The difficult conditions in some of the markets where Malta-headquartered international trade finance bank Fimbank operates have caused a reduction in net commission income, group president Margrith Lütschg-Emmenegger said last Thursday.
However this was being compensated by income emanating from its forfaiting business, which had experienced a steady increase in momentum.
Rating agency Fitch has affirmed Fimbank’s rating at ‘BB’ while placing the outlook from ‘stable’ to ‘negative’. The bank’s Long-term Issuer Default was reaffirmed at ‘BB’.
“Considering the current deterioration in the global economic performance and the negative impact this has had on the rating of several financial institutions, I am pleased that we have successfully avoided such a scenario,” Ms Lütschg-Emmenegger said.
“Despite challenging market conditions, including the political turmoil in some of our core markets, retaining our Fitch rating further validates the business model which we have been adopting successfully over the years.”
Referring to the revision of Fitch’s outlook to ‘Negative’ after the agency expressed concern over the bank’s tightening capital ratios over the past two years, Ms Lütschg-Emmenegger explained this was the result of business expansion, growth in factoring business and the introduction of new factoring joint ventures.
FIMBank is building a network of international factoring joint ventures with reputable partners in emerging markets.
The investment made in emerging markets such as India and Brazil, will not only ensure diversification in terms of markets for the group but will also give these the potential to develop to the extent that theywill fund the group’s continued growth, the president said.
She added that apart from remaining prudent and adopting a vigilant risk management approach, Fimbank was determined to maintain a sound core capital as it was critical to ensure the continuing growth of the group, maintain adequate capital ratios and in the coming months seek ways to further strengthen the capital base.
In the meantime, the group had continued to manage its balance sheet in a prudent manner and enjoy healthy capital and liquidity ratios, Ms Lütschg-Emmenegger pointed out.
Earlier last week, Fitch said Fimbank needed to continue operating with higher capital ratios in view of the bank’s exposure to credit risk, high concentration levels by obligor and operational risk inherent in its activities. Its ratings continue to reflect its controlled asset quality, resilient profitability and balanced funding structure.
The agency added that Fimbank’s appetite for credit risk was material but the bank had shown it was capable of adequately managing it to date.