‘Progress was overshadowed by impairment of legacy positions’ – FIMBank CEO

FIMBank Group CEO Adrian Alejandro Gostuski has stated that the group’s “notable improvement” during 2022 was “overshadowed” by the impairment of legacy positions and significant trading losses.

He was speaking following the publication of the group’s 2022 Annual Report, which highlighted how despite an improvement in its financial performance during the year, it still managed to register $24.7 million (€23 million) in pre-tax losses. Operating income from its non-trading portfolio rose by 18.7 per cent from 2021’s figures to $45.8 million (€42.6 million), while operating expenses went down from $40.4 million (€37.6 million) in 2021 to $37.8 million (€35.2 million) to 2022.

However, its net trading results took a turn for the worse in 2022, with the group registering a $6.9 million (€6.4 million) loss, in sharp contrast to the previous year’s $2.5 million (€2.3 million) profit. Additionally, FIMBank Group also suffered from a significant increase of $23.9 million (€22.2 million) in its net impairment losses, with this amounting to $25.8 million (€24 million).

The group stated that since “none of the reserves are available for distribution”, the Board of Directors will not be recommending the payment of a dividend during its next Annual General Meeting.

Commenting on the results, Mr Gostuski said that the group is “disappointed” that the progress made during the year was blighted by the impairment of legacy positions and underperformance in its trading portfolio, particularly as a result of macroeconomic challenges, including the war in Ukraine and rising interest rates.

“With regards to specific legacy relationships, the group absorbed the impact of the latest developments in the recovery process. In respect to our investments in subsidiaries in Egypt and India, we recognised the impact from a lower valuation due to a combination of rising interest rates and uncertainties regarding their growth potential in the future,” he explained.

He stated that when it comes to trading losses, the default of two forfaiting assets in the portfolio of FIMBank Group’s subsidiary London Forfaiting Company had an impact on the results, “as the recovery value for these assets had to be adjusted downwards in light of the prevailing uncertainty”.

With regards to risk management, he said that the group’s “efforts have paid off”, and for the third consecutive year, its “prudent risk appetite has allowed it to reap tangible benefits”. This comes after FIMBank Group did not recognise any new material non-performing loans in 2022. “This is a significant achievement for us, as it reflects our commitment to providing sustainable financial solutions that meet the needs of our customers while minimising our risk exposure. It is a testament to our ongoing efforts to identify and mitigate risks, as well as our dedication to maintaining a healthy loan portfolio,” he added.

“The organisation recognises that the banking industry is dynamic and constantly evolving. We are therefore committed to continuously refining our strategies to ensure the group stays ahead of emerging trends and potential risks,” he continued.

Mr Gostuski explained that he believes that “balancing risk and reward is crucial” for the bank’s financial health, and the focus going forward will remain to “carefully manage” its assets and liabilities in order to “optimise” its capital position and support ongoing business operations.

He added that during 2022, FIMBank Group also initiated a transformation exercise to “revitalise” its strategy and “streamline operations” in response to new economic realities, as well as developments in the regulatory and compliance spheres. Mr Gostuski added that the group has also worked to improve its efficiency in its core business areas, including the closing of its branch in Athens, Greece, and the liquidation of FIM Holdings (Chile) S.p.A.

Through these measures, the group optimised its structure, and was able to create a “more agile and flexible business model” and be “better positioned to respond to changing market conditions and customer needs”. He said that this “ongoing effort” to optimise its operations will continue to be a “key focus” for the group as it strives to maintain its competitive edge.

As a result, FIMBank Group has positioned itself for “continued success in a rapidly evolving business landscape,” he pointed out, before adding that it seeks to remain “vigilant and proactive” in monitoring market conditions, regulatory requirements, and evolving customer needs by being able to “adapt effectively”.

Touching on the group’s investment in technology during the year, Mr Gostuski remarked that digital and technology are “critical enablers” for modern banking, and the group has “fully embraced” this through “continuous investment over the years”. He noted that in 2022, it “successfully achieved a number of milestones” in its “digital transformation journey”, including an upgrade to its digital banking platform, FIMBank Direct, which he confirmed will be completed in 2023.

He added that the group will continue to navigate through these uncertain times of high inflation in a “cautious” manner, and in doing so, will execute its strategy while searching for business opportunities that match its “risk appetite, with the principle of risk-adjusted returns”. “This approach will ensure that we experience moderate growth in diversified product offerings, in business lines that provide superior returns,” he continued.

Mr Gostuski said  that FIMBank Group’s “primary mission” is still to remain “customer centric” and to provide a “superior customer experience”. He concluded that through the “dedication” of the group’s employees, him and the rest of the management feel “confident” that it will “continue to navigate these challenge times and emerge stronger and better than ever before”.

With roots in 1994, FIMBank Group is a provider of trade finance, factoring and forfaiting solutions, with a global presence in various financial and trading centres. Mr Gostuski was first appointed acting CEO in April 2020, before he was then confirmed as CEO the following year, replacing Murali Subramanian, who had served in the position for five years.