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FIMBank Plc
Interim / Quarterly Report • Aug 10, 2017
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Interim / Quarterly Report
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COMPANY ANNOUNCEMENT
The following is a Company Announcement issued by FIMBank p.l.c. ("FIMBank" or the "Bank") pursuant to Chapter 5 of the Malta Financial Services Authority Listing Rules.
Quote
The Board of Directors of FIMBank met in London on 9 August 2017, to approve the Consolidated and the Bank's Interim Financial Statements for the six months ended 30 June 2017.
The Half-Yearly Report, drawn up in terms of the Listing Rules, is attached to this Company Announcement. The Interim Financial Statements are unaudited but independently reviewed by KPMG, the Registered Auditors.
In accordance with the requirements of the Listing Rules the Half-Yearly Report is being made publicly available for viewing on the Bank's website at www.fimbank.com.
Unquote
Andrea Batelli Company Secretary
10 August 2017
condensed interim financial statements 2017
| Contents | Page |
|---|---|
| Directors' Report pursuant to Listing Rule 5.75.2 | 2 |
| Condensed interim financial statements: | |
| Condensed interim statements of financial position | 7 |
| Condensed interim income statements | 8 |
| Condensed interim statements of comprehensive income | 9 |
| Condensed interim statements of changes in equity | 10 |
| Condensed interim statements of cash flows | 14 |
| Notes to the condensed interim financial statements | 1 ਤੋ |
| Statement pursuant to listing rule 5.75.3 | 27 |
| Independent auditors' report on review of | |
| condensed interim financial statements | 28 |
directors' report pursuant to listing rule 5.75.2
For the six months ended 30 June 2017
The Directors ("Board" or "Directors") are pleased to issue their Report pursuant to the Malta Financial Services Authority Listing Rules and the Prevention of Financial Markets Abuse Act, 2005. This Report, which shall be read in conjunction with the condensed interim financial statements of the Group and the Bank for the six months ended 30 June 2017, including the Notes thereto, forms part of the Half-Yearly Report of FIMBank p.l.c., drawn up in accordance with the requirements of Listing Rule 5.75.2.
principal activities and developments
The FMBank Group of Companies comprises FIMBank p.l.c. and its wholly owned subsidiaries, London Forfaiting Company Limited ("LFC"), FIM Business Solutions Limited ("FBS"), FIM Property Investment Limited ("FP"), FIM Holdings (Chile) S.p.A. ("FHC"), The Egyptian Company for Factoring S.A.E. ("Egypt Factors") and FIMFactors"). LFC, FIMFactors"). LFC, FIMFactors and FHC are themselves parents of a number of subsidiaries as set out below. The Group is supervised on a consolidated basis by the Malta Financial Services Authority ("MFSA"), whilst some of its subsidiaries and branches are subject to and regulation according to the respective jurisdictions in which they operate.
A brief description of the activities in the Group follows (% shareholding follows after the name):
- The Bank is a public limited company registered under the laws of Malta, and listed on the Malta Stock Exchange. It is licensed a. as a credit institution under the Banking Act, 1994. The Bank is principally active in providing international trade finance and to act as an intermediary to other financial institutions for international settlements, forfaiting, factoring and loan syndications.
- b. international trade finance services (with particular focus on forfaiting business) through an international network of offices. Some of these offices have distinct corporate status in the various jurisdictions where they are providing the service. LFC's activities include the trading of bills of exchange, promissory notes, loans, deferred payment letters of credit and the provision of other financial facilities to companies and banks.
- c. Group and its associated companies.
- FPI (100%), registered in Malta, owns and manages FIMBank's head office in Malta. FPI is responsible for the day-to-day d. management of the building and leasing of space for commercial purposes.
- e. Chile, to provide all types of factoring, financial leasing and other management services. The other shareholders are lnversiones El Mayorazgo Limitada, Marín y Compañía S.A., Asesoría e Inversiones CABS S.A., Compañía de Rentas Epulafquén Ltd., Compañía de Rentas Trigal Ltd. and Compañía General de Rentas Ltd.
- f. Egypt Factors (100%), registered in Egypt, is active in providing factoring and forfaiting services to Egyptian companies.
- FIMFactors (100%), registered in the Netherlands, is the corporate vehicle for FIMBank's holdings in factoring subsidiaries and g. associated companies. These are:
- i. Dubai Financial Services Authority to provide international factoring and forfaiting services in the Gulf and MENA region. Menafactors, in turn, holds 50% in Levant Factors S.A.L., a company registered in Lebanon. Menafactors has been placed into liquidation and is expected to be wound down shortly. As part of this process, the Company has also surrendered its license to provide the aforementioned services.
- ii. factoring companies. Currently the company is not carrying any investments.
- iii. India Factoring and Finance Solutions (Private) Limited (86%), incorporated in Mumbai, India, to carry out the business in of factoring, forfaiting and trade finance activities in India, the other shareholders being Banca IFIS (5%), India Factoring Employee Welfare Trust (8%) and Blend Financial Services Limited (1%). India Factoring is regulated by the Reserve Bank of India.
- iv. services and forfaiting targeting small and medium-sized companies. The other shareholder is Banco Industrial e Comercial S.A. ("Bicbanco") with 50%.
salient developments
In an operating environment characterised by economic uncertainties and increased regulation, the FIMBank Group has continued to actively pursue a transformation strategy aimed at consolidating a value-creation model of growth and superior returns. Throughout the last six months, FIMBank kept building on the foundations laid down in the prior eighteen months - by enhancing its revenue generation approach and product offering, benefiting from its risk management and recovery strategies whilst optimising on its capital and funding resources. On the back of this, FIMBank extended its profitability trend to this semester, returning net profits significantly higher than the same period last year.
An upgraded asset origination process and product diversification were at the Group's agenda with the implementation of clientcentric coverage models, cross-sell initiatives across the different Group segments and use of hubs in he MENA region. The development of niche products in areas of sustained with suitable margins was maintained – both for lending products, including the niche Malta real estate portfolio, as well as with the launch of the fully-fledged internet banking suite FM Direct. All this was complemented by a robust governance and risk framework across the Group, which not only nisks are adequately managed within established framework but also ed to more success in recovering delinquent loans across the various Group business units. A strong compliance culture enabled the Group to maintain with its correspondent banks across all actively dealt currencies. During the first half of the year administrative measures in prior years have also been revoled by the regulators.
ln addition, the pace of evolution was also shaped by the Group, which have invariably remained well above minimum requirements but which have nonetheled through asset optimisation and generation of profitability. This in anticipation of a capital-raising exercise already approved by shareholders in the May Annual General Meeting.
Cost management and financial discipline remains a pillar of strent use of current resources permitting FMBank to sustain increased regulatory and related costs whilst also embarking on innovative projects and initiatives.
review of performance
The condensed interim financial statements have been prepared in accordance with EU adopted IAS 34 Interim Financial Reporting. These published figures have been extracted from the FIMBank p.l. Group's unaudited accounts for the six months ended 30 June 2017 as approved by the Board of Directors on 9 August 2017.
For the six months ended 30 June 2017, the FIMBank Group posted an after-tax profit of USD4.12 million compared to an after-tax profit of USD1.21 million registered for the same period in 2016. The Directors do not recommend the payment of an interim dividend for the period under review.
income statement
The results for the period under review are summarised in the table be read in conjunction with the explanatory commentary that follows:
| Group | |||
|---|---|---|---|
| 2017 | 2016 | Movement | |
| USD | USD | USD | |
| Net interest income | 12,780,856 | 9,793,544 | 2,987,312 |
| Net fee and commission income | 9,182,752 | 7,146,482 | 2,036,270 |
| Net results from foreign currency operations | (1,981,136) | 258,686 | (2,239,822) |
| Other operating income | 3,976,244 | 3,513,783 | 462,461 |
| Net operating results | 23,958,716 | 20,712,495 | 3,246,221 |
| Net impairment gain/(losses) | 1,760,499 | (188,564) | 1,949,063 |
| Net (losses)/profits from trading assets and other financial instruments | (28,996) | 720,528 | (749,524) |
| Share of loss of equity accounted investees | (245,969) | (234,612) | (11,357) |
| Net income | 25,444,250 | 21,009,847 | 4,434,403 |
| Operating expenses | (21,218,882) | (18,860,620) | (2,358,262) |
| Taxation | (101,4/ /) | (892,531) | 791,054 |
| 4,123,891 | 1,256,696 | 2,867,195 | |
| Loss on discontinued operations | (46,802) | 46,802 | |
| Profit for the period | 4,123,891 | 1,209,894 | 2,913,997 |
The Group's operating results, before impairment losses, market adjustments and share of equity results, were USD3.2 million higher when compared to the second half of 2016. This was largely due to higher interest margins (up to USD12.8 million) and higher net fee and commission income (up to USD9.2 million from USD7.1 million).
Interest margins improved on the back of a higher level factoring forerdue interest on delinquent assets recovered in the first half of 2017 and overall higher spreads on loan facilities. These were offset by lower interest on fixed income investments and a higher level of customer deposits which increased overall absolute interest costs.
Fee and commission income increased mainly on factoring assets, also as such portfolios saw higher turnover levels during the first six months of the year. In addition, fee and commission expensed on lower credit insurance costs and fees payable on forfaiting.
FX results moved to negative territory due to an increase in foreign currency swaps used for risk management.
As a result of the continuous recovery efforts across the Bank and its subsidiaries, the Group made a net impairment gain of USD 1.76 million compared to a loss of USD.18 million in 2016. During this period the Group was successful in pursuing recoveries through the Bank, India and Egypt with a P&L impact on recoveries of USD4.60 million of which USD3.59 million from one particular account. These recoveries were offset by increases to specific provisions of USD3.25 million spread on a mix of legacy and other uncovered credits. Results from trading assess and other financial instruments decreased by USD0.75 million to a marginal loss of USD0.72 million to a marginal loss of USD003 million. This was a result of lower unrealised losses on the forfaiting portfolio offset by a lower profits on the disposal of investment securities.
The Group's investment in Brasilfactors suffered a net share of loss (equity method) of USD0.25 million, same level as the first six months of 2016.
Operating expenses for the six months under review increased by 13% from USD1.22 million, largely reflecting an increase in regulatory costs and the effect of consolidation of Egypt Factors which in using the equity method.
The Group's factoring entity in Russia, which was disclosed in the comparative period as Discontinued Operations with a reported losses of USD0.05 million is in the final stages of the liquidation process and had no financial impact on the review. During the latter part of 2016, the Group lost control over FactorRus as a result of the liquidation process which resulted in the Group discontinuing the consolidation of its financial position and performance.
financial position
At 30 June 2017, total Consolidated Assets stood at USD1.73 billion, in line with the position at end-2016. Increases with Central Bank of Malta and Loans and Advances to customers were off-set by decreases in exposures to Malta Government Treasury Bills, Loans and Advance to Banks and Trading Assets. Total Consolidated Liabilities as at 30 June 2017 5 billion, also in line with the position at end-2016.
Group Equity as at Financial Reporting date stood at USD182 million), with CET1 ratio standing at 10.89% and Total CAR at 14.71%.
annual general meeting 2017
The Bank convened its Annual General Meeting on 11 May 2017. Along with the statutions, the Meeting approved a resolution presented as special business in respect of a 1:30 Bonus Issue of Shares. The Board composition following the Annual General Meeting is as follows:
John C. Grech (Chairman) Masaud M. J. Hayat (Vice Chairman) Majed Essa Al-Ajeel Mohamed Fekih Ahmed Eduardo Eguren Linsen Osama Talat Al-Ghoussein Adrian Alejandro Gostuski Rogers David LeBaron Rabih Soukarieh Edmond Brincat (appointed on 12 July 2017) Hussain Lalani (appointed on 23 June 2017)
related party transactions
Consistent with the 2016 Annual Report and Audited Financial Statements, the Bank maintained a related party relationship with its significant shareholders, subsidiaries, equity accounted investees, directors and executive officers. In particular, the following related party balances and/or transactions were undertaken during the period under review:
-
- "Loans and advances to subsidiaries" at 30 June 2017, net of imparments, amounted to USD194.94 million (31 December 2016: USD296.78 million). Accrued Interest at 30 June 2017 stood at USD3.51 million (31 December 2016: USD0.08 million). Interest earned from subsidiaries for the six months ended 30 June 2017 amounted to USD3.45 million (six months ended 30 June 2016: USD3.07 million).
-
- "Loans and advances to associated companies" at 30 June 2017, net of impairments, amounted to USD12.00 million (31 December 2016: USD15.00 million). Accrued Interest at 30 June 2017 stood at USD0.09 million (31 December 2016: USD0.10 million). Interest earned from Associated Companies for the six months ended 30 June 2017 amounted to USD0.22 million (six months ended 30 June 2016: USD0.35 million).
-
- "Loans and advances to banks" at 30 June 2017 include placements with United Gulf Bank B.S.C. of USD28.53 million (31 December 2016: USD26.32 million). Accrued Interest at 30 June 2017 stood at USD0.07million (31 December 2016: USD0.01 million). This also includes acceptances of Burgan Bank S.A.K. amounting to USD1.97 million (31 December 2016: NIL).
-
- "Forward Contracts" with Burgan Bank S.A.K amount to USD0.27 million (31 December 2016: USD0.33 million).
-
- "Amounts owed to banks" at 30 June 2017 include loan funding from Burgan Bank S.A.K. of USD130.05 million (31 December 2016: USD50.00 million). Accrued Interest at 30 June 2017 stood at USD1.09 million (31 December 2016: USD0.88 million). Interest paid on this funding for the six months ended 30 June 2017 amounted to USD1.51 million (30 June 2016: USD2.48 million).
-
- Dividend received from subsidiary undertakings during the six months ended June 2017 amounted to USD1.45 million (30 June 2016: nil). No dividend was received by the Bank from equity accounted investees (six months ended 30 June 2016: NIL).
Related party transactions with shareholders and directors were undertaken in the ordinary course of business.
Related party transactions carried out by the Bank and its subsidiaries are reported to the Audit Committee which reviews them and assesses their nature and arm's-length consideration. This responsibility arises from the is drafted in accordance with the listing rules as well as current best recommendations and practices of good corporate governance.
the second half of 2017
FIMBank is evolving into a stronger banking institution based on sound business discipline, centrally-aligned offective management of enterprise risks. The dynamics achieved during the last months will continues striding towards a revenue maximisation approach, maintain portfolio quality and concurrently bolster its capital position to trigger further asset growth. Being successful across these areas will allow FlMBank to take its customer experior level, support scale, and generate enterprise value to its platform of various stakeholders.
Approved by the Board on 9 August 2017 and signed on its behalf by:
John C. Grech Chairman
Masaud M. J. Hayat Vice Chairman
| Group | Bank | |||||
|---|---|---|---|---|---|---|
| 30 Jun 17 | 31 Dec 16 | 30 Jun 17 | 31 Dec 16 | |||
| Note | USD | USD | USD | USD | ||
| ASSETS | ||||||
| Balances with the Central Bank of Malta, Treasury Bills and cash | 208,870,920 | 33,193,245 | 208,840,316 | 33,165,601 | ||
| Trading assets | 270,705,117 | 379,397,964 | ||||
| Derivative assets held for a risk management | 11 | 1,309,471 | 1,502,704 | 1,309,471 | 1,502,704 | |
| Financial assets designated at fair value through profit or loss | 17,799,900 | 17,799,900 | ||||
| Loans and advances to banks | 329,485,027 | 454,362,226 | 297,729,057 | 438,799,241 | ||
| Loans and advances to customers | 505,432,051 | 426,612,356 | 550,834,089 | 589,519,473 | ||
| Investments available-for-sale | 312,482,395 | 327,076,529 | 312,482,395 | 327,075,827 | ||
| Investments in associates | 906,425 | 1,161,332 | ||||
| Investments in subsidiaries | 12 | 96,305,594 | 86,305,594 | |||
| Intangible assets and goodwill | 12,331,120 | 11,701,935 | 2,895,629 | 2,467,630 | ||
| Property and equipment | 27,567,379 | 27,751,932 | 1,223,386 | 1,305,432 | ||
| Investment Property | 3,428,801 | 3,514,392 | ||||
| Current tax assets | 3,036,351 | 3,695,826 | 1,052,348 | 1,052,348 | ||
| Deferred taxation | 42,617,423 | 41,882,687 | 23,585,979 | 23,335,459 | ||
| Other assets | 7,899,969 | 4,263,474 | 3,552,487 | 2,613,913 | ||
| Prepayments and accrued income | 7,354,251 | 7,031,898 | 8,831,678 | 6,148,570 | ||
| Total assets | 1,733,426,700 | 1,740,948,400 | 1,508,642,429 | 1,531,151,692 | ||
| LIABILITIES AND EQUITY | ||||||
| Liabilities | ||||||
| Derivative liabilities held for risk management | 11 | 246,985 | 8,816,410 | 264,429 | 8,834,092 | |
| Amounts owed to banks | 560,966,904 | 528,939,251 | 448,016,611 | 426,137,477 | ||
| Amounts owed to customers | 873,049,967 | 948,710,544 | 838,978,649 | 915,367,604 | ||
| Debt securities in issue | 13 | 42,529,251 | 8,225,869 | 35,000,000 | ||
| Subordinated liabilities | 14 | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | |
| Current tax liabilities | 487,605 | 1,437 | ||||
| Other liabilities | 303,982 | 569,758 | 268,627 | 535,339 | ||
| Accruals and deferred income | 24,258,225 | 20,917,768 | 9,825,896 | 7,422,362 | ||
| Total liabilities | 1,551,842,919 | 1,566,181,037 | 1,382,354,212 | 1,408,296,874 | ||
| Equity | ||||||
| Share capital | 15 | 157,239,388 | 155,239,263 | 157,239,388 | 155,239,263 | |
| Share premium | 15 | 170,740 | 2,101,335 | 170,740 | 2,101,335 | |
| Reserve for general banking risks | 464,030 | /64,192 | 464,030 | 764,792 | ||
| Currency translation reserve | (4,847,086) | (6,715,522) | ||||
| Fair value reserve | (1,152,090) | (1,891,140) | (1,152,090) | (1,891,140) | ||
| Other reserves | 2,864,930 | 2,481,760 | 2,681,041 | 2,681,041 | ||
| Retained Earnings/(Accumulated Losses) | 3,492,666 | (487,210) | (33,114,892) | (36,040,473) | ||
| Total equity attributable to equity holders of the Bank | 158,232,578 | 151,493,278 | 126,288,217 | 122,854,818 | ||
| Non-controlling interests | 23,351,203 | 23,274,085 | ||||
| Total equity | 181,583,781 | 174,767,363 | 126,288,217 | 122,854,818 | ||
| Total liabilities and equity | 1,733,426,700 | 1,740,948,400 | 1,508,642,429 | 1,531,151,692 | ||
| MEMORANDUM ITEMS | ||||||
| Contingent liabilities | 16 | 9,508,109 | 6,507,529 | 22,071,737 | 19,782,148 | |
| Commitments | 17 | 256,534,311 | 186,030,894 | 182,692,510 | 120,282,416 |
| 2017 2016 2017 2016 Restated Restated Note USD USD USD USD 26,458,792 Interest income 21,669,613 15,385,578 11,404,270 (13,677,936) (8,794,433) Interest expense (11,876,069) (9,829,342) Net interest income 12,780,856 9,793,544 2,609,837 5,556,236 Fee and commission income 4,685,164 11,646,747 10,269,339 5,056,862 (2,463,995) Fee and commission expense (3,122,857) (1,129,381) (1,225,355) Net fee and commission income 9,182,752 7,146,482 3,927,481 3,459,809 Net trading results (17,716,171) 1,188,234 (17,682,289) 2,518,476 Net gain/(loss) from other financial 7 instruments carried at fair value 15,706,039 (209,020) 15,741,076 (128,081) 8 Dividend income 3,749,265 2,872,721 5,197,666 2,872,721 Other operating income 226,979 641,062 2,138 386,539 Operating income before net impairment gain 23,929,720 21,433,023 12,742,308 11,719,301 Net impairment qain/(loss) on financial assets 245,943 1,760,499 (188,564) 1,706,698 Operating income 25,690,219 11,965,244 21,244,459 14,449,006 Administrative expenses (11,390,218) (19,987,494) (17,322,621) (9,991,641) (1,231,388) (429,405) Depreciation and amortisation (1,537,998) (466,699) Total operating expenses (21,218,882) (10,458,340) (18,860,619) (11,819,623) Operating profit 4,471,337 2,383,840 2,629,383 1,506,904 Share of loss of equity accounted investees (net of tax) (245,969) (234,612) Profit before income tax 4,225,368 2,149,228 2,629,383 1,506,904 9 Taxation (101,477) (892,532) (4,564) (1,210,108) Profit from continuing operations 4,123,891 1,256,696 2,624,819 296,796 10 Loss on discontinued operations (46,802) Profit for the period 4,123,891 1,209,894 2,624,819 296,796 Attributable to: Equity holders of the bank 4,062,284 296,796 1,104,936 2,624,819 Non-controlling interests 61,607 104,958 Profit for the period 1,209,894 4,123,891 2,624,819 296,796 Earnings per share Basic earnings per share (US cents) 1.32 0.37 0.84 0.10 1.32 Diluted earnings per share (US cents) 0.37 0.84 0.10 |
Group | Bank | ||
|---|---|---|---|---|
| Earnings per share - continuing operations | ||||
| 1.32 Basic earnings per share (US cents) 0.38 0.84 0.10 |
||||
| Diluted earnings per share (US cents) 1.32 0.38 0.84 0.10 |
| Group | Bank | ||||
|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | ||
| USD | USD | USD | USD | ||
| Profit for the period | 4,123,891 | 1,209,894 | 2,624,819 | 296,796 | |
| Other comprehensive income: | |||||
| ltems that are, or may be, reclassified subsequently to profit or loss | |||||
| Foreign operations - foreign currency translation differences Fair value reserve (available-for-sale financial assets), net of |
1,868,436 | (74,130) | |||
| deferred tax | 739,050 | (251,969) | 739,052 | (251,969) | |
| Total comprehensive income for the period | 6,731,377 | 883,795 | 3,363,871 | 44,827 |
| Attributable to equity shareholders of the Bank | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Share capital USD |
Share premium USD |
Reserve for general banking risks USD |
Currency translation reserve USD |
Fair value reserve USD |
Other reserve USD |
Retained earnings/ (accumulated losses) USD |
Total USD |
Non- controlling interests USD |
Total equity USD |
|
| At 1 January 2017 | 155,239,263 | 2,101,335 | 764,792 | (6,715,522) | (1,891,140) | 2,481,760 | (487,210) | 151,493,278 | 23,274,085 | 174,767,363 |
| Total comprehensive income Comprehensive income for the period Profit for the period |
4,062,284 | 4,062,284 | 61,607 | 4,123,891 | ||||||
| Other comprehensive income Change in fair value of available-for-sale assets Currency translation reserve |
1,868,436 | 739,050 | 739,050 1,868,436 |
15,511 | 739,050 1,883,947 |
|||||
| Total comprehensive income for the period | l | 1,868,436 | 739,050 | l | 4,062,284 | 6,669,770 | 77,118 | 6,746,888 | ||
| Transactions with owners of the Bank Contributions and distributions Bonus issue of shares |
1,941,232 | (1,941,232) | ||||||||
| Total transactions with owners of the Bank | 1,941,232 | (1,941,232) | l | - | - | - | - | - | ı | |
| Transfer between reserves Exercised share options |
58,893 | 10,637 | (300,762) | 383,170 | (82,408) | 69,530 | 69,530 | |||
| As at 30 June 2017 | 157,239,388 | 170,740 | 464,030 | (4,847,086) | (1,152,090) | 2,864,930 | 3,492,666 | 158,232,578 | 23,351,203 | 181,583,781 |
| Attributable to equity shareholders of the Bank | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Share capital USD |
Share premium USD |
Reserve for general banking risks USD |
Currency translation reserve USD |
Fair value reserve USD |
Other reserve USD |
Accumulated losses USD |
Total USD |
Non- controlling interests USD |
Total equity USD |
|
| At 1 January 2016 | 149,268,322 | 8,072,276 | 1,000,027 | (5,690,377) | (409,528) | 2,486,644 | (5,644,809) | 149,082,555 | 25,837,059 | 174,919,614 |
| Total comprehensive income Comprehensive income for the period Profit for the period |
1,104,936 | 1,104,936 | 104,958 | 1,209,894 | ||||||
| Other comprehensive income Change in fair value of available-for-sale assets Currency translation reserve |
(74,130) | (251,969) | (251,969) (74,130) |
383,632 | (251,969) 309,502 |
|||||
| Total comprehensive income for the period | (74,130) | (251,969) | l | 1,104,936 | 778,837 | 488,590 | 1,267,427 | |||
| Transactions with owners of the Bank Contributions and distributions Bonus issue of shares Share issue transaction costs by subsidiaries |
5,970,941 | (5,970,941) | (4,939) | (4,939) | (4,939) | |||||
| Changes in ownership interests Change in non-controlling interests at subsidiaries |
(882,955) | (882,955) | ||||||||
| Total transactions with owners of the Bank | 5,970,941 | (5,970,941) | (4,939) | - | (4,939) | (882,955) | (887,894) | |||
| As at 30 June 2016 | 155,239,263 | 2,101,335 | 1,000,027 | (5,764,507) | (661,497) | 2,481,705 | (4,539,873) | 149,856,453 | 25,442,694 | 175,299,147 |
| Share capital USD |
Share premium USD |
Reserve for general banking risks USD |
Fair value reserve USD |
Other reserve USD |
Accumulated losses USD |
Total USD |
|
|---|---|---|---|---|---|---|---|
| At 1 January 2017 | 155,239,263 | 2,101,335 | 764,792 | (1,891,140) | 2,681,041 | (36,040,473) | 122,854,818 |
| Total comprehensive income Total comprehensive income for the period Profit for the period |
2,624,819 | 2,624,819 | |||||
| Total comprehensive income for the period | - | - | 2,624,819 | 2,624,819 | |||
| Transactions with owners of the Bank Contributions and distributions |
|||||||
| Bonus issue of shares | 1,941,232 | (1,941,232) | |||||
| Total transactions with owners of the bank | 1,941,232 | (1,941,232) | l | ||||
| Transfer between reserves | (300,762) | 300,762 | |||||
| Exercised share options | 58,893 | 10,637 | 69,530 | ||||
| Adjustment of AFS valuation | - | (655,890) | (655,890) | ||||
| Adjustment of SIF and EMTFF valuation | - | 190,630 | 190,630 | ||||
| Amortisation of AFS instruments | 1,204,310 | 1,204,310 | |||||
| As at 30 June 2017 | 157,239,388 | 170,740 | 464,030 | (1,152,090) | 2,681,041 | (33,114,892) | 126,288,217 |
| Share capital USD |
Share premium USD |
Reserve for general banking risks USD |
Fair value reserve USD |
Other reserve USD |
Accumulated losses USD |
Total USD |
|
|---|---|---|---|---|---|---|---|
| At 1 January 2016 | 149,268,322 | 8,072,276 | 1,000,027 | (409,528) | 2,681,041 | (36,616,090) | 123,996,048 |
| Total comprehensive income Total comprehensive income for the period Profit for the period |
296,796 | 296,796 | |||||
| Other comprehensive income Change in fair value of available-for-sale assets |
(251,969) | (251,969) | |||||
| Total comprehensive income for the period | (251,969) | 296,796 | 44,827 | ||||
| Transactions with owners of the Bank Contributions and distributions Bonus issue of shares |
5,970,941 | (5,970,941) | |||||
| Total transactions with owners of the bank | 5,970,941 | (5,970,941) | - | ||||
| As at 30 June 2016 | 155,239,263 | 2,101,335 | 1,000,027 | (661,497) | 2,681,041 | (36,319,294) | 124,040,875 |
| Group | Bank | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| USD | USD | USD | USD | |
| Cash flows from operating activities | ||||
| Interest and commission receipts | 40,236,561 | 30,682,617 | 18,741,506 | 12,697,568 |
| Exchange (paid)/received | (3,386,784) | 5,211,310 | (4,207,496) | 5,827,755 |
| Interest and commission payments | (15,532,541) | (15,736,283) | (10,255,541) | (13,499,999) |
| Payments to employees and suppliers | (18,357,994) | (18,011,466) | (9,818,333) | (7,941,890) |
| Operating profit/(loss) before changes in operating assets / liabilities | 2,959,242 | 2,146,178 | (5,539,864) | (2,916,566) |
| (Increase)/decrease in operating assets: | ||||
| - Trading assets and financial assets at fair value through profit or loss | 108,535,834 | (64,128,638) | ||
| - Loans and advances to customers and banks | 94,637,048 | 7,954,386 | 99,634,588 | (20,408,721) |
| - Other assets | (2,977,018) | (3,322,351) | (938,512) | (132,910) |
| Increase/(decrease) in operating liabilities: | ||||
| - Amounts owed to customers and banks | (82,551,923) | 234,608,950 | (178,858,700) | 228,274,561 |
| - Other liabilities | (265,776) | 80,714 | (24,697) | 963,669 |
| - Net advances from/(to) subsidiary companies | 100,986,251 | (37,800,588) | ||
| Net cash generated from operating activities before income tax | 120,337,407 | 177,339,239 | 15,259,006 | 167,979,445 |
| Income tax refunded/(paid) | 384,654 | (483,232) | (4,564) | (480,654) |
| Net cash flows from operating activities | 120,722,061 | 176,856,007 | 15,254,442 | 167,498,791 |
| Cash flows from investing activities | ||||
| - Payments to acquire property and equipment | (/83,016) | (428,329) | (160,322) | (267,482) |
| - Payments to acquire intangible assets | (584,591) | (1,064,468) | (615,036) | (1,024,793) |
| - Payments to acquire shares in subsidiary companies | (10,000,000) | (5,000,000) | ||
| - Proceeds from disposal of available-for-sale financial assets | 8,871,894 | 699,802 | 8,871,894 | 699,802 |
| - Proceeds on disposal of financial assets at FV through P&L | 17,870,000 | 17,870,000 | ||
| - Proceeds on disposal of sale of property and equipment | 1,174 | 558,596 | 550,090 | |
| - Net investment in discontinued operations | 651,370 | |||
| - Receipt of dividend | 3,873,571 | 2,872,721 | 5,321,972 | 2,872,721 |
| Net cash flows from/(used in) investing activities | 29,249,032 | 3,289,692 | 21,288,508 | (2,169,662) |
| Cash flows from financing activities | ||||
| - Proceeds from issue of share capital | 69,529 | 69,529 | ||
| - Net movement in debt securities | 34,303,383 | (32,431,370) | 35,000,000 | (20,000,000) |
| - Share issue costs | (4,939) | |||
| Net cash flows from/(used in) financing activities | 34,372,912 | (32,436,309) | 35,069,529 | (20,000,000) |
| Increase/(decrease) in cash and cash equivalents | 184,344,005 | 147,709,390 | 71,612,479 | 145,329,129 |
| Analysed as follows: | ||||
| - Effect of exchange rate changes on | ||||
| cash and cash equivalents | (15,607,227) | 1,072,125 | (1,480,889) | 1,114,301 |
| - Net increase in cash and cash equivalents | 199,951,232 | 146,637,265 | 79,093,368 | 144,214,828 |
| Increase in cash and cash equivalents | 184,344,005 | 147,709,390 | 71,612,479 | 145,329,129 |
| Cash and cash equivalents at beginning of period | 35,550,126* | (130,391,611) | 43,676,465* | (145,334,098) |
| Cash and cash equivalents at end of period | 219.894.131 | 17,317,779 | 115,288,944 | (4.969) |
notes to the condensed interim financial statements
For the six months ended 30 June 2017
1 reporting entity
FIMBank p.l.c. ("the Bank") is a credit institution domiched in Malta with its registered address at Mercury Tower, The Exchancial and Business Centre, Elia Zammit Street, St. Juliar's, STJ3155, Malta. The condensed interim financial statements of the six months ended 30 June 2017 include the Bank and its subsidiaries (toqether referred to as the "Group" and individually as "Group Entities").
The consolidated financial statements of the Group as and for the year ended, 31 December 2016 are available upon request from the Bank's registered office and are available for viewing on its website at www.fimbank.com.
2 basis of accounting
The condensed interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, adopted by the EU. The interim financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the financial statements of FIMBank p.l.c. as at and for the year ended 31 December 2016.
The condensed interim financial statements were approved by the Board of Directors on 9 August 2017.
3 significant accounting policies
The accountinq policies applied by the Group in these condensed interim financial statements are the same in its consolidated financial statements as at and for the year ended 31 December 2016.
3.1 standards issued but not yet effective
IFRS 9 Financial Instruments
IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments, IFRS 9 includes revised guidance on the classification and measurements, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also caries forward the quidance on recognition and derecognition of financial instruments from 145 99. FRS 9 is effective for annual reporting on or after 1 January 2018, with early adoption permitted.
The actual impact of adopting IFRS 9 on the Group's consolidated financial statements in 2018 is not known and cannot be reliably estimated because it will be dependent on the financial instruments that the Group holds and economic conditions at the time as well as accounting elections and judgements that it will make in the new standard will require the Group to revise its accounting processes and internal controls related to reporting financial instruments and these changes are in process of being reviewed.
At reporting date, the Group is in the process of conducting an impact assessment based on its positions at 31 December 2016, which follows a preliminary assessment conducted on the 31 December 2015 positions. The current is being based on the IFRS9 technical elections being made as part of the implementation process as well as more updated reference data required to calculate impairments using the expected loss model.
IFRS 9 Implementation Strategy
The Group's IFRS 9 implementation process is governed by a Steering Committee whose members include representative from Finance and Risk functions. The Group is following the implementation process of Burgan Bank, a significant influence, and a subsidiary of KIPCO Group (the ultimate parent of FIMBank p.l.c.).
As part of the implementation process, reputable external advisors have been engaged to assist the Grounting interpretation of IFRS9 as well as risk-data modelling and calculations. A new suite of Trisk-related and is in process of being installed and configured to be in line with IFRS9, internal accounting elections, as well as other risk-related controls and policies.
lt is expected that the current phase related to accounting elections and data management is concluded by the end of the 3rd financial quarter, with the final modelling and implementation phase being finalised by mid-4th financial quarter.
4 use of judgements and estimates
The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of asses and liabilities, income and expenses. Actual results may differ from these estimates.
In preparing these condensed interim financial statements made by management in applying the Group's accounting policies and the key sources of estimation were the same as those applied to the financial statements as at and for the year ended 31 December 2016.
5 operating segments
The Group identified five significant reportable segments: Trade Finance, Forfaiting, Factoring, Treasury and Real Estate, which are represented by different Group entities. For each of the entities, Executive Management reports on a monthly basis.
information about operating segments
Group - June 2017 USD
| Trade Finance | Forfaiting | Factoring | Treasury | Real Estate | Other | Tota | |
|---|---|---|---|---|---|---|---|
| External revenue: | |||||||
| Interest income | 8,909,154 | 7,295,692 | 8,854,169 | 949,117 | 447,636 | 3,024 | 26,458,792 |
| Fee and commission income | 3,983,028 | 4,957,291 | 2,435,210 | 201,677 | 69,541 | 11,646,747 | |
| Trading income | (147,405) | 200,141 | (17,682,289) | (86,618) | (17,716,171) | ||
| 12,892,182 | 12,105,578 | 11,489,520 | (16,/33,172) | 649,313 | (14,053) | 20,389,368 | |
| Intersegment revenue: | |||||||
| Interest income | 2,242,375 | 681,524 | 557,880 | 3,481,779 | |||
| Fee and commission income | 4,288 | 60 | 11,992 | 54 | 16,394 | ||
| 4,288 | 2,242,435 | 693,516 | 557,934 | 3,498,173 | |||
| Reportable segment profit/(loss) | |||||||
| before income tax | 2,091,565 | 4,686,621 | 126,119 | (5,158,997) | 649,313 | (518,039) | 1,876,582 |
| Trade Finance | Forfaiting | Factoring | IT Solutions | Other | Total | |||
|---|---|---|---|---|---|---|---|---|
| External revenue: | ||||||||
| Interest income | 7,144,056 | 7,312,503 | 7,213,054 | 21,669,613 | ||||
| Fee and commission income | 3,786,552 | 4,336,876 | 1,877,643 | 154,281 | 113,987 | 10,269,339 | ||
| Trading income | 2,504,426 | (1,380,396) | 58,801 | (157) | 5,560 | 1,188,234 | ||
| 13,435,034 | 10,268,983 | 9,149,498 | 154,124 | 119,547 | 33,127,186 | |||
| Intersegment revenue: | ||||||||
| Interest income | 3,071,714 | 3,071,714 | ||||||
| Fee and commission income | 26,412 | - | 134,876 | 161,288 | ||||
| 3,071,714 | 26,412 | - | 134,876 | 3,233,002 | ||||
| Reportable segment profit/(loss) | ||||||||
| before income tax | 3,512,245 | 3,096,240 | (2,782,400) | 5,014 | (368,270) | 3,462,829 | ||
| Group - June 2017 USD |
||||||||
| Trade Finance | Forfaiting | Factoring | Treasury | Real Estate | Other | Total | ||
| Reportable segment assets | 490,139,347 | 282,673,324 | 339,252,036 | 580,436,184 | 28,254,938 | 37,420,955 | 1,758,176,784 | |
| Reportable segment liabilities | 1,014,370,915 | 90,145,235 | 114,426,900 | 341,930,117 | 1,458,853 | 1,562,332,020 | ||
| Group - December 2016 USD |
||||||||
| Trade Finance | Forfaiting | Factoring | Treasury | Other | Total | |||
| Reportable segment assets | 606,726,271 | 426,111,143 | 660,730,427 | 445,973,460 | 51,042,818 | 2,190,584,119 | ||
| Consolidated profit before income tax | 4,225,368 | 2,149,228 |
|---|---|---|
| Effect of other consolidation adjustments on segment results | 2,594,755 | (1,078,989) |
| Share of loss of equity accounted investees | (245,969) | (234,612) |
| 1,876,582 | 3,462,829 | |
| Other profit or loss | (518,039) | (368,270) |
| Total profit or loss for reportable segments | 2,394,621 | 3,831,099 |
| USD | USD | |
| 2017 | 2016 |
-
accounting classifications and fair values
The following table shows the carrying amounts and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
Group - 30 June 2017
| Trading | Designated at fair value |
Loans and receivables |
Available-for- sale |
Liabilities at amortised cost |
Total carrying amount |
|
|---|---|---|---|---|---|---|
| USD | USD | USD | USD | USD | USD | |
| Financial assets measured at fair value |
||||||
| Trading assets | 270,705,117 | 270,705,117 | ||||
| Derivative assets | 1,309,471 | 1,309,471 | ||||
| Investments available-for-sale | 312,482,395 | 312,482,395 | ||||
| Financial assets not measured at fair value Balances with the central bank |
||||||
| of malta, treasury bills and cash | 208,870,920 | 208,870,920 | ||||
| Loans and advances to banks | 329,485,027 | 329,485,027 | ||||
| Loans and advances to customers | 505,432,051 | 505,432,051 | ||||
| Financial liabilities measured at fair value Derivative liabilities |
246,985 | 246,985 | ||||
| Financial liabilities not measured at fair value |
||||||
| Amounts owed to banks | 560,966,904 | 560,966,904 | ||||
| Amounts owed to customers | 873,049,967 | 873,049,967 | ||||
| Debt securities in issue | 42,529,251 | 42,529,251 | ||||
| Subordinated liabilities | 50,000,000 | 50,000,000 |
Group - 31 December 2016
| Trading USD |
Designated at fair value USD |
Loans and receivables USD |
Available-for- sale USD |
Liabilities at amortised cost USD |
Total carrying amount USD |
|
|---|---|---|---|---|---|---|
| Financial assets measured | ||||||
| at fair value | ||||||
| Trading assets | 379,397,964 | 379,397,964 | ||||
| Derivative assets | 1,502,704 | 1,502,704 | ||||
| Financial assets designated at | ||||||
| fair value through profit or loss | 17,799,900 | 17,799,900 | ||||
| Investments available-for-sale | 327,076,529 | 327,076,529 | ||||
| Financial assets not measured at fair value |
||||||
| Balances with the central bank | ||||||
| of malta, treasury bills and cash | 33,193,245 | 33,193,245 | ||||
| Loans and advances to banks | 454,362,226 | 454,362,226 | ||||
| Loans and advances to customers | 426,612,356 | 426,612,356 | ||||
| Financial liabilities measured at fair value |
||||||
| Derivative liabilities | 8,816,410 | 8,816,410 | ||||
| Financial liabilities not measured at fair value |
||||||
| Amounts owed to banks | 528,939,251 | 528,939,251 | ||||
| Amounts owed to customers | 948,710,544 | 948,710,544 | ||||
| Debt securities in issue | 8,225,869 | 8,225,869 | ||||
| Subordinated liabilities | 50,000,000 | 50,000,000 |
| Designated at fair value |
l oans and receivables |
Available-for- sale |
Liabilities at amortised cost |
Total carrying amount |
|
|---|---|---|---|---|---|
| USD | USD | USD | USD | USD | |
| Financial assets measured at fair value |
|||||
| Derivative assets | 1,309,471 | 1,309,471 | |||
| Investments available-for-sale | 312,482,395 | 312,482,395 | |||
| Financial assets not measured at fair value |
|||||
| Balances with the central bank of malta, treasury bills and cash |
208,840,316 | 208,840,316 | |||
| Loans and advances to banks | 297,729,057 | 297,729,057 | |||
| Loans and advances to customers | 550,834,089 | 550,834,089 | |||
| Financial liabilities measured at fair value |
|||||
| Derivative liabilities | 264,429 | 264,429 | |||
| Financial liabilities not measured at fair value |
|||||
| Amounts owed to banks | 448,016,611 | 448,016,611 | |||
| Amounts owed to customers | 838,978,649 | 838,978,649 | |||
| Debt securities in issue | 35,000,000 | 35,000,000 | |||
| Subordinated liabilities | 50.000.000 | 50.000.000 |
| Designated at fair value USD |
l oans and receivables USD |
Available-for- sale USD |
Liabilities at amortised cost USD |
Total carrying amount USD |
|
|---|---|---|---|---|---|
| Financial assets measured | |||||
| at fair value | |||||
| Derivative assets | 1,502,704 | 1,502,704 | |||
| Financial assets designated | |||||
| at fair value through profit or loss | 17,799,900 | 17,799,900 | |||
| Investments available-for-sale | 327,075,827 | 327,075,827 | |||
| Financial assets not measured at fair value |
|||||
| Balances with the central bank | |||||
| of malta, treasury bills and cash | 33,165,601 | 33,165,601 | |||
| Loans and advances to banks | 438,799,241 | 438,799,241 | |||
| Loans and advances to customers | 589,579,473 | 589,579,473 | |||
| Financial liabilities measured at fair value Derivative liabilities |
8,834,092 | 8,834,092 | |||
| Financial liabilities not measured at fair value |
|||||
| Amounts owed to banks | 426,137,477 | 426,137,477 | |||
| Amounts owed to customers | 915,367,604 | 915,367,604 | |||
| Subordinated liabilities | 50,000,000 | 50,000,000 |
| Level 1 | Level 2 | Level 3 | Total | |
|---|---|---|---|---|
| USD | USD | USD | USD | |
| Trading assets | 270,705,117 | 270,705,117 | ||
| Derivative assets held for risk management | 1,309,471 | 1,309,471 | ||
| Investments available-for-sale | 146,955,109 | 159,775,927 | 5,751,359 | 312,482,395 |
| 146,955,109 | 161,085,398 | 276,456,476 | 584,496,983 | |
| Derivative liabilities held for risk management | 246,985 | 246,985 | ||
| 246,985 | - | 246,985 | ||
| Group - 31 December 2016 | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| USD | USD | USD | USD | |
| Trading assets | 379,397,964 | 379,397,964 | ||
| Derivative assets held for risk management | 1,502,704 | 1,502,704 | ||
| Financial assets designated | ||||
| at fair value through profit or loss | 17,799,900 | 17,799,900 | ||
| Investments available-for-sale | 161,841,816 | 159,658,216 | 5,576,479 | 327,076,529 |
| 161,841,816 | 161,160,920 | 402,774,343 | 725,777,097 | |
| Derivative liabilities held for risk management | 8,816,410 | 8,816,410 | ||
| 8,816,410 | - | 8,816,410 | ||
| Bank - 30 June 2017 | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| USD | USD | USD | USD | |
| Derivative assets held for risk management | 1,309,471 | 1,309,471 | ||
| Investments available-for-sale | 146,955,109 | 159,775,927 | 5,751,359 | 312,482,395 |
| 146,955,109 | 161,085,398 | 5,751,359 | 313,791,866 | |
| Derivative liabilities held for risk management | 264,429 | 264,429 | ||
| 264,429 | 264,429 | |||
| Bank - 31 December 2016 | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| USD | USD | USD | USD | |
| Derivative assets held for risk management Financial assets designated |
1,502,704 | 1,502,704 | ||
| at fair value through profit or loss | 17,799,900 | 17,799,900 | ||
| Investments available-for-sale | 161,841,816 | 159,658,216 | 5,575,795 | 327,075,827 |
| 161,841,816 | 161,160,920 | 23,375,695 | 346,378,431 | |
| Derivative liabilities held for risk management | 8,834,092 | 8,834,092 | ||
| - | 8,834,092 | - | 8,834,092 |
measurement of fair values
valuation techniques and significant unobservable inputs
The below sets out information about valuation techniques used in measuring Level 3 fair values at 30 June 2017 and 31 December 2016 as well as the significant unobservable inputs used.
trading assets
The trading assets portfolio represent Forfaiting of receivables generated from an export contract on a without recourse basis. The assets would be evidenced by a number of different debt instruments including Bills of Exchange Promissory Notes, Letters of Credit and trade or project related Syndicated and Bi-lateral Loan (Financing) Agreements.
The Group establishes fair value of its trading a valuation technique based on the discounted expected future principal and interest cash flows. The discount rate is an estimate based on current expected credit margin spreads and interest rates at the reporting date. Inputs to valuation technique reasonably represent market expectation and measures of risk-return factors in the financial instrument.
The Group uses the LIBOR yield curve as of each reporting date plus an adequate credit margin spread to discount the trading assets held. At 30 June 2017, the interest rates used range between 0.49% and 11.75% (2016: between 0.54% and 9.81%).
The effect of an estimated general increase of one percentage point in interest rate on trading assets at 30 June 2017 would reduce the Group's profit before tax by approximately USD117,527 (2016: USD388,913).
derivative assets and liabilities
Derivative assets and liabilities comprise Forward contracts and interest-rate future contracts, classified as held for risk management. The forward contracts are over-the-counter derivatives whilst the interest-rate futures are traded on appropriate exchanges.
The Group establishes the fair value of:
- forward foreign-exchange contracts by reference to forward exchange rates published by financial information agencies on each i) valuation date;
- ii) interest rate futures by reference to independent valuations provided by portfolio custodians.
No significant unobservable inputs are used in valuing the derivative assets and liabilities.
financial assets designated at fair value through profit or loss
The Financial assets designated at fair value through profit or loss ("FITPL") consisted of credit linked notes, whereby the Group was funding the risk of default with respect to specified borrowers.
The FVTPL portfolio was fair valued using a model based on the counterparties by reference to specialised dealer price quotations. Periodical changes in dealer quoted to changes in quoted prices for instruments with similar characteristics issued by the borrowers.
All credit linked notes matured or were sold during the current period.
investments available-for-sale
Available-for-sale investments mainly represent holded of a collective investment scheme whose underlying investments would be classified as either Level 2 or Level 3 assets.
The fair value is measured by the Group based on periodical net-asset-valuations prepared by the scheme's independent administrator. The subfund's assets are marked at fair market value. Assets are marked at observable traded prices where there is no observable price, the assets are marked in accordance with best market practise. This may involve the use of models and assumptions used in these models may be subjective and could include a number of highly judgemental assertions.
For Level 2 assets, the effect of a ten percentage in the net asset value of the sub-fund at 30 June 2017 would decrease the Bank and Group equity by approximately USD15,977,593 (31 December 2016: USD15,965,892).
For Level 3 assets, the effect of a ten percentage in the net asset value of the sub-fund at 30 June 2017 would decrease the Bank and Group equity by approximately USD575,136 (31 December 2016: USD557,580).
reconciliation of Level 3 fair values
The following table shows a reconciliation from the beginning balances for fair value measurements in Level 3 of the fair value hierarchy:
| Group | Financial assets designated at fair |
|||
|---|---|---|---|---|
| value through profit or | Investments | |||
| Trading assets | OSS | available-for-sale | Total | |
| USD | USD | USD | USD | |
| Balance at 1 January 2016 | 355,063,998 | 17,741,000 | 5,665,354 | 378,470,352 |
| Total gains and losses in trading income Total gains and losses in other comprehensive |
(1,374,359) | (128,500) | (1,502,859) | |
| income | 319,039 | 319,039 | ||
| Purchases | 322,278,414 | 322,278,414 | ||
| Settlements | (257,139,622) | (257,139,622) | ||
| Balance at 30 June 2016 | 418,828,431 | 17,612,500 | 5,984,393 | 442,425,324 |
| Balance at 1 January 2017 | 379,397,964 | 17,799,900 | 5,575,795 | 402,773,659 |
| Total losses in trading income | 9,904,798 | 70,100 | 9,974,898 | |
| Total gains and losses in other comprehensive | ||||
| income | 175,564 | 175,564 | ||
| Purchases | 236,578,776 | 236,578,776 | ||
| Settlements | (355,176,421) | (17,870,000) | (373,046,421) | |
| Balance at 30 June 2017 | 270,705,117 | 5,751,359 | 276,456,476 |
| Bank | Financial assets designated at fair value through profit or loss USD |
Investments available-for-sale USD |
Total USD |
|---|---|---|---|
| Balance at 1 January 2016 Total gains and losses in trading income Total gains and losses in other comprehensive income |
17,741,000 (128,500) |
5,665,354 319,039 |
23,406,354 (128,500) 319,039 |
| Balance at 30 June 2016 | 17,612,500 | 5,984,393 | 23,596,893 |
| Balance at 1 January 2017 Total gains and losses in trading income Total gains and losses in other comprehensive Income Settlements |
17,799,900 70,100 (17,870,000) |
5,575,795 175,564 |
23,375,695 70,100 175,564 (17,870,000) |
| Balance at 30 June 2017 | - | 5,751,359 | 5,751,359 |
sensitivity analysis of Level 3 fair values
For the fair values of Level 3 financial instruments, reasonably possible changes at 30 June 2017 and 31 December 2016 to one of the significant unobservable inputs, holding other inputs constant, haluation techniques and significant unobservable inputs" above.
7 net loss from other financial instruments carried at fair value
| Group | Bank | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| USD | USD | USD | USD | |
| Net income/(loss) on derivatives held for risk management purposes | 15,662,747 | (2,277,353) | 15,697,784 | (2,196,414) |
| lnvestment securities designated at fair value through profit or loss | 43,292 | 2,068,333 | 43,292 | 2,068,333 |
| 15,706,039 | (209,020) | 15,741,076 | (128,081) |
8 dividend income
| Group | Bank | ||||
|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | ||
| USD | USD | USD | USD | ||
| Dividend from an available-for-sale investment | 3,749,265 | 2,872,721 | 3,749,265 | 2,872,721 | |
| Dividend from subsidiary | 1,448,401 | ||||
| 3,749,265 | 2,872,721 | 5,197,666 | 2,872,721 |
9 taxation
Taxation is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year multiplied by the pre-tax income of the interim reporting period.
For the six months ended 30 June 2017, the Group is estimation credit of USD 101,477 (30 June 2016: charge of USD 892,532). The change in effective tax rate when compared to the Malta corporate income taxrate of 35% was caused mainly by different rates of tax for non-Malta based entities (in the United Kingdom, United Arab Emirates, India, Russia, Chile and Brazil),
10 discontinued operations
During the year ended 31 December 2016, the Group placed FactorRus LLC into liquidation which resulted in the Group losing control over the Subsidiary. Consequently, the Group discontinued the consolidation of the financial position and performance of this subsidiary. At 30 June 2016 the results of the entity were presented in accordance with IFRS 5 "Non-current assets held for sale and discontinued operations".
11 derivative assets and liabilities
| Group | Bank | |||
|---|---|---|---|---|
| 30 Jun 2017 | 31 Dec 2016 | 30 Jun 2017 | 31 Dec 2016 | |
| USD | USD | USD | USD | |
| Derivative assets | ||||
| Held for risk management | ||||
| – foreign exchange | 1,309,471 | 1,502,704 | 1,309,471 | 1,502,704 |
| 1,309,471 | 1,502,704 | 1,309,471 | 1,502,704 | |
| Derivative liabilities | ||||
| Held for risk management | ||||
| – interest rate | 17,682 | |||
| – foreign exchange | 246,985 | 8,816,410 | 264,429 | 8,816,410 |
| 246,985 | 8,816,410 | 264,429 | 8,834,092 |
12 investments in subsidiaries
impairment assessment
At each reporting date the Bank carries out an assessment to conclude as to whether that the investment in subsidiaries (at cost) in its separate financial statements and acquisition of India Factoring and Eqypt Factors reported in the consolidated financial statements, may be further impaired. At the reporting date the reasonableness of the impairment in subsidiaries as disclosed in the audited financial statements for the year ended 31 December 2016. This was carried out with reference to the underlying performance of each subsidiary during the period under review, with reference to the 31 December 2016 assessment. The recoverable amounts for each investment have been calculated based on their value in use, determined by discounting the future expected to be generated from the continuing use of each entity. No indications for further impairments were no impairment movements were recognised during the period ended 30 June 2017 (31 December 2016: USD5,037,875).
India Factoring and Egypt Factors
As disclosed in the Financial Statements for the year ent has approved a set of budgets for India Factoring and Egypt Factors based on a strategy to grow the business in a changing market landscape, whilst ensuring and control environment. These budgets formed the recoverable amount is arived at. In this respect, the recoverable amount for each subsidiary exceeds the carrying amount of the goodwill recognised on their initial accounting as a business combination. Whilst it is inherent that actual results may differ from those budgeted, and such variations may be significant, that the business plans can be supported, such that it will enable the Bank to recover the investments at least at the amount stated.
The key assumptions described above may change as economic, political and market conditions change. Whilst the recoverable amount is higher than the carrying amount, any significant adverse movement in a key assumption would lead to an impairment of the investments and the related goodwill.
13 debt securities in issue
| Group | Bank | |||
|---|---|---|---|---|
| 30 Jun 2017 | 31 Dec 2016 | 30 Jun 2017 | 31 Dec 2016 | |
| USD | USD | USD | USD | |
| Unsecured promissory notes | 42,529,251 | 8,225,869 | 35,000,000 | |
| 42,529,251 | 8,225,869 | 35,000,000 |
At 30 June 2017, promissory notes in issue have a tenor of up to one year. The Group's effective interest rateranges between 1% and 3.23% (31 December 2016: 1.25% and 2.90%), and the Bank's effective interest rate ranges between 1.74% and 1.83% (31 December 2016: nil).
14 subordinated liabilities
| Group | Bank | ||||
|---|---|---|---|---|---|
| 30 Jun 2017 | 31 Dec 2016 | 30 Jun 2017 | 31 Dec 2016 | ||
| USD | USD | USD | USD | ||
| Subordinated loan | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | |
| 50,000,000 | 50,000,000 |
The subordinated loan was granted by a Bank holding in the Group. The loan has a floating rate of interest priced on an arm's length basis and has a contractual maturity of five years. In the event of the Banks liquidation or winding up this loan will rank after the Bank's unsubordinated, secured areditors. This loan qualifies as Tier 2 capital under the provisions of the Capital Requirements Regulation.
15 capital and reserves
As disclosed in the Directors' Report under "Annual General Meeting 2017", during the Annual General Meeting held on 11 May 2017 the Shareholders approved a 1:80 Bonus Issue of Share Premium account. This resulted in this resulted in the alletment of 3,882,463 ordinary shares of USD0.50 each with the corresponding increase in Share Capital and decrease in Share Premium.
16 contingent liabilities
| Group | Bank | |||
|---|---|---|---|---|
| 30 Jun 2017 | 31 Dec 2016 | 30 Jun 2017 | 31 Dec 2016 | |
| USD | USD | USD | USD | |
| Guarantee obligations incurred on behalf of third parties | 9,508,109 | 6,507,529 | 22,071,737 | 19,782,148 |
| 9,508,109 | 6,507,529 | 22,071,737 | 19,782,148 |
17 commitments
| Group | Bank | |||
|---|---|---|---|---|
| 30 Jun 2017 | 31 Dec 2016 | 30 Jun 2017 | 31 Dec 2016 | |
| USD | USD | USD | USD | |
| Commitments to purchase assets: | ||||
| Undrawn credit facilities | 124,357,527 | 74,532,067 | 100,542,095 | 53,964,313 |
| Confirmed letters of credit | 35,551,650 | 29,125,426 | 56,451,277 | 45,893,638 |
| Documentary credits | 9,462,194 | 15,268,323 | 9,462,194 | 15,268,323 |
| Risk participations | 15,972,000 | 5,000,000 | 15,972,000 | 5,000,000 |
| Factoring commitments | 264,944 | 156,142 | 264,944 | 156,142 |
| Commitment to purchase assets | 56,212,704 | 61,458,936 | ||
| Credit default swaps | 27,117,426 | 2,500,000 | ||
| Commitments to sell assets: | ||||
| Commitment to sell assets | (12,404,134) | (2,010,000) | ||
| 256,534,311 | 186,030,894 | 182,692,510 | 120,282,416 |
statement pursuant to listing rule 5.75.3
We hereby confirm that to the best of our knowledge:
- · as well as of the financial performance and cash flows for the period then ended, fully in compliance with IAS 34, Interim Financial Reporting, adopted by the EU; and
- · the Interim Directors' Report includes a fair review of the information required in terms of Listing Rules 5.75.2 and 5.81 to 5.84.
Murali Subramanian Chief Executive Officer
Ronald Mizzi Chief Financial Officer
independent auditors' report on review of condensed interim financial statements
To the Board of Directors of FIMBank p.l.c.
introduction
We have reviewed the accompanying condensed interim financial statements of FIMBank") and of the Group of which the Bank is the parent ("the Condensed Interim Financial Statements") set out on pages 7 to 32 which compised statements of financial position as at 30 June 2017, and the related condensed statements of comprehensive income, condensed statements of changes in equity and condensed cash flow six-months period then ended. Management is responsible for the preparation and presentation of the condensed in accordance with IAS 34, Interin Financial Reporting, adopted by the EU. Our responsibility is to express a conclusion on these condensed interim financial statements based on our review.
This report is made solely to the Board of Directors in accordance with the terms of our engagement and is released for publication in compliance with the requirements of Listing Rule 5.75.4 issued by the Listing Authority. Our review has been undertaken so that we might state to the Board of Directors those matters we are required to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Board of Directors for this report, or for the conclusions we have expressed.
scope of review
We conducted our review in accordance with International Standard on Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial statements consists of marily of persons responsible for financial and accounting matters, and applying analytical and other review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
conclusion
Based on our review, nothing has come to our attention that the accompanying condensed interim financial statements for the six month period ended 30 June 2017 all material respects, in accordance with IAS 34, Interim Financial Reporting, adopted by the EU.
emphasis of matter
We draw attention to Note 12 to the condensed interim financial statements. At 31 December 2016, the Bank carried out an impairment assessment by calculating the recoverable amount of its subsidiary undertakings (and the related goodwill arising on the acquisition of India Factoring and Finance Solutions Private Limited and The Egyptian Company for Factoring S.A.E. reports consolidated financial statements) to determine whether those amounts are at least equal to the carrying amounts at which such assets are stated. One of the principal assumptions underlying the models used to calculate the recoverable amount relating to the equity held in India Factoring and Finance Solutions Private Limited and The Egyptian Company for Factoring S.A.E. is the attainment of the approved set of budgets used as a basis to arive at the recoverable amounts of the respective in these subsidiaries and the goodwill recognised on their initial accounting as a business combination. The financial statements explain that actual results may differ from those projected (used to determine recoverable amounts) and that such variations may be material. Our opinion is not modified in respect of this matter.
Noel Mizzi (Partner) for and on behalf of
9 August 2017
KPMG Registered Auditors Portico Building
Marina Street Pieta' PTA 9044 Malta