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Malta Business Review BANKING NEWS FIMBank announces USD 5.3 million profit for 2016 Refocused strategy yields positive results The FIMBank Group’s return to profitability is the outcome of a successful consolidation and turnaround strategy launched in 2015. This is the highlight of the Group’s 2016 performance. FIMBank’s Group Consolidated Audited Financial Statements show that for the year ended 31 December 2016, the Group registered a profit of USD5.3 million, compared to a loss of USD7.1 million in 2015. At 31 December 2016, total Consolidated Assets stood at USD1.74 billion, a substantial increase of 21 per cent over the USD1.44 billion reported at end 2015, while total Consolidated Liabilities stood at USD1.57 billion, up by 24 per cent from USD1.27 billion in 2015. Operating income before net impairment for 2016 stood at USD46.1 million, at par with 2015 levels. On the other hand, during the year in review, net interest income decreased by USD7.6 million to USD22.0 million. Operating expenses decreased by USD8.3 million, from USD47.0 million to USD38.7 million. Significantly, “as a result of energetic and consistent recovery efforts”, for the second year running net impairments saw a very significant decrease, this time by more than 70 per cent, to stand at USD2.3 million, compared to USD10.3 million in 2015. Meanwhile, the Board of Directors will not be recommending a dividend, however, subject to the Regulator’s approval, the Board will be recommending a 1 for 80 Bonus Issue of Ordinary Shares by way of capitalisation of the Share Premium Account. According to the FIMBank Group’s Chairman, Dr John C. Grech, the 2016 financial results “are a vindication of our steadfast resolve to bring the Group back on the road to profitability following the bleak performance of 2014”. He explained that “after considerable effort and sound strategic decision-making, today we are in a position to witness the financial response to a successful turnaround strategy, superbly crafted and ably delivered by FIMBank’s management team, led by our CEO Murali Subramanian”. Dr Grech also referred to the fact that “on the back of consistent support of our controlling shareholders Fitch Ratings upgraded FIMBank to BB and its Support Rating to 3 from 5”. Commenting on the financial results, FIMBank Group CEO Murali Subramanian stated that the pillars for the successful turnaround of the Group’s fortunes post- 2014, included an improved origination strategy, the harmonisation of FIMBank’s product offering, exploring new product opportunities, developing a marketappropriate risk appetite, as well as the implementation of cost efficiencies across the whole Group. “These principles provided a platform from which FIMBank has, since then, been successfully stabilising its performance, growing its loan book and reversing the negative financial trend, eventually returning a fullyear profit by end-2016”. Mr Subramanian identified the strengthening of FIMBank’s management structure, the vigorous implementation of cost control measures, and the implementation of a common risk management framework, as key contributors to the success of the turnaround. From an operational perspective, during 2016 the re-alignment and streamlining of FIMBank’s international factoring strategy “proceeded as planned”, with the ongoing restructuring of business units across the factoring network. FIMBank’s CEO highlighted the Bank’s Shipping, Factoring as well as lending into selected Real Estate in Malta, as sectors expected to drive increasingly important revenue streams to the Group. He also mentioned the Group’s “successful approach to the retail depositor market, thanks to the diversification of our funding base and a reduction in the overall cost of funding”. Referring to the immediate outlook for the Group, Mr Subramanian said that “We will evaluate further avenues to diversify the target sectors wherever viable, in order to reinforce balance, and rebuild or consolidate the different portfolios”. He referred to the macro-economic outlook as encouraging, and reiterated management’s intention to continue monitoring closely developments in all the markets, “thus allowing us to exploit opportunities and protect ourselves from potential external risks to the business”. FIMBank’s CEO stated that “The overall objective is to continue growing our business to more sustainable levels of profitability, generating greater returns to shareholders, while strengthening our balance sheet further”. MBR FIMBank p.l.c., Mercury Tower, The Exchange Financial & Business Centre, Elia Zammit Street, St. Julian's STJ 3155, Malta Tel: +356 21322100 - Email: marketing@fimbank.com 64
GLOBAL ECONOMY Malta Business Review Deloitte Global Economic Outlook Q1 2017 As 2017 begins, the global economic environment is characterized by new political realities. In the United States, there is a new president with ideas and goals different from those of his predecessor. The US election has led to higher bond yields and a higher-valued US dollar based on expectations of faster growth and more inflation. In Europe, growth and inflation have begun to accelerate, yet unemployment remains stubbornly high in much of the continent. Meanwhile, important elections are on the horizon for both Germany and France, setting the stage for the policy environment in the coming year. In Asia, growth is stabilizing, but risks are piling up in the form of higher debts and rising trade tensions. In this edition of Deloitte’s Global Economic Outlook, economists across the globe examine the unfolding environment and offer their thoughts on how things might evolve. First, Patricia Buckley discusses the US economy in light of the election. She notes that the economy is in “fairly good shape,” but that the incoming administration has fiscal plans designed to boost growth and trade as well as immigration plans meant to shield the US economy from the vicissitudes of the global economy. In the second article, Alexander Börsch looks back at 2016 and how it was not a bad year for the Eurozone from an economic perspective. He discusses how the current environment sets the stage for continued moderate growth with rising inflation. On the other hand, he notes the political earthquakes that struck Europe in the past year, such as Brexit and the Italian referendum, as well as the various downside risks to Europe’s economy. In the third article, Dr Ira Kalish looks at the Chinese economy. He discuss how two issues in particular are likely to determine the path of the Chinese economy. First, trade is top of mind, with exports declining due to a high-valued currency, rising wages, and weak external demand. Moreover, the threat of protectionist action by the United States makes the trade outlook uncertain. Second, efforts to cool down an overheated property market are bearing fruit but threaten to undermine growth. Japan is the topic of the fourth article. Dr Ira Kalish examines how stronger exports have led to an acceleration in economic growth. Moreover, the weakness of the yen bodes well for continued export growth. In her article on India, Rumki Majumdar offers a detailed examination of the government’s recent and controversial demonetization. She notes the potentially disruptive effect of this policy. Mexico is the subject of our next article by Jesus Leal Trujillo and Daniel Bachman. The country has attracted quite a bit of attention given President Donald Trump’s talk about renegotiating NAFTA. Jesus and Danny examine the history of Mexico’s shift toward freer trade in the past two decades and the economic impact. In the next article, Akrur Barua examines Turkey, an economy with many positive attributes. However, currently Turkey faces some significant challenges, including terrorism, an influx of refugees, slow growth in export markets, and political uncertainty. Lester Gunnion examines the South African economy in the next article. He points to relatively slow growth and the necessity of tight monetary and fiscal policies, which don’t much help persistently high unemployment. In the final article, Akrur Barua and Anshu Mittal take a look at the global shipping industry. They discuss the upheavals facing the industry as a result of excess capacity and a slowdown in global trade. The Deloitte Global Economic Outlook Q1 2017 may be downloaded from http:// deloi.tt/2lfr5hq. MBR www.mbrpublications.net 65
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Malta Business Review EDITORIAL The
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COVER STORY OF THE MONTH Malta Busi
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A Global Force in Trade Finance FIM
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Malta Business Review EU: ANALYSIS
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