Fimbank should be on track for “tangible, bottom-line results” by the end of the year, after six of the most challenging months of its 21-year history.

The group posted an after-tax loss of $8.64 million, compared with a profit of $1.45 million registered in the same period in 2014. However, this result needs to be seen in the context of the unprecedented clean-up of legacy cases and run-offs from events occurring in 2014, which saw net impairment losses reach $8.56 million.

Chief financial officer Marcel Cassar said that prior to impairment losses, marked-to-market adjustments and share of equity results, the group maintained a stable operating performance, reporting a minimal drop in net operating results.

Adjusted for non-recurring expenses pre-tax of $3.04 million, there would have actually have been a bottom-line post-tax improvement of $2 million.

“While this turnaround has been challenging for all involved, particularly as we have had to deal with a large number of legacy issues, we are now starting to see the results of this effort and a return to core operating profitability is now firmly without our sights,” deputy CEO (and former ad interim CEO) Simon Lay said.

A team was recently set up in Malta to sort out some of the skeletons, and by June, $1.6 million had already been recovered, with the recovery tempo stepping up in the remaining half of the year.

Fimbank’s overseas operations were responsible for much of the pre-tax loss of $53.43 million reported in 2014, which resulted in the ouster of Magrith Lutschg Emmenegger and her replacement by Mr Lay. A new CEO, Murali Subramanian, took over last Thursday.

Deputy CEO Simon Lay replaced Magrith Lutschg Emmenegger.

In Russia, the factoring book is effectively fully provided for and there are no further exposures. The group is in the final stages of liquidating the company with a small team still engaged to manage the final remaining steps. A loss of $2.3 million represents the winding down costs and the reversal of a previously recognised deferred tax asset.

The group fully consolidated its operations in India Factoring last April. “Fimbank is committed to its presence in India. A number of capital injections were made during the first half of 2015 and the group now holds 84.8 per cent of India Factoring (compared to 79 per cent in December 2014).

A team was recently set up in Malta to sort out some of the skeletons, and by June, $1.6 million had already been recovered

“A number of changes were implemented in India to enhance the management structure and ensure continuous oversight by the group of the entity’s operations and risks,” a company spokesman said.

LATAM Factors in Chile, which was acquired in October 2014, broke even in the first six months of this year and will be fully consolidated in the results by year end.

There was a $1.5 million fair value markdown of a put option written in favour of the IFC for shares held in Egypt Factors. The group said that the future of this business “is the subject of ongoing board and management evaluation”, with a decision due to be taken by year end.

New impairments in Menafactors, Dubai, “dented an otherwise good performance, with restructuring discussions just starting”.

Brazil was also marginally profitable. Plans to acquire factoring companies in Slovenia and Kenya were suspended by the ad interim CEO as soon as he took over.

The group reported $26.1 million in opera­ting results, down marginally by 2.6 per cent. It said that the lower cost of funding and higher volumes for funded business were offset by a more rigorous transaction selection policy and a strategic shift away from traditional fee-based trade finance products to interest-based financial products.

The clean-up operation has also taken its toll on the workforce, with the headcount reduced from 405 at end-2014 to 384 by the end of June – with no more terminations envisaged. The bank paid out $1.45 million for termination benefits for staff and consultants, although it declined to comment on how much Ms Lutschg-Emmenegger may have received.

The 2014 AGM authorised the board to raise $100 million new capital, of which $48 million were raised last year. Chairman John Grech has now confirmed that the group received a commitment for funding facilities of $250 million from Burgan Bank to be shared between Fimbank and London Forfaiting. These faci­lities are in addition to the existing $195 million funding lines already provided by Kipco Group member banks.

“This is indeed a significant milestone that will allow us to implement Fimbank’s new business strategy, permit us to reinforce our asset base and target higher income levels,” he commented.

“They reflect the strong commitment by our controlling shareholders, Burgan Bank and United Gulf Bank, in support of Fimbank’s strategic plan.”

Commenting on the interim results, Dr Grech said “the seeds of consolidation have been sown”.

The directors did not recommend the payment of an interim dividend.