Emmenegger, during a stockbrokers' meeting held on May 16. The group's international investment plans relate to the establishment of a factoring presence in Brazil, Mexico and eventually also in China. FIMBank's board has approved the commencement of negotiations with selected strategic partners for the acquisition of equity stakes in established factoring and leasing companies in the Latin American region. These investments are not expected to be concluded by the end of 2008.
Rizzo, Farrugia & Co. are Corporate Stockbrokers to FIMBank plc.
• Mr Rizzo is director of Rizzo, Farrugia & Co. (Stockbrokers) Limited.
Rizzo, Farrugia & Co. (Stockbrokers) Ltd, RFC, is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the issuer/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.
© 2008 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved.
The key highlights are
• net interest income climbs 41.7 per cent to $7 million;
• net fee and commission income of $10.05 million (+63.6 per cent);
• profit of $29.2 million on sale of GTF ;
• pre-tax profit for the period of $34 million; and
• extraordinary scrip dividend of $0.03290924 per share.
During the first six months of this year, the FIMBank Group registered a 41.7 per cent increase in net interest income to $7 million. Gross interest income rose by 19.6 per cent to $16.3 million while interest expense only increased by 6.9 per cent to $9.2 million, resulting in a 6.8 percentage point increase in the net interest margin to 43.3 per cent.
Moreover, net fee and commission income climbed 63.6 per cent to $10.05 million on improved performances at the group's fully-owned forfaiting subsidiary and especially from increased trade finance activities at the bank. Net trading income and gains from financial instruments carried at fair value increased to $2.06 million from $1.43 million in the first half of last year. The FIMBank group generated a profit of $29.2 million from the sale of its 38.5 per cent stake in Global Trade Finance to the State Bank of India, which was concluded at the end of March.
This substantial one-time gain boosted the group's operating income which surged to $48.4 million during the period under review from $12.7 million in the same period last year. Excluding the gain made from the disposal of the factoring joint venture in India, the group still managed to register a 51.7 per cent gain in total operating income compared to the same period last year.
Administrative expenses rose by 48.2 per cent to $13.2 million during the period under review, attributable to additional costs with respect to the start-up of new associated ventures, further recruitment, increases in performance-based compensation as well as a one-time bonus to staff paid from the extraordinary profit of the GTF sale.
Depreciation and amortisation edged 1 per cent higher to $0.4 million while impairment allowances rose to $1.1 million from the 2007 interim figure of $0.4 million on increased allowances in line with the strong growth in loans and advances.
Meanwhile, in the half-year report the directors noted that following a judgment against the bank, delivered by a court of first instance, for the payment of $1.7 million (inclusive of interest and court fees), the group recognised a provision for this amount in the income statement. The directors said the bank is in the process of formalising its appeal submissions with proceedings expected to start before the end of the year.
The group accounted for its share of profits of associate undertakings amounting to $2 million in the first half of this year compared to $1.4 million in the comparative period. This relates to a six-month contribution from the 40 per cent shareholding in EgyptFactors while it only accounts for a three-month contribution from GTF and Menafactors. While FIMBank disposed of its shareholding in GTF at the end of Q1, on the other hand it acquired the remaining 50 per cent shareholding in Menafactors in Q2 and as a result, from the second quarter of the year it began consolidating this investment in the group accounts. The directors explained that the purchase of the other 50 per cent of Menafactors is only temporary following the merger between Emirates Bank and National Bank of Dubai.
This factoring joint venture was initially set up between FIMBank and National Bank of Dubai but as a result of the merger, FIMBank opted to seek an alternative partner as the Emirates Bank already offered factoring activities. FIMBank is thus seeking to dispose of a substantial part of this equity holding within the next 12 months.
The FIMBank Group registered a pre-tax profit of $34 million, substantially higher than the profitability generated in the first six months of 2007 of $3.8 million, mainly as a result of the significant profit from the sale of GTF. Excluding this gain, the group still registered a 26.7 per cent increase in profitability. After accounting for a tax charge of $10 million, group profit after tax during the first half of 2008 amounted to $23.8 million.
FIMBank's 2008 interim results are hugely impacted by the extraordinary gain of $29.2 million from the sale of the Indian factoring joint-venture company. Following the sale of GTF, the directors had stated that "the absence of GTF from the second quarter of 2008 onwards is not anticipated to have any material impact on the group results for 2008 because the increase in group business activity should have an overall compensating effect".
In the half-year report FIMBank's directors again state that these positive trends will continue for the remainder of the year together with the encouraging performances from Menafactors and EgyptFactors.
The board of directors also state that during the second half of the year they will again consider enlarging the equity base in order to support the group's further growth and international investment plans. Following the rights issue in December 2007, this capital-raising exercise could come from an international public offering in conjunction with a secondary listing of FIMBank's shares on the Dubai Stock Exchange, as announced by FIMBank's president Margrith Lütschg-Emmenegger, during a stockbrokers' meeting held on May 16. The group's international investment plans relate to the establishment of a factoring presence in Brazil, Mexico and eventually also in China. FIMBank's board has approved the commencement of negotiations with selected strategic partners for the acquisition of equity stakes in established factoring and leasing companies in the Latin American region. These investments are not expected to be concluded by the end of 2008.
Rizzo, Farrugia & Co. are Corporate Stockbrokers to FIMBank plc.
• Mr Rizzo is director of Rizzo, Farrugia & Co. (Stockbrokers) Limited.
Rizzo, Farrugia & Co. (Stockbrokers) Ltd, RFC, is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the issuer/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.
© 2008 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved.