FIMBank Plc

Earnings Release • Mar 13, 2012

COMPANY ANNOUNCEMENT

The following is a Company Announcement by FIMBank p.l.c. pursuant to Malta Financial Services Authority Listing Rules 5.16 and 5.54:

Quote

The Board of Directors of FIMBank p.l.c. met in Mumbai, India on 12 March, 2012 to approve the Consolidated Audited Financial Statements for the financial year ended 31 December 2011. A Preliminary Statement of Results for the financial year ended 31 December 2011 is attached to this Company Announcement and has been made available for public view on the Company's website at www.fimbank.com.

The Board of Directors resolved that the Consolidated Audited Financial Statements be submitted for approval of the shareholders at the forthcoming Annual General Meeting to be held in Malta on 10 May 2012. At that Meeting, the Board of Directors will be recommending the payment of a scrip dividend of US\$ 2,738,034 (i.e. US cents 2.003884 per ordinary share) and a one for twenty-five (1:25) bonus share issue. Shareholders on the Register at the Central Securities Depository of the Malta Stock Exchange on 10 April 2012 (the 'Record Date', i.e. last trading date being 3 April 2012) will be entitled to:

• a) receive notice of the Annual General Meeting;
• b) be allotted shares issued pursuant to the bonus share issue; and
• c) receive the scrip dividend, to be paid either in cash or by the issue of new shares at each shareholder's option by 21 May 2012.

The attribution price for the issue of the scrip shares has been determined as the trade weighted average price at which FIMBank's ordinary shares will be transacted on the Malta Stock Exchange during the 30 days preceding the Record Date or, in the absence of that, the latest trade weighted average price.

Unquote

M Cassar Company Secretary

13 March 2012

FIMBank plc Preliminary statement of annual results

For the year ended 31 December 2011

general

The Preliminary Statement of Annual Results is published in terms of Malta Financial Services Authority Listing Rules 5.16 and 5.54. Figures have been extracted from FIMBank p.l.c.'s Audited Financial Statements for the financial year ended 31 December 2011, as approved by the Board of Directors on 12 March 2012 and audited by KPMG. The Financial Statements refer to the consolidated accounts of the FIMBank Group (the "Group"), comprising FIMBank p.l.c. (the "Bank") and its wholly-owned subsidiaries, London Forfaiting Company Limited ("LFC") together with its subsidiary companies, FIMFactors B.V. ("FIMFactors") and its wholly-owned subsidiary Menafactors Limited ("Menafactors"), FIM Business Solutions Limited ("FBS"), and FIM Property Investment Limited ("FPI"). Coverage is also given to the associated undertakings BRASILFACTORS S.A. ("Brasilfactors"), CIS Factors Holding B.V. ("CIS Factors"), India Factoring and Finance Solutions Private Limited ("India Factoring"), Levant Factors S.A.L., and The Egyptian Company for Factoring S.A.E. ("Egypt Factors").

review of performance

After a reasonably optimistic start to 2011 and the hope that wide-ranging monetary and fiscal measures across major economies could help revive confidence in international trade and bring back some stability in the financial markets, the political tur moil that spread across North Africa and the Middle East brought caution again to the fore. Most of the year remained characterised by continued uncertainty in Libya, a cautious return to normality in other parts of North Africa and deepening economic problems around the Mediterranean rim which have been threatening the stability of the Eurozone. As the Group's exposures in Libya and Egypt were kept well under control, the search started for opportunities that may present themselves once things become more stable, the FIMBank Group's strongest credentials being its experience and expertise in supporting trade and ability to attract new business in the region.

For the year ended 31 December 2011, FIMBank Group delivered an after tax profit of USD9.13 million, compared with USD6.74 million in 2010, with Group Basic Earnings per Share of US cents 6.69 (2010 – US cents 4.97).

The Group's Operating Income after Net Impairment increased by 16% over the same period in 2010, from USD32.24 million to USD37.40 million. Net Interest Income increased by 4% with net interest margin of 46% of Gross Interest Income (2010: 58%). Group Interest Income increased by 30% to USD29.18 million as a result of increases in trade finance and discounting facilities, syndications, forfaiting and factoring business. Financing costs increased by 66% over the levels recorded in 2010, reflecting the Group's continued efforts to grow its deposit base from banks and corporates, in a macroeconomic environment dominated by limited liquidity and more expensive pricing. Net Fees and Commission decreased by 4% mainly as a result of a more prudent approach towards documentary credit business in the MENA countries in view of the political events and subsequent economic turmoil in the region. This decrease was compensated by an increase in net profits from the Group's Forfaiting Assets of USD1.63 million – such assets having a different regional exposure which experienced less volatility during the year under review. The Group also reported net realised and unrealised foreign exchange profits of USD0.54 million (2010 – loss of USD2.29 million). These were coupled by realised gains on derivative instruments, mainly currency forward and swap contracts, used in hedging the Group's currency exposures, which amounted to USD3.69 million. Losses on other financial assets carried at fair value, namely marked-to-market losses on the Bank's Trading Book, amounted to USD1.05 million. Net Impairment losses amounted to USD0.13 million, well below the levels reported for 2010. This was a result of a) reversals of USD0.48 million in the Collective Impairment charge due to a decrease in the level of non-collaterised funded and unfunded lending portfolio; and b) charge of USD0.61 million in Specific Impairment allowances and write-offs, well below the USD2.28 million reported in 2010, which comparative year was impacted by charges booked in the factoring book of Menafactors.

Group Operating Expenses amounted to USD28.92 million, a 16% increase over the levels for the same period in 2010. Administrative costs, including staff costs, increased by 19% to USD27.80 million. The Group's Associated Entities returned a net loss of USD0.19 million, comparing favourably with 2010 net losses of USD1.0 million. This as a result of improved performan ce registered in India and Russia, compensated by losses registered in Egypt. The Group booked a net tax credit of USD0.85 million for 2011, mainly as a result of previously unrecognized deductible temporary differences.

The Bank's Operating Income after Impairment Allowances increased by 13% over the same period in 2010, to USD22.37 million. Net Interest Income increased by 16%, whilst Net Fee and Commission decreased by 5% or USD0.65 million, largely mirroring the performance of the Group. Realised and unrealised foreign exchange profits amounted to USD0.32 million (2010 – loss of USD3.03 million) coupled with realised gains on derivative instruments held for risk management purposes, mainly currency forwards an d swaps, which amounted to USD3.70 million. The Bank's Financial Assets carried at Fair Value returned a loss of USD1.11 million. Net Impairment Allowances moved from net impairment loss of USD1.49 million to net impairment reversals of USD0.33 million, due to a reversal in Collective Impairment charges of USD0.52 million, offset by net Specific Impairment charges and Write-offs on the Bank's exposures of USD0.19 million. Total Operating costs for the Bank amounted to USD21.35 million, increasing by 21% over the 2010 levels. After accounting for net tax credits of USD0.82 million, the Bank posted an after tax profit for the year ended 31 December 2011 of USD1.84 million (2010 – USD2.63 million).

As at 31 December 2011, Consolidated Assets exceeded the USD1 billion mark and stood at USD1,018 million, an increase of 18% over end-2010 figures whilst Consolidated Liabilities stood at USD893 million, up by 21% (USD153 million) on 2010. Group Equity as at same financial reporting date stood at USD125 million, up by 3% when compared to the equity levels reported at 31 December 2010, reflecting the profit performance for the year as well as the equity retention resulting from the scrip divide nd approved in May. Consolidated Basle II Capital Adequacy ratio of 19.3% (2010 – 20.7%), remained very strong and well above the regulatory minimum of 8%. Liquidity, with ratios averaging 53% during 2011, was prudently and consistently maintained above the 30% minimum regulatory requirement.

outlook for 2012

While 2011 has proved once more the FIMBank Group's ability to navigate the troubled waters of prolonged economic difficulties in major advanced nations coupled with political unrest in key markets, 2012 should bring much needed hope that the worst may indeed be over. The Group has a demonstrated track record of turning problem times into opportunities, and 2011 has been no exception, however current market conditions continue to call for prudence, attention to strong risk management, compliance a nd focus on dong what the Group knows best – trade finance and emerging markets. 2012 will also start to see the business landscape affected by the onset of Basle III which, in the coming years, will introduce more stringent requirements for capital adequacy and liquidity, in particular. Despite these stiff challenges, the FIMBank Group has now established a wide and diversified product range which, driven by strong business fundamentals, will continue to provide it with opportunities to grow and profi t.

dividends and reserves

The Directors will be recommending to the Annual General Meeting of shareholders the payment of a scrip dividend amounting to USD2,738,034 (2010: USD3,371,955), representing a net dividend per ordinary share of US cents 2.003884 (2010: US cents 2.480242). Moreover, the Directors will be recommending a 1 for 25 Bonus Issue of Ordinary Shares by way of capitalisation of Share Premium. This dividend and bonus issue, which require the approval of the Annual General Meeting to be held on 10 May 2012, will be paid and allotted by 21 May 2012. All shareholders on the register as at close of trading on 10 April 2012 (the "Record Date") shall be entitled to receive the dividend and bonus shares.

statements of financial position

As at 31 December 2011

	Group		Bank
	2011	2010	2011	2010
	USD	USD	USD	USD
ASSETS
Balances with the Central Bank of Malta and cash	11,220,465	9,827,969	11,202,132	9,813,667
Trading assets	230,286,337	203,566,233	-	-
Derivative assets held for risk management	1,844,035	2,317,571	1,852,222	2,317,571
Financial assets designated at fair value
through profit or loss	41,320,260	45,579,280	41,320,260	42,410,000
Loans and advances to banks	417,884,197	326,474,603	410,335,778	322,642,839
Loans and advances to customers	245,186,411	223,166,336	417,827,014	367,218,263
Investments available-for-sale	92,742	162,493	92,040	161,791
Investments in equity accounted investees	22,501,596	15,292,913	3,213,425	3,213,425
Investments in subsidiaries	-	-	73,481,359	64,234,312
Property and equipment	26,033,673	15,896,306	1,882,113	1,814,489
Intangible assets	1,573,025	1,522,687	653,646	740,651
Current tax assets	448,583	1,558,921	448,583	1,558,921
Deferred taxation	11,205,891	9,039,765	4,466,875	2,325,553
Other assets	3,507,147	3,227,678	2,773,613	2,411,528
Prepayments and accrued income	4,668,122	3,012,824	4,412,473	2,540,034
Total assets	1,017,772,484	860,645,579	973,961,533	823,403,044
LIABILITIES AND EQUITY
Liabilities
Derivative liabilities held for risk management	4,722,154	2,377,124	4,722,154	2,425,331
Amounts owed to banks	365,202,188	331,214,605	358,274,318	329,976,491
Amounts owed to customers	411,565,369	291,452,181	408,123,600	285,048,980
Debt securities in issue	50,554,467	55,522,895	42,346,073	42,853,818
Subordinated debt	41,162,938	43,789,227	41,162,938	43,789,227
Provisions	3,010,366	3,052,184	1,733,104	1,733,104
Other liabilities	94,392	182,135	94,392	182,135
Accruals and deferred income	16,731,411	12,148,640	6,265,596	5,156,968
Total liabilities	893,043,285	739,738,991	862,722,175	711,166,054
Equity
Share capital	68,318,160	67,976,317	68,318,160	67,976,317
Share premium	10,474,390	10,235,339	10,474,390	10,235,339
Currency translation reserve	(2,974,934)	(507,632)	-	-
Fair value reserve	(97,470)	(51,665)	(97,470)	(51,665)
Other reserve	12,442,022	8,098,579	2,681,041	2,681,041
Retained earnings	36,567,031	35,155,650	29,863,237	31,395,958
Total equity	124,729,199	120,906,588	111,239,358	112,236,990
Total liabilities and equity	1,017,772,484	860,645,579	973,961,533	823,403,044
MEMORANDUM ITEMS
Contingent liabilities	66,848,581	38,150,984	72,685,336	43,362,797
Commitments	163,711,561	197,427,079	116,747,046	170,860,031

statements of changes in equity

			Currency	Fair
Group	Share	Share	translation	value	Other	Retained
	capital	premium	reserve	reserve	reserve	earnings	Total
	USD	USD	USD	USD	USD	USD	USD
At 1 January 2010	67,713,477	9,986,355	(146,618)	-	6,495,973	31,579,394	115,628,581
Total comprehensive income
for the year
Profit for the year	-	-	-	-	-	6,743,910	6,743,910
	-	-	-	-	-	6,743,910	6,743,910
Other comprehensive income
Change in fair value of
available-for-sale financial assets	-	-	-	(51,665)	-	-	(51,665)
Currency translation reserve	-	-	(361,014)	-	-	-	(361,014)
Total other comprehensive	-	-	(361,014)	(51,665)	-	-	(412,679)
income
Total comprehensive income	-	-	(361,014)	(51,665)	-	6,743,910	6,331,231
for the year
Transactions with owners,
recorded directly in equity
Shares issued on exercise of
options	18,720	5,133	-	-	-	-	23,853
Dividends to equity holders	-	-	-	-	-	(1,565,048)	(1,565,048)
Scrip issue of ordinary shares	244,120	243,851	-	-	-	-	487,971
Total contributions by and
distributions to owners	262,840	248,984	-	-	-	(1,565,048)	(1,053,224)
Transfer from retained earnings	-	-	-	-	1,602,606	(1,602,606)	-
As at 31 December 2010	67,976,317	10,235,339	(507,632)	(51,665)	8,098,579	35,155,650	120,906,588
At 1 January 2011	67,976,317	10,235,339	(507,632)	(51,665)	8,098,579	35,155,650	120,906,588
Total comprehensive income
for the year
Profit for the year	-	-	-	-	-	9,126,779	9,126,779
	-	-	-	-	-	9,126,779	9,126,779
Other comprehensive income
Change in fair value of available-for-
sale financial assets	-	-	-	(45,805)	-	-	(45,805)
Currency translation reserve	-	-	(2,467,302)	-	-	-	(2,467,302)
Total other comprehensive
income	-	-	(2,467,302)	(45,805)	-	-	(2,513,107)
Total comprehensive income
for the year	-	-	(2,467,302)	(45,805)	-	9,126,779	6,613,672
Transactions with owners,
recorded directly in equity
Dividends to equity holders	-	-	-	-	-	(3,371,955)	(3,371,955)
Scrip issue of ordinary shares	341,843	239,051	-	-	-	-	580,894
Total contributions by and
distributions to owners	341,843	239,051	-	-	-	(3,371,955)	(2,791,061)
Transfer from retained earnings	-	-	-	-	4,343,443	(4,343,443)	-
As at 31 December 2011	68,318,160	10,474,390	(2,974,934)	(97,470)	12,442,022	36,567,031	124,729,199

statements of changes in equity

Bank	Share capital USD	Share premium USD	Fair value reserve USD	Other reserve USD	Retained earnings USD	Total USD
At 1 January 2010	67,713,477	9,986,355	-	2,681,041	30,331,663	110,712,536
Total comprehensive income
for the year Profit for the year	-	-	-	-	2,629,343	2,629,343
	-	-	-	-	2,629,343	2,629,343
Other comprehensive income Change in fair value of available-for-sale financial assets	-	-	(51,665)	-	-	(51,665)
Total other comprehensive income for the year	-	-	(51,665)	-	-	(51,665)
Total comprehensive income for the year	-	-	(51,665)	-	2,629,343	2,577,678
Transactions with owners, recorded directly in equity Shares issued on exercise of options Dividends to equity holders Scrip issue of ordinary shares	18,720 - 244,120	5,133 - 243,851	- - -	- - -	- (1,565,048) -	23,853 (1,565,048) 487,971
Total contributions by and distributions to owners	262,840	248,984	-	-	(1,565,048)	(1,053,224)
As at 31 December 2010	67,976,317	10,235,339	(51,665)	2,681,041	31,395,958	112,236,990
At 1 January 2011	67,976,317	10,235,339	(51,665)	2,681,041	31,395,958	112,236,990
Total comprehensive income
for the year Profit for the year	-	-	-	-	1,839,234	1,839,234
	-	-	-	-	1,839,234	1,839,234
Other comprehensive income Change in fair value of available-for-sale
financial assets Total other comprehensive income for	-	-	(45,805)	-	-	(45,805)
the year	-	-	(45,805)	-	-	(45,805)
Total comprehensive income for the year	-	-	(45,805)	-	1,839,234	1,793,429
Transactions with owners, recorded directly in equity Dividends to equity holders Scrip issue of ordinary shares	- 341,843	- 239,051	- -	- -	(3,371,955) -	(3,371,955) 580,894
Total contributions by and distributions to owners	341,843	239,051	-	-	(3,371,955)	(2,791,061)
As at 31 December 2011	68,318,160	10,474,390	(97,470)	2,681,041	29,863,237	111,239,358

income statements

	Group		Bank
	2011	2010	2011	2010
	USD	USD	USD	USD
Interest income	29,178,828	22,410,004	20,990,805	14,300,606
Interest expense	(15,667,074)	(9,429,484)	(15,080,538)	(9,183,774)
Net interest income	13,511,754	12,980,520	5,910,267	5,116,832
Fee and commission income	20,750,013	21,386,459	14,629,402	15,237,631
Fee and commission expense	(2,151,053)	(1,983,914)	(1,429,800)	(1,387,338)
Net fee and commission income	18,598,960	19,402,545	13,199,602	13,850,293
Net trading income/(expense) Net gain from other financial	2,716,444	(1,743,819)	316,461	(3,028,565)
instruments carried at fair value	2,644,387	5,330,330	2,584,985	5,319,358
Dividend income Other operating income	- 57,809	320 44,162	- 32,322	320 31,572
Operating income before net impairment	37,529,354	36,014,058	22,043,637	21,289,810
Net impairment (loss)/reversal on financial assets	(132,026)	(3,777,541)	328,517	(1,493,233)
Operating income	37,397,328	32,236,517	22,372,154	19,796,577
Administrative expenses Depreciation and amortisation Provision for liabilities and charges	(27,765,367) (1,158,502) -	(23,301,533) (1,208,687) (506,281)	(20,681,648) (671,744) -	(16,900,731) (731,585) -
Total operating expenses	(28,923,869)	(25,016,501)	(21,353,392)	(17,632,316)
Operating profit	8,473,459	7,220,016	1,018,762	2,164,261
Share of loss of equity accounted investees (net of tax)	(191,956)	(996,549)	-	-
Profit before tax	8,281,503	6,223,467	1,018,762	2,164,261
Taxation	845,276	520,443	820,472	465,082
Profit for the year	9,126,779	6,743,910	1,839,234	2,629,343
Basic earnings per share	6.69c	4.97c	1.35c	1.94c
Diluted earnings per share	6.69c	4.97c	1.35c	1.94c

statements of comprehensive income

	Group		Bank
	2011	2010	2011	2010
	USD	USD	USD	USD
Profit for the year	9,126,779	6,743,910	1,839,234	2,629,343
Other comprehensive income:
Exchange differences on translation of
foreign operations	(2,467,302)	(361,014)	-	-
Fair value reserve (available for sale financial assets):
- Net change in fair value	(70,470)	(79,485)	(70,470)	(79,485)
- Taxation	24,665	27,820	24,665	27,820
Total other comprehensive income	(2,513,107)	(412,679)	(45,805)	(51,665)
Total comprehensive income for the year	6,613,672	6,331,231	1,793,429	2,577,678

statements of cash flows

	Group		Bank
	2011	2010	2011	2010
	USD	USD	USD	USD
Cash flows from operating activities
Interest and commission receipts	49,150,459	34,144,862	34,249,514	29,268,371
Exchange received	7,008,872	2,598,845	6,825,753	1,949,468
Interest and commission payments	(16,325,013)	(10,806,982)	(14,941,844)	(10,077,821)
Payments to employees and suppliers	(24,761,228)	(21,619,479)	(21,265,880)	(16,244,235)
Operating profit before changes
in operating assets / liabilities	15,073,090	4,317,246	4,867,543	4,895,783
(Increase) / decrease in operating assets:
- Financial assets at fair value
through profit or loss	(21,702,168)	(81,665,692)	(24,188)	(19,240,703)
- Loans and advances to customers and banks	(33,413,242)	(99,394,020)	(44,424,996)	(78,556,378)
- Other assets	(820,554)	6,616,519	(903,174)	(540,657)
Increase / (decrease) in operating liabilities:
- Amounts owed to customers and banks	107,097,265	63,151,841	102,416,777	61,184,839
- Other liabilities	(87,743)	68,329	(87,743)	156,732
- Net advances to subsidiary companies	-	-	(17,225,766)	(69,660,142)
Net cash inflows/(outflows) from
operating activities before income tax	66,146,648	(106,905,777)	44,618,453	(101,760,526)
Income tax paid	(185,847)	(1,200,386)	(185,847)	(1,200,114)
Net cash inflows/(outflows)
from operating activities	65,960,801	(108,106,163)	44,432,606	(102,960,640)
Cash flows from investing activities
- Payments to acquire property and equipment	(10,843,260)	(6,076,446)	(548,275)	(153,597)
- Payments to acquire intangible assets	(513,935)	(695,848)	(104,554)	(342,619)
- Proceeds on disposal of property and equipment	48,331	14,016	12,326	-
- Purchase of shares in subsidiary companies	-	-	(8,705,959)	(10,822,021)
- Purchase of shares in equity
accounted investees	(9,332,627)	(12,026,480)	-	(1,200,000)
- Purchase of shares in available-for-sale
financial assets	(719)	(702)	(719)	-
- Receipt of dividend	-	320	-	320
Net cash flows used in investing activities	(20,642,210)	(18,785,140)	(9,347,181)	(12,517,917)
Increase/(decrease) in cash and cash
equivalents c/f	45,318,591	(126,891,303)	35,085,425	(115,478,557)

statements of cash flows

	Group		Bank
	2011	2010	2011	2010
	USD	USD	USD	USD
Increase/(decrease) in cash and cash
equivalents b/f	45,318,591	(126,891,303)	35,085,425	(115,478,557)
Cash flows from financing activities
- Proceeds from issue of shares on exercise of options	-	23,853	-	23,853
- Proceeds from issue of 4.25% bonds
- Proceeds from issue of 4.25% bonds	-	43,396,399	-	43,396,399
- Debt securities in issue	(4,460,683)	4,923,510	-	(4,931,905)
- Repayment of Subordinated Convertible Loan	(1,714,285)	(857,143)	(1,714,285)	(857,143)
- Dividends paid	(2,791,061)	(1,077,077)	(2,791,061)	(1,077,077)
Net cash flows used in/(from) financing
activities	(8,966,029)	46,409,542	(4,505,346)	36,554,127
Increase/(decrease) in cash and cash
Equivalents	36,352,562	(80,481,761)	30,580,079	(78,924,430)
Analysed as follows:
- Effect of exchange rate changes
on cash and cash equivalents	(520,723)	(7,942,433)	(519,211)	(7,895,910)
- Net (decrease) / increase in cash
and cash equivalents	36,873,285	(72,539,328)	31,099,290	(71,028,520)
Increase/(decrease) in cash and cash
equivalents	36,352,562	(80,481,761)	30,580,079	(78,924,430)
Cash and cash equivalents
at beginning of year	26,129,428	105,474,073	24,770,937	103,695,367
Reclassification of cash and cash equivalents previously held as	-	1,137,116	-	-
discontinued operation
	26,129,428	106,611,189	24,770,937	103,695,367
Cash and cash equivalents at end of year	62,481,990	26,129,428	55,351,016	24,770,937