Fimbank chairman John C. Grech talks about the salient elements leading to the bank’s growing profitability, the $7.7 million profit for 2017, the recently announced rights issue and the outlook for the future.

Fimbank chairman John C. Grech.

In June 2013, the group saw the joint acquisition of Fimbank by Burgan Bank and United Gulf Bank. What role did they play in the progress registered by the bank?

The acquisition of an 80 per cent stake in Fimbank by two prestigious institutions such as Burgan Bank K.P.S.C. and United Gulf Bank BSC was a pivotal development in the history of the bank. Through this measure, the Fimbank Group fell within the orbit of a major institutional investor, the Kipco Group, a major player in the Middle East.

This meant that as a group, we could benefit from new business opportunities and better funding resources, together with the possibility of consolidating and further strengthening our operating performance. It also meant that we had a partner in Burgan Bank who could provide hands-on assistance, through their expertise and experience in risk management, financial crime and reducing credit loss, to help ensure the success of our turnaround strategy.

The bank has reported a net profit of $7.7 million for 2017, and a restated profit of $5.4 million for 2016. What are the salient elements which continue to drive growth and shareholder value?

There is no doubt that the measures our management team undertook from 2015 onwards, as part of a transformation strategy for the bank, resulted in a cycle of higher growth-generation in terms of value, and a sustainable basis for increased returns, which we see today reflected in positive financial results. The subsequent risk management and recovery programme and the management’s work in optimising our capital and funding resources in turn led to a spur in revenue generation and an enhancement of our product offering.

Priority will continue to be given to the crafting of superior client delivery channels and product evolution

Going forward, we intend to continue focusing our efforts on refining our asset origination process and on widening the scope of our product suite in the various business sectors, riding on the success of our client-centric coverage models and the implementation of cross-sell initiatives across the different group segments, while exploiting the use of hubs in key markets, particularly in the MENA region.

In a recent company announcement Fimbank announced an approval by the Listing Authority for the listing of new ordinary shares, in the form of a rights issue that will raise a total amount of approximately $114 million. What is the purpose of this rights issue?

This rights issue will be a milestone development during 2018. The amount expected to be raised is that of approximately $114.4 million, net of expenses (if subscribed for in full). Our majority shareholder, United Gulf Holding, is committed to the issue and is making available $105 million for the purpose of its underwriting of the rights issue. The proceeds will be used to strengthen the bank’s capital base and support general growth and the conversion to equity of a $50 million subordinated loan.

What is the outlook for the bank?

Over the past three years, we have seen the gradual evolution of the Fimbank Group into a stronger banking institution based on sound business principles. Discipline, the implementation of centrally-aligned operations and the effective management of enterprise risks have provided the foundations for the current positive performance and for future value creation for all Fimbank stakeholders. My appreciation, and that of my board, goes to the persistence and sense of purpose shown by our CEO Murali Subramanian, his management team and all our staff in Malta and around the world.

As always, current success will serve as a springboard for further measures which will sustain this positive trend, and allow our investors to reap greater benefits in the long-term. 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 in funding and cost structures, so critical to our turnaround, will be maintained.

The ability of the group to meet new challenges will be enhanced by greater flexibility derived from an improved scalability of the business.