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5 NEWS 7.9.2023 FIMBank Group reports USD 3.9m in after-tax profit for H1 2023 PAUL COCKS FOR the six months ended 30 June 2023, the FIMBank Group reported an after-tax profit of USD3.9 million, compared to a USD2.9 million after- tax loss registered for the six months ended 30 June 2022. No reserves are presently available for distribution. These published figures have been extracted from the FIMBank Group's unaudited and unreviewed financial statements for the six months ended 30 June 2023 as approved by the Board of Directors on 30 August 2023. The group comprises the bank and its branch in the United Arab Emir- ates, and its wholly owned subsidiar- ies, London Forfaiting Company Lim- ited ("LFC"), FIM Business Solutions Limited ("FBS"), FIM Property In- vestment Limited ("FPI"), The Egyp- tian Company for Factoring S.A.E. ("Egypt Factors") and FIMFactors B.V. ("FIMFactors"). LFC and FIMFactors are themselves parents of a number of subsidiaries as set out below. The group is supervised on a con- solidated basis by the Malta Financial Services Authority, whilst some of its subsidiaries and the branch are sub- ject to authorisation and regulation of the jurisdictions in which they oper- ate. The financial period ended 30 June 2023 saw a strong upward trend in both the overall and underlying per- formance, with FIMBank Group re- porting a pre-tax profit of USD6.0 million, compared to a pre-tax loss of USD1.3 million registered in the first six months of 2022. Post-tax profit stood at USD3.9 million, compared to a post-tax loss of USD2.9 million reg- istered in the first six months of 2022. As the global macroeconomic trends progressed as projected, inter- est rates surpassed anticipated levels, as central banks and government au- thorities continued relentlessly to im- plement measures to address the per- sisting inflation. The group witnessed an increase in interest expenditure, outperformed by a more significant improvement in interest income, wid- ening the interest margins. The com- bined result was a net interest margin of 2.4% and a 30% increase in net in- terest income. The group remained fairly unaf- fected from the ongoing conflict in Ukraine due to strategic measures taken in the past. Moreover, the li- quidity challenges encountered by several larger western banks, did not affect the Group directly, due to the prompt actions taken by the Regu- lators to avoid potential contagion within the banking industry. During the first half of the year, the group consistently reaped the ben- efits of its prudent risk approach, which is evidenced by the fact that none of the performing financial as- sets turned non-performing. Further- more, upon re-evaluating its current non-performing portfolio, the group wrote-off a number of exposures that were fully provided for, where it was determined that the recovery pros- pects would be remote. This step improved the group's asset quality parameters, enabling Management to concentrate on the ongoing recovery initiatives and the safeguarding and growth of the performing portfolios. The group's capital position re- mained strong, with a Total Capital Ratio ("TCR") of 19.1%. This was well above the 16.39% minimum TCR re- quirement. The group maintained a strong liquidity position throughout the period under review, with an av- erage Liquidity Coverage Ratio (LCR) of 312%, which was well above the regulatory minimum requirement and the Group's internal risk appetite level. The group reported its 'operating results from non-trading portfolio' of USD29.1 million, marking an increase of USD5.6 million (24%) year on year. 'Net Interest Income' rose by USD4.2 million (30%), to reach USD18.2 mil- lion, as the group continued its busi- ness momentum driven by the im- proving interest rate environment. 'Net fees and commission income' stood at USD9.7 million, registering a growth of USD4.1 million (73%) originating from significantly higher fee income generated on forfaiting assets. During the period under review, the group reported no dividend in- come, contrasting with the receipt of USD3.8 million in dividends from its investment in an unlisted sub-fund during the first half of 2022. Notably, during the six months in question, the group recognised an unrealised fair value gain on its in- vestments in the unlisted sub-fund, resulting in 'other operating income' of USD1.2 million. Amid persistent inflationary pres- sures and the appreciation of the Euro against the US Dollar, the Group con- sistently prioritised its investment in human capital, regulatory compli- ance and strategic initiatives. Conse- quently, operating expenses reached USD21.0 million, reflecting an in- crease of USD2.4 million (13%) from the six months ended June 2022. Second half of 2023 The group remains committed to executing its strategy, pursuing busi- ness opportunities that align with our risk appetite and the principle of risk-adjusted returns. The group's balance sheet is more resilient due to our lower legacy exposures and our enhanced and sustainable revenue- generating capabilities. It observes market expectation for further interest rate hikes in the sec- ond half of 2023, with rates stabilising thereafter, and anticipated reductions only in 2024. While the group's bal- ance sheet structure is favourably po- sitioned for a rising interest rate en- vironment, it remains mindful of its customers' position and their ability to absorb higher interest expenses. The group anticipates moderate portfolio growth, centred on our cus- tomer-centric approach, but limited by regulatory developments on cap- ital requirements. Its strategic focus remains on business lines and geo- graphical areas that offer superior re- turns and present lower risks, thereby delivering consistent value. As the group remains focused on improving its strategy, it has now concluded the first phase of an in- depth strategy review by a highly rep- utable advisory firm, which was initi- ated last year. This conclusion has led to a series of strategic recommenda- tions, further guiding the group in fu- ture-proofing its shareholder's value. The group remained fairly unaffected from the ongoing conflict in Ukraine due to strategic measures taken in the past. Moreover, the liquidity challenges encountered by several larger western banks, did not affect the Group directly

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