Contents
Chairman’s statement to the shareholders
1
FIMBank group performance 2022
2
Directors’ report
6
Statement of compliance with the principles of good corporate governance
14
Remuneration report
25
Financial statements:
Statements of financial position
30
Statements of profit or loss
32
Statements of other comprehensive income
33
Statements of changes in equity
34
Statements of cash flows
38
Notes to the financial statements
40
Statement by the directors pursuant to Capital Markets Rule 5.68
158
Independent auditors’ report
159
Schedules to the annual report
Statements of profit or loss – 5 year summary
172
Statements of financial position – 5 year summary
173
Cash flow statements – 5 year summary
174
Accounting ratios – 5 year summary
175
Directors and executive management
176
FIMBank Group Annual Report & Financial Statements 2022
1
Chairman’s statement to the shareholders
Dear Shareholder,
The year 2022 was marked by rising inflation, tighter monetary policy, financial stress, and rising geopolitical tensions, which led to exceptional
challenges for our customers, associates, and communities. Even as we speak, global economic recovery continues to face significant headwinds,
amid lingering supply-chain challenges, persistent labour market challenges, and rising inflationary pressures. In the midst of this turbulence, the
FIMBank Group maintained a commendable level of prudence, by adhering to a disciplined approach towards risk management and implementing
robust monitoring and control measures. This approach resulted in no new material non-performing loans being registered for the financial period
under review. This resulted in a notable improvement in performance but was regretfully overshadowed by impairment of legacy positions and the
underperformance of the trading portfolio, which contributed to a post-tax loss of USD26.7 million, compared to a loss of USD3.6 million in 2021.
As Chairman, it is always difficult to address the challenges faced by the Group, especially because I am well aware of the constant, professional and
diligent effort which Management and all our people consistently dedicate towards ensuring the best possible outcomes for the Group. However,
it is also critical to ensure transparency and acknowledge the reality of the situation, whilst explaining the actions being taken to improve the Group’s
financial position.
This year’s performance was impacted both by the trading results and impairments of legacy positions. The trading results specifically relate to the
performance of the forfaiting trading portfolio, while the impairments relate to pre-2020 legacy balance sheet positions that include non-performing
loans, deferred tax assets, and goodwill on subsidiaries. While these results undeniably fall short of our expectations, I firmly believe that as in the
past, our response to these challenges will once again define us as a Group. I am confident – and I know that Management is determined to ensure
- that this temporary setback will drive us to regroup and further intensify our efforts to overcome the current difficulties and deliver the results
that our Shareholders expect and deserve. To this end, we are committed to the process of refining our business model to ensure it remains agile
and responsive to the ever-changing market landscape, including the complex global challenges we are currently facing. We recognise that this is a
continuous process that requires patience and perseverance, and we will be taking all the necessary steps to strengthen our operations and enable
the long-term success for the Group. This process will also augment our potential to capitalise on opportunities for sustainable growth and
profitability, even amidst the most challenging of circumstances.
When analysing the performance of the year in review, it is also important to highlight the significant transformation that is underway within our
Group and which will have a significant impact on our future performance. During 2022, the Bank stepped up this process with the closure of its
Hellenic Branch in Greece and the liquidation of FIM Holdings (Chile) S.p.A. These developments have already contributed towards lowering our
expense base and further streamlining the Group. The significant progress registered in managing operating expenses, as evidenced in the end-of-
year financial statements, is a testament to our commitment to enhancing efficiency, optimising our resources, and achieving sustainable
profitability.
My unwavering confidence in the future of the Group is rooted to the fact that our business operations are founded upon customer centricity. This
allows us to deliver exceptional services that meet the specific needs of our clients, working tirelessly to foster meaningful relationships with them
and treating them as our partners. We go beyond the traditional transactional approach and work together towards mutually beneficial outcomes.
Our customised products and services are designed to help the businesses of our clients thrive, and we take pride in delivering exceptional value.
As we look towards the future, we remain steadfast in enhancing our presence in markets where we already operate. In Malta, our home market,
we will continue to focus on serving local corporates, building strong partnerships, and providing tailored solutions that meet their specific needs.
By doing so, we can continue to provide a dependable banking experience to Maltese businesses that goes beyond financial solutions. FIMBank's
progress towards the achievement of its strategic goals is underpinned by a pool of highly skilled human capital across various specialised disciplines,
ongoing investment in technology, a reduced level of legacy balance sheet items, and a strong shareholder base. These strategic pillars place the
Bank in a favourable position to achieve its goals in a steady and sustainable manner.
At FIMBank, we place great emphasis on maintaining strong investor relations, and over the course of the year, we have taken steps to foster
engagement with all our stakeholders. On behalf of the Board, I would like to express our deep appreciation for the unwavering trust and loyalty
demonstrated by our Shareholders. I take this opportunity to thank our majority shareholder, the KIPCO Group, for their solid and continued backing
during these challenging times. Their support has been instrumental towards allowing us to navigate the rapidly changing landscape, and an
important source of encouragement in our drive to achieve our strategic objectives.
In closing, I wish to express my gratitude and appreciation to the Directors, Management, and employees of the FIMBank Group. Their commitment
and dedication have been critical when facing these challenging times. We remain grateful for their invaluable contribution, their tireless efforts in
upholding our corporate values and executing our strategic objectives.
Signed by John C. Grech (Chairman) on 22 March 2023
FIMBank Group Annual Report & Financial Statements 2022
2
FIMBank Group performance 2022
CEO’s message
FIMBank’s financial results for the year 2022 demonstrated an improving trend in its underlying performance, as evidenced by the Group's ‘income
before net impairment and net trading results’. This showed a considerable growth, increasing from a negative USD1.9million in 2021 to USD8.0
million in 2022. The improved performance in net interest, net fee and dividend income, as well as in operating expenses, were however
overshadowed by the impact from impairment of legacy positions and from trading results.
Regrettably, the effect from impairment of legacy positions, which are related to larger balance sheet positions that date back to pre-pandemic
(2020), together with elevated trading losses, significantly impacted our bottom line in this year's financial results. 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.
In respect to trading losses, the default of two forfaiting assets in the portfolio of our subsidiary, London Forfaiting Company, impacted to the
resulting bottom line, as the recovery value for these assets had to be adjusted downwards in light of the prevailing uncertainty. The Group's net
trading results were also affected by lower trading volumes, which were primarily a consequence of the current market conditions.
On a positive note, for the third consecutive year, the Group's prudent risk appetite has allowed it to reap tangible benefits, with no new material
non-performing loans registered for the period. The Group’s responsible lending practices and effective risk management strategies have played a
critical role in this regard. Effective risk management strategies have enabled the Group to identify potential risks and take measures to mitigate
them proactively through the adoption of responsible lending practices, thus ensuring that only creditworthy borrowers receive loans, reducing the
likelihood of defaults. Containing non-performing loans is crucial for sustaining a healthy banking business. During the year, the Group has made
noteworthy progress in recovering legacy non-performing exposures. Resolution of non-performing loans is a complex task that requires a
multidisciplinary approach and we have a dedicated team of specialists working tirelessly with the mandate to purge the balance sheet of legacy
non-performing loans.
The organisation recognises that the banking industry is dynamic and constantly evolving. We are therefore committed to continuously refine our
strategies to ensure that the Group stays ahead of emerging trends and potential risks.
Overview of financial results
While we are pleased to report a notable improvement in our performance in 2022, we are disappointed to acknowledge that this progress was
overshadowed by the impairment of legacy positions and underperformance in our trading portfolio. As a result, the FIMBank Group reported a
post-tax loss of USD26.7 million for the financial year ended 31 December 2022, compared to a post-tax loss of USD3.6 million in 2021.
The Group's total consolidated assets stood at USD1.69 billion, a decrease of 6%, or USD101 million, when compared to the previous year. Despite
this minor rebalancing, we are confident that our ongoing focus on a risk reward model, steadily managing our assets size and capital positions, will
enable us to continue operating effectively and deliver value for our stakeholders.
At FIMBank, we place great importance on maintaining a strong risk management framework and prudent risk appetite. We are proud to report
that our efforts have paid off, as we 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. By not registering
any new non-performing loans, we have been able to focus on other ongoing initiatives, including expanding our lending products. This achievement
also demonstrates our ability to adapt to changing market conditions and our commitment to deliver long-term value to our stakeholders.
In addition, we reviewed the level of gross non-performing exposures and identified several fully provided exposures with remote recovery prospects
which were written off. This led to an improvement of our asset quality ratios, allowing our management team to concentrate on expanding our
performing portfolio. We will continue to monitor the quality of our assets and take proactive measures to mitigate potential risks.
I believe that balancing risk and reward is crucial for the Bank’s financial health. We manage risks associated with lending, whilst also earning a
suitable return on investment. This ensures sustainable growth and success for the Bank. We do this by focusing on prudent risk management and
sustainable growth, in order to deliver value to our stakeholders. Our focus going forward will remain to carefully manage our assets and liabilities,
to optimise our capital position and support our ongoing business operations.
FIMBank Group Annual Report & Financial Statements 2022
3
During the period under review, the Group initiated a transformation exercise to revitalise our strategy and streamline operations in response to
the new economic realities, as well as developments in the regulatory and compliance spheres. As part of our strong compliance-focused policy, we
exited various business activities, jurisdictions, and customer groups. The Group also pursued a strategy of optimising our structure, with the aim of
streamlining our operations and reducing expenses. We worked to improve the efficiency of our processes and organisation, allowing us to focus
on our core business areas. During 2022, we closed our Hellenic branch in Athens and saw the liquidation of FIM Holdings (Chile) S.p.A. By optimising
our structure, we were able to create a more agile and flexible business model, be better positioned to respond to changing market conditions and
customer needs. This ongoing effort to optimise our operations will continue to be a key focus for the Group, as we strive to maintain our competitive
edge.
Overall, these actions have positioned us for continued success in a rapidly evolving business landscape. We are committed to continue exploring
opportunities to improve our operations and deliver sustainable financial solutions to our valued customers. By remaining vigilant and proactive in
monitoring market conditions, regulatory requirements, and evolving customer needs, we will be able to adapt effectively, and succeed in a rapidly
changing business environment.
Despite the challenging market conditions in 2022, we are pleased to report that the FIMBank Group's capital position and liquidity remained strong.
Our Total Capital Ratio (TCR) was of 17.8%, which is well above the minimum TCR requirement of 16%. Recently, the results of the Supervisory
Review and Evaluation Process (SREP) from the Malta Financial Services Authority resulted in a decrease in our minimum TCR requirement from
17.5% to 16%. We appreciate the confidence shown by the Malta Financial Services Authority and are proud of our strong capital position, which
demonstrates our commitment to maintaining a solid financial foundation that can withstand market fluctuations.
Our Liquidity Coverage Ratio (LCR) was managed well above the regulatory requirements. An average LCR of 198% reflects our consistently strong
shorter term liquidity position. Similarly, our Net Stable Funding Ratio (NSFR) averaging 128% in 2022 was well above our regulatory requirements
and demonstrated solid liquidity from a longer-term perspective. The level of liquidity balances maintained, was in line with the Group’s prudent
banking practices defined in our carefully crafted Risk Appetite Statement.
Business unit performance
London Forfaiting Company Ltd (“LFC”)
Founded in 1984, LFC has a proven track record of providing efficient custom finance solutions to importers, exporters, and financial institutions.
The company is dedicated to partnering with clients in key markets to offer forfaiting services and trade finance solutions, with an extensive global
network of offices providing unmatched breadth of nation coverage. During the year in review, the trading results of LFC's portfolio were affected
by a downward fair valuation of USD7.3 million mainly due to two overdue assets. Some level of volatility is typical for LFC's trading business, but
the impact in 2022 was higher than in previous years. Nonetheless, LFC generated sufficient profits from its normal business activities to fully absorb
the negative trading impact, and record a profit after tax of USD0.7 million. It is worth noting that LFC has maintained its trademark ability to be
dynamic and adaptable, enabling it to upsize or downsize its portfolio in response to current market opportunities and group strategies. The fact
that LFC has been able to generate a profit each year since being acquired by FIMBank, even after absorbing any negative trading impact,
underscores the inherent and resilient consistency of its business model.
India Factoring and Finance Solutions Private Ltd (“India Factoring”)
India Factoring retained its leadership position in the provision of factoring services in India for the fifth consecutive year. The company continues
to support small and medium enterprises with tailor-made working capital solutions. Clients benefit from access to immediate liquidity, to smooth
out cash requirements, improve financial planning, and more importantly, optimise their financials. In 2022, India Factoring maintained its portfolio
at a similar level to that of the previous year. Despite outperforming in terms of operational profit, the subsidiary experienced an increase in
provisions which impacted the positive performance. The increase in provisions was on account of one legacy domestic relationship. The company’s
performance of its export book, has been strong and its current portfolio status remains impeccable. During the year in review, India Factoring
sustained a loss of USD0.7 million, compared to a profit of USD1.9 million registered in 2021.
The Egyptian Company for Factoring S.A.E. (“Egypt Factors”)
Egypt Factors experienced a decline in its factoring portfolio during the first six months of 2022, however rebounded with steady growth during the
second half of the year. The subsidiary returned a profit of USD0.4 million, a level which is similar to the previous year. Egypt Factors was the first
licensed Egyptian company specialising in factoring services, it is considered a pioneer in the financial services sector in Egypt and maintained its
leading market position measured by the market share. The subsidiary was awarded the ‘Leaders in Innovation and Development 2022’ by Aalam
EL Mal newspaper, one of the principal business journalism media organisations in Egypt.
FIMBank Group Annual Report & Financial Statements 2022
4
Investment in technology
Digital and technology are critical enablers for modern banking, and FIMBank has fully embraced this paradigm through continuous investment over
the years. During 2022, we successfully achieved a number of milestones on our digital transformation journey. One of our main priorities during
the year was the upgrade of our digital banking platform, FIMBank Direct, which will be completed in 2023. Our focus is on enhancing our customer’s
digital journey and expanding the platform's functional capabilities. This will enable our customers to securely manage their banking requirements
in a streamlined manner. We are also well on the way to replace our Group factoring operating platforms, in anticipation of market driven changes
which are due in the payments industry.
Malta Corporate Finance
FIMBank recently launched its Corporate Finance strategy to proactively engage with Malta's corporate customers, increase its presence in the local
market, and establish stronger roots through a selective approach. The Bank has expanded its range of corporate lending products to support this
forward-looking strategy and create tailored financial solutions for commercial customers. FIMBank is well-equipped to offer working capital finance
solutions, including overdrafts, guarantee facilities, revolving loans, and project financing, as well as loans for capital expenditures.
The Bank's goal is to build and maintain valued relationships with local customers by understanding their business models and prospects. FIMBank
provides tailored financing packages that align with the customers' growth strategies, while ensuring that the Bank always acts in the clients' best
interests and fosters long-lasting relationships.
FIMBank is sensitive to its customers' business needs and is agile in its approach, helping clients reach their desired prospects. This contributes to
the Bank's strategy of increasing profitability and asset class diversification, while expanding its role in supporting the community through corporate
social responsibility initiatives.
Corporate Social Responsibility
At FIMBank, we are committed to making a positive impact on our community. During this financial period, we donated funds in support of various
philanthropic organisations and initiatives.
One of these was Children's Dreams, which fulfils the Christmas wishes of children identified by the Foundation for Social Welfare Services. These
children come from challenging financial and social backgrounds, and our support has helped bring them joy during the holiday season. We also
supported the ‘Naħseb Fik’ project, which provides assistance to elderly people who come from challenging financial and social backgrounds. In
October, we also showed our support for Breast Cancer Awareness month with a donation to Europa Donna Malta, an organisation that raises
awareness about breast cancer and provides support to those affected by it. In November, we supported the ‘Movember’ annual event, which raises
awareness and funds for men suffering from prostate and testicular cancer.
In 2022, FIMBank provided further support to the Research Trust of the University of Malta and the University of Malta, as part of an ongoing
research study revolving around the findings and remains resulting from the excavation of deposits, retrieval of faunal material and extraction of
speleothems. This research requires the specialised research and input of foreign scientists. The project is anticipated to produce a series of major
scientific peer-reviewed papers, each of which will expand the existing knowledge on the subject. The project is being undertaken together with the
Superintendence of Cultural Heritage.
At FIMBank, we believe in giving something back to our community, particularly by supporting philanthropic organisations and initiatives. We will
continue to explore new ways to make a positive impact and support those in need.
FIMBank Group Annual Report & Financial Statements 2022
5
Environmental, Social and Corporate Governance principles (ESG)
The FIMBank Group recognises the increasing significance of Environmental, Social, and Governance (“ESG”) standards and our role in promoting
sustainable practices. As a business, we have a direct influence on the health of people in many countries, through our role as an employer, the
products and services we offer, as well as our external influence on the environment and the communities in which we operate.
At FIMBank, we are committed to integrating ESG into our business strategy to effectively promote sustainability in the investment decision-making
process. This includes identifying and mitigating ESG-related risks, enhancing our social impact, and reducing our environmental footprint. We
believe that by promoting sustainable practices, we can help create a more resilient future for all stakeholders, including our customers,
shareholders, employees, and the wider community. As we continue to integrate ESG into our business operations, we will strive to make a positive
impact and fulfil our role as a responsible corporate citizen.
To ensure that we are fulfilling our responsibility to the community, we have engaged external consultants to assist us in implementing an ESG
framework within the organisation. This framework will enable us to support the European Union's ESG objectives and manage the risks posed by
environmental change to the Group, our customers, and society as a whole.
Concluding remarks
As we navigate through uncertain times marked by high inflation and geopolitical uncertainty, FIMBank remains grounded and cautious in its
projections. We will continue to execute our strategy while searching for business opportunities that match our 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.
The Group's balance sheet remains resilient, with lower legacy exposures and improved and sustainable revenue-generation capabilities. Over the
past years, we have learned that we can change and adapt to overcome unprecedented situations. Our goal is to integrate this commitment within
our customer centricity mindset and transform it into a prudently designed ecosystem that guarantees the realisation of mutual value.
Our primary mission is to remain customer centric. This will continue to underline our continuous Group-wide efforts to provide a superior customer
experience. We recognise that finding the right balance between risk and reward is crucial for banks to remain financially healthy, and we remain
committed to ensuring that we do so while maintaining our focus on our customers. With the dedication of our employees, we are confident that
we will continue to navigate these challenging times and emerge stronger and better than ever before.
Finally, I would like to take this opportunity to express my sincere thanks and gratitude to our Board of Directors for their continuous guidance and
support, and to the Management and all our employees for their dedication, hard work and support.
Signed by Adrian A. Gostuski (Chief Executive Officer) on 22 March 2023
FIMBank Group Annual Report & Financial Statements 2022
6
Directors’ report
For the year ended 31 December 2022
The Directors present their report together with the Financial Statements of FIMBank p.l.c. (the “Bank”), and FIMBank Group of Companies (the
“Group”) for the year ended 31 December 2022. This report is prepared in accordance with Article 177 of the Companies Act, 1995 (Chapter 386,
Laws of Malta) (“the Companies Act”), including the further provisions as set out in the Sixth Schedule of the Companies Act.
Results for the year
The Group and the Bank reported a loss after tax of USD26,672,050 and USD22,010,084 respectively, for the year under review.
Further information about the results are provided in the Statements of Profit or Loss and the Statements of Other Comprehensive Income on pages
32 and 33 and in the Review of Performance section within this report.
Group structure and principal activities
The Group comprises the Bank and its wholly owned subsidiaries, London Forfaiting Company Limited (“LFC”), FIM Business Solutions Limited
(“FBS”), FIM Property Investment Limited (“FPI”), The Egyptian Company for Factoring S.A.E. (“Egypt Factors”), and FIMFactors B.V. (“FIMFactors”).
LFC and FIMFactors are themselves parents of a number of subsidiaries as set out in Note 27 to the Financial Statements. 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 authorisation
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 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
The Bank has a branch registered in Dubai International Finance Centre, United Arab Emirates, which is regulated by the Regulator in the UAE.
During the Board of Directors’ meeting held on 10 November 2021, a resolution was passed to close the Hellenic Branch in Greece. The closure
was finalised on 28 February 2022.
• LFC (100%) is registered in the United Kingdom as a private limited liability company. It was founded in 1984 and provides 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.
• FBS (100%), registered in Malta, has as its primary purpose the provision of information technology and support services to the Group.
• FPI (100%), registered in Malta, owns and manages FIMBank’s Head Office and other properties leased from third parties. FPI is responsible for
facility management activities and the leasing of commercial and office space within Mercury Tower to related parties and third-party tenants.
On 28 June 2022, a decision was made by FPI to change its status and adopt the status of a private exempt single member company in accordance
with the terms of Article 211 of the Companies Act, with such change resulting in FIMBank becoming 100% shareholder in FPI;
• Egypt Factors (100%), registered in Egypt, is active in providing factoring services to Egyptian companies.
• FIMFactors (100%), registered in the Netherlands, is the corporate vehicle for the Bank’s holdings in factoring subsidiaries and associated
companies. These are:
a. India Factoring and Finance Solutions (Private) Limited (88.16%), incorporated in Mumbai, India, is to carry out the business of factoring in
India. India Factoring is regulated by the Reserve Bank of India.
b. BrasilFactors S.A. (50%), is an equity-accounted investee incorporated in São Paulo, Brazil, with its core business focused on factoring services,
targeting small and medium-sized companies. The other shareholder in this company is China Construction Bank (50%).
• FHC (100%), registered in Chile, previously served as a corporate vehicle was officially liquidated on 2 March 2022.
FIMBank Group Annual Report & Financial Statements 2022
7
Review of performance
The financial period ended 31 December 2022 saw a notable improving trend in underlying performance, overshadowed by impairment of legacy
positions and trading results. While the FIMBank Group post-tax loss for the year stood at USD26.7 million (compared to a loss of USD3.6 million
registered in 2021), ‘income before net impairment and net trading results’ registered an improvement reaching USD8.0 million (compared to a
USD1.9 million loss for 2021).
The global macroeconomic environment during the year in review largely played out as anticipated by the Bank’s Management. Although the
uncertainty in connection with the Covid-19 pandemic largely dissipated during 2022, with a gradual return to “business as usual”, inflation rose
beyond predetermined thresholds and prompted governments and central banks to implement counter-inflationary measures. Our balance sheet
structure was well positioned to benefit from such increased interest rates and our net interest income performance improved ahead of our earlier
expectations.
During the year in review the Group continued to attain the tangible benefits of its prudent risk appetite. As a result, throughout 2022 no new
material non-performing loans were recognised. Moreover, the Group reviewed the level of gross non-performing exposures and wrote-off a
number of fully provided exposures where it was determined that the recovery prospects would be remote. In addition to improving the Group's
asset quality ratios, this also allowed management more time to concentrate on other ongoing recovery initiatives, and on preserving and expanding
the performing portfolio.
The year in review also saw the Group pursuing the medium-term strategy of further pruning its structure. During 2022, the closure of the Hellenic
branch in Athens and the liquidation of FIM Holdings (Chile) S.p.A. contributed to a more streamlined business model and a lower expense base.
The ongoing and prudent management of expenditure was aided by higher USD exchange rates, which led to passive savings on expenses
denominated in other currencies than the functional currency.
The Group did not perform as well as expected in a few particular areas, such as trading results and impairment of legacy positions. Trading results
refer to the performance of the forfaiting trading portfolio held in the entity London Forfaiting Company Ltd ("LFC”). Certain larger balance sheet
positions that date back to pre-Covid-19 pandemic are referred to as “legacy”. These positions include non-performing loans, deferred tax asset and
goodwill on subsidiaries.
The Group registered progress on additional legacy exposures for which future recovery is anticipated, while making headway in recovering other
legacy non-performing exposures. This accomplishment was overshadowed by higher impairment charges associated with a handful of legacy non-
performing loans, where the unique legal circumstances or delays in the recovery process required a higher level of coverage in accordance with
IFRS rules. Furthermore, the valuation of our companies in Egypt and India has been impacted by rising interest rates combined with future
uncertainties, resulting in goodwill write-off.
The trading results emanating from LFC’s portfolio recorded a loss of USD7.3 million. A certain level of volatility is a normal feature of the trading
business, and although the 2022 trading loss was higher than our historical experience, LFC generated sufficient profits from other business to fully
absorb the negative trading results and recorded a profit after tax of USD0.7 million. It is significant to highlight that LFC has maintained its trademark
of being dynamic and adaptable, which allowed it to upsize or downsize in response to current market opportunities. LFC's ability to generate a
profit after absorbing the negative trading results of the year in review also underlines its inherent resilience.
India Factoring maintained its factoring portfolio at a level similar to the previous year, while outperforming 2021’s results on its operational profit,
despite another wave of the COVID-19 pandemic and the ensuing interruptions to global trade. However, an increase in provision was necessary
due to a delay in the recovery process for one specific legacy group of connected clients. In contrast to its profit of USD1.9 million in 2021, the
company ended the year in review with a loss of USD0.7 million. Meanwhile, the business continued to recover debt from other legacy clients, while
also onboarding new customers with robust balance sheets under well-structured facilities.
Egypt Factors had originally witnessed a decline in its factoring portfolio, although this stabilised towards the end of 2022. During the year the entity
recorded recoveries of legacy exposures and also released some provisions. By the end of 2022, the company had returned a profit of USD0.4 million,
which was at a level similar to the previous year.
The Group’s capital position remained strong, with a Total Capital Ratio (“TCR”) of 17.8%. This was well above the 16% minimum TCR requirement,
which had been lowered as a result of the MFSA Supervisory Review and Evaluation Process (SREP). This assessment led to the lowering of the
Group’s Pillar 2 Requirement (P2R) from 6% to 4.5%. It is important to emphasize that the Pillar 2 capital reduction was a recognition by the MFSA
of the advancements and improvements made by the Group and its management on various fronts. Thanks to the outcome of this assessment the
Group now has the opportunity to originate additional assets that are consistent with its risk appetite and that can generate incremental revenue
streams. The Group maintained a strong liquidity position throughout the year with an average Liquidity Coverage Ratio (LCR) of 198% and an
average Net Stable Funding Ratio (NSFR) of 128%. Both liquidity metrics were well above the regulatory minimum requirement and the Group’s
internal risk appetite level.
FIMBank Group Annual Report & Financial Statements 2022
8
Statements of profit or loss
For the year ended 31 December 2022, the Group registered a post-tax loss of USD26.7 million compared to a post-tax loss of USD3.6 million in
2021. Group earnings per share were negative at US cents 5.09 (2021: negative US cents 0.74). The results for the year under review are summarised
in the table below, which should be read in conjunction with the explanatory commentary that follows:
Group
2022
2021
Movement
USD
USD
USD
Net interest income
30,336,949
24,868,755
5,468,194
Net fee and commission income
11,428,873
10,837,563
591,310
Dividend income
3,821,545
1,089,189
2,732,356
Other operating income
163,542
1,737,303
(1,573,761)
Operating results from non-trading portfolio
45,750,909
38,532,810
7,218,099
Operating expenses
(37,762,423)
(40,420,374)
2,657,951
Income before net impairment and net trading results
7,988,486
(1,887,564)
9,876,050
Net trading results
(6,924,935)
2,502,426
(9,427,361)
Net impairment losses
(25,777,991)
(1,907,796)
(23,870,195)
Loss before taxation
(24,714,440)
(1,292,934)
(23,421,506)
Taxation
(1,957,610)
(2,319,589)
361,979
Loss for the year
(26,672,050)
(3,612,523)
(23,059,527)
At USD45.8 million the Group’s ‘operating results from non-trading portfolio’ exceeded last year’s by USD7.2 million (19%). ‘Net interest income’
rose by USD5.5 million (22%) year on year, to USD30.3 million, as policy makers are gradually executing their monetary policies allowing the Group
to widen its interest margins. ‘Net fees and commission income’ at USD11.4 million improved slightly from prior year. The Group received USD3.8
million dividends from its investment in an unlisted sub-fund, compared to USD1.1 million recorded in 2021.
‘Other operating income’ includes a fair value loss of USD0.3 million recognised on Financial Assets at FVTPL, compared to a fair value gain of USD0.4
million in the previous year. Moreover, the Group did not recognise any fair value gains or losses on Financial Assets at FVOCI, as during the year
under review the Group changed its business model resulting in debt securities being reclassified from FVOCI to amortised cost (Refer to Note 26.1).
In 2021 the Group recognised USD0.7 million in fair value gains on Financial Assets at FVOCI. Other elements of other operating income were fairly
stable. The Group's investment property was subject to an external valuation which did not result in any upward or downward movement as the
market value of the property remained largely unvaried when compared to prior years.
‘Operating expenses’ for the year under review stood at USD37.8 million, a USD2.7 million (7%) decrease from 2021. Inflationary pressures were
offset by the Group's careful cost control, which was passively aided by the weakening of the Euro relative to the US Dollar. The Group continued
investing in its human resources through the attraction, retention and training of employees.
These improvements resulted in the ‘income before net impairment and net trading results‘ of USD8.0 million, compared to a loss of USD1.9 million
in 2021.
In contrast to the prior year's gain of USD2.5 million, ‘Net trading results’ took a turn in 2022, with a loss of USD6.9 million. The trading book held
at the Group’s subsidiary LFC, was mainly impacted by the default of two assets. LFC together with a wider group of creditors are currently in
negotiations with the two borrowers, regarding settlement of the overdue assets. Whilst the prospects of recovery remain positive, it is too early
to speculate the quantum of the recovery. To reflect the uncertain recovery value the fair values of these assets have been revised downwards. Net
trading results were also impacted by lower trade volumes, due to the uncertainty caused by the conflict in Ukraine, and higher interest payments
being honoured by borrowers due to the rise in interest rates.
As several risks materialised, the Group increased its ‘net impairment losses’ by USD25.8 million, primarily due to legacy non-performing clients and
goodwill write-off. On the basis of higher modelled expected credit losses, the Group increased its Stage 1 and Stage 2 provisions for performing
clients by USD1.9 million. In contrast, in 2021 USD2.3 million of provisions were released. The Group has also taken USD0.5 million provisions for
liabilities and charges (2021: Nil).
FIMBank Group Annual Report & Financial Statements 2022
9
The Group reversed USD13.0 million of Stage 3 provision (2021: USD15.8 million). USD32.5 million (2021: USD28.1 million) were reversed upon
write-offs or recoveries of non-performing exposures, whereas USD19.5 million (2021: USD12.3 million) was a coverage increase for legacy non-
performing exposures and coverage for legal fees incurred in the process of recovering the Group’s delinquent portfolio.
The Group recovered USD1.6 million in previously written-off debt (2021: USD1.4 million). The Group also wrote-off USD32.7 million (2021: USD
21.4 million) of non-performing exposures on which the Group has no reasonable expectations of recovering the contractual cash flows. The majority
of this written-off debt was fully provided for in preceding years. In the majority of cases, the Group had not forgiven the debt and is not precluded
from enforcing, selling, or transferring the credit to another entity. These developments along with other measurements have helped the Group to
lower its NPL Ratio by approximately 3.4% within the year under review.
The Group performed an impairment assessment of goodwill on two of its subsidiaries namely Egypt Factors and India Factoring. The goodwill
recognised as of the review date was not supported by the concluded value-in-use and the fair value less cost to dispose models, resulting in a USD
5.2 million write off to bring goodwill down to zero. Please refer to Note 30.2 for further information.
Provisions for tax for all Group entities, for 2022 were USD2.0 million, compared to USD2.3 million in 2021. The Group has utilised some of its
deferred taxation and has carried out an assessment to ensure that the recognised deferred tax assets are recoverable before their finite expiry,
where such is applicable.
Financial position
At 31 December 2022, total consolidated assets stood at USD1.69 billion, down by USD101 million or 6% from end-2021. Average total consolidated
assets were 2% lower than the average for prior year.
Compared to previous year, the Group closed the year with lower balances in treasury assets which includes HQLA (by USD73 million) and factoring
assets (by USD51 million) and with higher balances in trade finance (by USD20 million), loans to banks (by USD14 million) and trading assets (by
USD5 million).
Average factoring balances were higher by USD78 million, whereas average balances were lower for treasury assets (by USD89 million), trade finance
(by USD12 million), loans to banks (by USD7 million) and trading assets (by USD4 million). The Group continued with its strong risk focused strategy,
maintaining caution around some business activities, jurisdiction and customer groups. Regulatory requirements, in particular the Total Capital Ratio
(TCR), were high on the agenda and business volumes were managed around these requirements. The residual effects of the pandemic, the conflict
in Ukraine and inflationary pressures left their mark on market demand and trade flows.
Once an evaluation of the investments in India Factoring and Egypt Factors revealed that the recoverable amount is less than the carrying value, the
Group reduced the goodwill on these subsidiaries to zero and impaired a portion of its investment in these two subsidiaries. Nonetheless an
assessment on deferred tax asset and investment property concluded that the carrying amount of these assets was adequate. When conducting
these assessments, Management have weighed in on various factors having a significant impact on the global economy and on the specific activities
of these assets.
The Group had consolidated liabilities of USD1.49 billion as at 31 December 2022, a drop of USD73 million from prior year. Average balances for
2022 were higher than previous year by USD33 million for factoring creditors and USD27 million for bank wholesale funding, but lower for corporate
and retail deposits (by USD67 million), debt securities in issue (by USD22 million) and bank deposits (by USD4 million).
Total equity decreased by USD27.8 million to USD195.5 million, reflecting the loss for the year and other equity adjustments. As at 31 December
2022 the Group’s CET1 and TCR ratios stood at 17.8% (2021: 18.7%).
Total consolidated commitments at USD100.0 million (2021: USD153.6 million) consist mainly of confirmed letters of credit, documentary credits,
commitments to purchase forfaiting assets and factoring commitments. Total consolidated contingent liabilities, principally consisting of outstanding
guarantee obligations, stood at USD12.1 million (2021: USD2.0 million).
FIMBank Group Annual Report & Financial Statements 2022
10
Principal risks and uncertainties
FIMBank is a banking group offering a suite of trade finance products across the different geographies it operates in, mainly emerging markets. The
risks associated with this business model are multiple and varied. Exposure to credit risk, liquidity risk, interest rate risk and foreign exchange risk
arises in the normal course of the Group’s business. As the Group is mainly engaged in cross-border trade finance transactions, the business
performance is also impacted by the overall performance of the world economy, in particular to the level of cross-border trade between countries
at varying stages of their economic development and which may not yet have achieved the level of stability of developed countries. This exposes
the Group to risks of political and economic changes including volatilities to commodity prices, exchange control regulation and difficulties in
preserving own legal rights.
Both FIMBank and its main Group entities are exposed to such risks in different degrees based on their size and complexity. FIMBank, as the parent
company, ensures that all Group entities adhere to the Group’s risk, governance and compliance frameworks as updated from time to time.
Further disclosures on the Group’s principal risks and uncertainties are provided in Note 5 of this Annual Report and the 2022 Pillar 3 Disclosures
Report published on the Bank’s website.
Outlook for 2023
Today’s interconnected world calls for being vigilant and to follow closely the wider macroeconomic environment development. The geopolitical
situation and related tensions do impact our customers through global supply chain disruptions, trade volumes changes and commodity prices
fluctuations. Moreover, developments unique to Malta have to be continually monitored and addressed with due attention.
The global growth is projected to pick up only in the longer term. In the shorter term we may see a global growth slowdown. The impact of the
conflict in Ukraine and Central Banks' interest rate-related policies are anticipated to be some of the major issues to watch in the coming months.
Taking this into consideration, the Group will continually carry out its strategy, pursuing business opportunities in accordance with its risk appetite
and the principle of risk-adjusted returns. In comparison to prior years, the Group's balance sheet is more resilient due to lower legacy exposures
and enhanced and sustainable revenue-generation capabilities. Moreover, the balance sheet structure is positioned favourably for an increasing
interest rate scenario.
We anticipate modest portfolio growth within our customer-centric focus, constrained by regulatory developments on capital requirements. The
strategic focus continues to be on business lines and geographical areas that deliver superior returns and carry lower risks generating consistent
value to the Group. Whilst we steadily eliminate complex structures, business lines are streamlined and our presence in Malta continues to develop
and mature.
The Group remains focused on improving its strategy in pursuit of our long-term objective of expanding and future-proofing our Shareholders’ value.
The Group has commissioned a highly reputable advisory firm to perform an in-depth review that shall lead to strategic recommendations. The
holistic approach taken by the advisors shall focus on business lines, markets, products and building competitive advantage. Significance will also
be given to the Group’s cost structure, IT architecture design and integration and the resources and capabilities the Group requires to achieve its
objectives.
The MFSA Supervisory Review and Evaluation Process (SREP) resulted in a reduction of our Pillar 2 Requirement (P2R) by 1.5% which was welcomed
by the Group. This result enables further growth in asset portfolios and creates an opportunity for the Group to convert its asset origination power
into incremental tangible revenue streams. The trend of decreasing the stock of non-performing assets and improving our coverage ratios is
continuing and the fully dedicated Recovery function supported by our Legal team is helping the Group to maintain this growing momentum.
In the context of complex and dynamic regulatory framework, including the very relevant ESG topic, the Group’s ongoing drive to improve
governance and controls will undoubtedly be a source of future sustainable growth. The Group is in the process of developing an ESG transition plan
which will seek to integrate social and environmental considerations into every aspect of the business. FIMBank is in a good position to progress
toward its strategic goals in a steady and sustainable way because of its pool of highly skilled human capital across many disciplines, the ongoing
investment in technology, the lower level of legacy balance sheet items, and the stability of a strong shareholder base.
Dividends and reserves
As none of the reserves are available for distribution, the Board of Directors will not be recommending the payment of a dividend to the Annual
General Meeting of Shareholders (2021: Nil).
FIMBank Group Annual Report & Financial Statements 2022
11
Standard licence conditions and regulatory sanctions
During the year under review, no breaches of licence requirements occurred. Moreover, no regulatory sanctions were taken against the Bank.
Approvals at the annual general meeting of shareholders
The Bank convened its Annual General Meeting on 14 June 2022 and all statutory Ordinary Resolutions were approved.
Shareholder register information pursuant to Capital Markets Rule 5.64
The Directors refer to the following disclosures in terms of the Capital Markets Rule 5.64:
a. details of the structure of the share capital, the class of shares and the rights and obligations attached to it and the percentage of total share
capital that it represents are, unless otherwise stated in this report, disclosed in the Notes to the Financial Statements;
b. except as provided for by Article 41 of the Articles of Association of the Bank, or where the consent of the Supervisory Authority may be required,
there are no restrictions on the transfer of securities, or limitations on the holding of securities, or the need to obtain the approval of the Bank
or other holders of securities of the Bank for any such transfer or holding. Shareholders holding 5% or more of the share capital as at 31 December
2022 are as follows:
No of shares
% holding
United Gulf Holding Company B.S.C
410,812,110
78.63%
Burgan Bank K.P.S.C. (“BBK”)
44,394,499
8.50%
In addition to the Shareholders listed in the above table, as at 31 December 2022, Tunis International Bank S.A. (a subsidiary of BBK) holds
9,207,000 shares (1.76%);
c. there is no share scheme in place which gives employees the rights to any form of control;
d. the Bank’s Articles of Association do not contain more stringent provisions than the ones contained in the Companies Act governing the changes
or variations in the rights attached to shares;
e. in terms of Article 12 of the Bank’s Articles of Association, the rights attached to any class of shares may be varied either with the consent in
writing of the holders of not less than 80% of the issued shares of that class or with the sanction of an extraordinary resolution passed at a
separate general meeting of the holders of shares of that class. The Banking Act requires the Bank to obtain the consent of the Supervisory
Authority (MFSA) to effect any material change in voting rights;
f. the rules and procedures governing the appointment and replacement of Board Members are provided by the Articles of Association and are
referred to in the Statement of Compliance with the Principles of Good Corporate Governance. Any amendments to the Articles shall be by
means of an extraordinary resolution in accordance with the provisions of Articles 90 and 91;
g. unless otherwise disclosed in this Annual Report, there are no significant agreements to which the Bank is a party and which take effect, alter or
terminate upon a change of control of the Bank following a takeover bid and the effects thereof; and
h. there are no agreements between the Bank and its Board Members or employees providing for compensation if they resign or are made
redundant without valid reason or if their employment ceases because of a takeover bid.
At 31 December 2022 the Bank had no securities with special control rights in accordance with the Capital Markets Rule 5.64.4.
FIMBank Group Annual Report & Financial Statements 2022
12
Events after the financial reporting date
There were no material events or transactions which took place after the financial reporting date which would require disclosure in or adjustment
to this Annual Report and Financial Statements.
Going concern
As required by the Capital Markets Rule 5.62, upon due consideration of the Bank’s performance, financial position, capital adequacy and solvency,
the Directors confirm that, at the time of approving these Financial Statements, the Bank is capable of continuing to operate as a going concern for
the foreseeable future.
Directors
The Directors who served during the financial year (inclusive of any changes to the date of this report) were:
John C. Grech (Chairman) CGC, BCC, BRIC
Masaud M.J. Hayat (Vice Chairman) NRC
Abdel Karim A.S. Kabariti CGC, NRC
Claire Imam Thompson CGC, BAC, BRC
Edmond Brincat BAC, NRC
Erich Schumacher BRC
Hussain Abdul Aziz Lalani BAC, BRC, BRIC
Majed Essa Ahmed Al-Ajeel CGC, NRC
Mohamed Fekih Ahmed BCC
Osama Talat Al-Ghoussein BRC Retired on 31 March 2022
Rabih Soukarieh BCC
Rogers David LeBaron CGC, NRC
Denotes membership of:
• Board Audit Committee (BAC)
• Board Credit Committee (BCC)
• Board Review and Implementation Committee (BRIC)
• Board Risk Committee (BRC)
• Corporate Governance Committee (CGC)
• Nomination and Remuneration Committee (NRC)
FIMBank Group Annual Report & Financial Statements 2022
13
Statement of responsibility
This Statement of responsibility is required in terms of the Capital Markets Rule 5.55.2 and set out in the form required by the Capital Markets Rules
5.67 to 5.69.
The Companies Act, 1995 (Chapter 386, Laws of Malta) requires the Directors of the Bank to prepare financial statements for each financial year
which give a true and fair view of the financial position of the Bank and the Group as at the end of the financial year and of the profit or loss of the
Bank and the Group for that period in accordance with the requirements of International Financial Reporting Standards as adopted by the EU.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy, at any time, the financial position of
the Bank and the Group and to enable them to ensure that the financial statements have been properly prepared in accordance with the provisions
of the Companies Act, 1995 (Chapter 386, Laws of Malta) and the Banking Act, 1994 (Chapter 371, Laws of Malta). The Directors also ensure that
the financial statements of the Group are prepared in accordance with Article 4 of the IAS Regulation.
The Directors are also responsible for safeguarding the assets of the Bank and the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors, through oversight of management, are responsible to ensure that the Bank and the Group establish and maintain internal controls to
provide reasonable assurance with regard to reliability of financial reporting, effectiveness and efficiency of operations and compliance with
applicable laws and regulations.
Management is responsible, with oversight from the Directors, to establish a control environment and maintain policies and procedures to assist in
achieving the objective of ensuring, as far as possible, the orderly and efficient conduct of the Bank’s business. This responsibility includes
establishing and maintaining controls pertaining to the Bank’s and the Group’s objective of preparing financial statements as required by the
Companies Act, 1995 (Chapter 386, Laws of Malta) and managing risks that may give rise to material misstatements in those financial statements.
In determining which controls to implement to prevent and detect fraud, management considers the risks that the financial statements may be
materially misstated as a result of fraud.
Independent auditors
During 2022, the Bank has carried out a tender process for the contract of external audit services. The tender process was overseen by the Audit
Committee, which Committee has recommended the appointment of Ernst & Young Malta Limited as the Group’s External Auditors. The
recommendation was endorsed by the Board of Directors. The appointment of Ernst & Young Malta Limited as the Group’s External Auditors will be
proposed at the forthcoming Annual General Meeting. Subject to the approval of the Shareholders, Ernst & Young Malta Limited will undertake the
audit of FIMBank Group for the year ending 31 December 2023.
The Directors and Management take the opportunity to express their gratitude to KPMG for the sterling service and professionalism demonstrated
in their role as External Auditors of the Group over the past twenty-eight years.
Approved by the Board of Directors and signed on its behalf by John C. Grech (Chairman) and Masaud M.J. Hayat (Vice Chairman) on 22 March
2023
Registered Address
Mercury Tower
The Exchange Financial and Business Centre
Elia Zammit Street
St. Julian’s STJ 3155
Malta
FIMBank Group Annual Report & Financial Statements 2022
14
Statement of compliance with the principles of good
corporate governance
For the year ended 31 December 2022
Introduction
Pursuant to the requirements of Capital Markets Rules 5.94 et seq of the Malta Financial Services Authority (the “MFSA”), the Board of Directors
(the “Board” or “Directors”) of FIMBank p.l.c. hereby details the extent to which the Code of Principles of Good Corporate Governance (the
“Principles”), published as Appendix 5.1 to Chapter 5 of the Capital Markets Rules, have been adopted together with the effective measures taken
to ensure compliance with such Principles.
Part 1: Compliance with the principles
The Board firmly believes that strong corporate governance permits the Bank and the Group to benefit from greater transparency in its activities,
as well as in its relations with the market, thereby enhancing integrity and confidence. Although the Principles are not mandatory, the MFSA has
recommended that listed companies endeavour to adopt such Principles. The Board has considered this to be in the best interest of the Shareholders
because they commit the Directors, Management and employees of the Bank to internationally recognised standards of corporate governance.
Ultimate responsibility for good corporate governance remains with the Directors who have therefore resolved to adopt the Principles and endorse
them accordingly, except for those instances where particular circumstances exist that warrant non-adherence thereto, or at least postponement
for the time being.
The Board is committed to improve further its corporate governance standards which is an ongoing process.
Principle 1: Roles and responsibilities of the board
The Board of Directors’ terms of reference are included in the relevant charter and can be summarised as follows:
The Board is responsible for the overall long-term direction of the Group, for setting its strategy and policies and ensuring that they are pursued
through good management practices. The Board carries out its responsibilities by:
a. exercising prudent and effective controls and ensuring that such controls are appropriately reviewed for effectiveness and monitored for
compliance on a regular basis;
b. determining the strategic aims and the organisational structure;
c. regularly reviewing management performance and ensuring that the Group has the appropriate mix of financial and human resources to run
its business;
d. being conversant with relevant statutory and regulatory requirements;
e. ensuring that all Directors regularly attend meetings of the Board, agree on business objectives, financial plans and general parameters within
which the Board, the Board Committees and Management are to function;
f. ensuring that systems and controls are in place to mitigate significant business risks and that exposures are identified and properly managed;
g. setting appropriate business standards, codes of corporate governance and ethical behaviour for all Directors and employees, as well as
monitoring their performance;
h. appointing the Group Chief Executive Officer (“GCEO”) who is entrusted with day-to-day management of the Group and its operations, together
with members of management; and
i. appointing Senior Management through the Nomination and Remuneration Committee.
Over the years, the Board has created a framework through which it effectively performs its functions and discharges its liabilities. The Board has
also established terms of reference and charters for the various Board Committees and the conduct of their meetings.
FIMBank Group Annual Report & Financial Statements 2022
15
The Members of the Board of Directors of the Bank bring to their office a mix of backgrounds and capabilities, ranging from business to financial
services. This ensures a good blend of expertise and experience. Moreover, the suitability of any individual to become a Director of the Bank is, in
the first place assessed by the Nomination and Remuneration Committee. As part of its work, this Committee is tasked with performing an annual
evaluation of the Board’s overall performance in addition to an evaluation on the performance of each individual Member. This includes an
evaluation of the knowledge and experience of each Member while also assessing their authorities and leadership skills. As a result, this Committee
screens individuals for the position of Director against the Bank’s requirements at the time. Subsequently, the proposal for an individual to become
a Director is assessed by the MFSA which reviews, inter alia, the individual’s competence to serve as Director against established ‘fit and proper’
criteria. In this connection, the individual is required to provide all information, including detailed personal and career information, as the competent
authorities may deem necessary. Upon appointment, new Directors receive general information about the Bank, its business and affairs, and queries
in this regard are in the first instance handled by the Company Secretary and/or the GCEO.
Principle 2: Roles and responsibilities of the chairman and of the chief executive officer
The roles of the Chairman and of the GCEO are completely separate from one another to ensure clear division of responsibilities at the head of the
Bank.
The Chairman is a non-executive officer who is selected from amongst the Directors. The Chairman is responsible for leading the Board and setting
its agenda, ensuring that the Directors receive precise, timely and objective information so that they can properly execute their duties, encouraging
their active engagement in meetings and issues brought before the Board and ensuring effective communication with Shareholders.
The GCEO is the most Senior Executive of the Group and is appointed by the Board of Directors. He is responsible for leading the Management in
the execution of the strategy and to run the day-to-day activities of the Group.
Principle 3: Board composition and appointment of directors
The Bank’s Articles of Association (the “Articles”) contain detailed provisions (in Clauses 93 to 114) as to the manner of appointment and retirement
of the Directors. Directors hold office from the close of the Annual General Meeting at which they are appointed until the day of the consecutive
Annual General Meeting, at which they become eligible for re-election. The Articles also provide that the Chairman and Vice Chairman are to be
appointed by the Directors from amongst their number and shall hold office for a period of one year, unless otherwise decided by a simple majority
of the Board. Any Member may nominate an individual in the manner prescribed by the Articles, provided that such nomination is seconded by a
Member or Members who in aggregate hold at least twenty thousand shares between them.
As at the date of this Statement, the Directors and their respective first date of appointment to the Board, including identification as required by
Code Provision 3.2 for those Directors deemed independent as per the Capital Markets Rules, are as follows:
Year when first appointed
John C. Grech (Chairman)
2004
Rogers David LeBaron
2006
Majed Essa Ahmed Al-Ajeel
2013
Masaud M.J. Hayat (Vice Chairman)
2013
Mohamed Fekih Ahmed
2013
Rabih Soukarieh
2013
Osama Talat Al-Ghoussein
2014
Retired on 31 March 2022
Edmond Brincat (Independent Director)
2017
Hussain Abdul Aziz Lalani
2017
Abdel Karim A.S. Kabariti
2020
Claire Imam Thompson (Independent Director)
2020
Erich Schumacher *
2022
Appointed on 14 June 2022
‘ * ‘ Erich Schumacher was appointed by the Shareholders on 14 June 2022 and regulatory approval was obtained on 15 September 2022.
Except for their involvement in Board Committees as described below, all Directors hold office in a non-executive capacity.
FIMBank Group Annual Report & Financial Statements 2022
16
The Board considered and resolved that all Non-Executive Directors meet the requisites for them to be deemed independent in view of the fact that
all Directors signed a written declaration of independence prior to the publication on this Annual Report. This decision was based on the
representations given by the individual Directors, including those with a shareholding in the Bank or associated with entities having a shareholding
in the Bank or who have served on the Board for more than twelve consecutive years, which does not in any way impair these Directors’ ability to
consider appropriately the issues which are brought before the Board. In terms of Principle 3.4, each Non-Executive Director has confirmed in writing
to the Board that he/she undertook:
• to maintain in all circumstances his/her independence of analysis, decision and action;
• not to seek or accept any unreasonable advantages that could be considered as compromising his/her independence; and
• to clearly express his/her opposition in the event that he/she finds that a decision of the Board may harm the Bank.
Another written declaration of independence shall be signed by all the Non-Executive Directors in March 2023. In addition to the declaration
provided, the Board considers such Directors to bring a sufficiently balanced character and frame of mind to their duties and judgment that they
are consequently deemed to be independent. The Bank monitors that each Director limits the number of any directorships held in other companies.
The Bank considers that the Directors have sufficient time to perform their duties and responsibilities in terms of law. The management body of the
Group is deemed to be the Board of Directors, which is appointed in accordance with the Bank’s Articles of Association.
As at 31 December 2022, the Board of Directors consisted of:
Number of directorships held
(including FIMBank p.l.c. and its subsidiaries)
John C. Grech (Chairman)
11
Masaud M.J. Hayat (Vice Chairman)
12
Abdel Karim A.S. Kabariti
5
Claire Imam Thompson
1
Edmond Brincat
17
Erich Schumacher
1
Hussain Abdul Aziz Lalani
4
Majed Essa Ahmed Al-Ajeel
2
Mohamed Fekih Ahmed
6
Rabih Soukarieh
3
Rogers David LeBaron
1
Principles 4 and 5: Duties and proceedings of directors
The Board of the Bank carries out its duties through a structure that starts with the strategy and policy formulated at meetings and subsequently
delegated to committees and management for implementation and execution at various levels, both functional and operational.
In the first instance, the proceedings of Directors are regulated by the Bank’s Articles of Association. Meetings of the Board for any calendar year
are normally set at the last meeting of the preceding year, so that advance preparation and daily planning for the meetings can be made. Meetings
are held at least quarterly and are formally notified by the Company Secretary at least seven days before the meeting with the issuance of the
agenda for the forthcoming meeting. Occasionally, meetings are also called at short notice or on an ad hoc basis, in which case the Directors may
decide to waive the statutory period of notice. The agenda is accompanied by such papers and documents as are necessary to inform Directors of
issues relating to their roles and responsibilities, and in particular of the decisions they are expected to take. During the year, all Directors were duly
notified of every meeting and given the statutory notice period. With notices of meetings, the Directors are also served with Alternate Director
Appointment Forms which, in case of non-attendance, they are invited to complete and send to the Company Secretary prior to the meeting.
The Board held five meetings in 2022. All Members of the Board were present for all five meetings except for Abdel Karim A.S. Kabariti, who was
excused in March and June and Hussain Abdul Aziz Lalani who was excused in December. Erich Schumacher attended three meetings, two meetings
as an invitee and one meeting as a Member of the Board. Meetings include presentations by Management, whilst other information and
documentation is made available for perusal by the Directors at their request. Members of Senior Management attend Board Meetings by invitation
depending on the agenda content and relevance. The Board also might request that the Meetings be attended by other employees or by professional
advisors, as and when necessary. In all other circumstances, the Directors are expected to play a full and constructive role in the Group’s affairs. As
soon as possible after a Meeting, draft minutes are circulated amongst the Members for their information. Minutes are then read and approved at
the following Meeting. Directors are provided with Board documents and can also be provided with all past minutes of Board and Committee
Meetings upon request.
FIMBank Group Annual Report & Financial Statements 2022
17
Board Meetings also serve as an opportunity to report on the progress and decisions of the Committees, covered under Principle 8. All Board
Committees are either a mix of Directors and Management (Board Review and Implementation Committee) or include the participation of
Management (Board Audit Committee, Nomination and Remuneration Committee, Corporate Governance Committee, Board Credit Committee and
Board Risk Committee). Committees report to the Board on their activities through their respective Chairman at each Board Meeting. Management
reporting is also done directly to the Board at each Meeting, either by means of an update presentation from the GCEO or usually through the Board
Review and Implementation Committee. In any case, each Board Meeting receives an update on the performance of the Bank and the Group, on
known risk cases, litigation and potential problems, about key strategic developments, including the progress of investees such as subsidiaries and
joint ventures and key financial indicators that enable performance to be measured against internal budgets, industry peers and prior financial
periods.
Principle 6: Information and professional development
Upon first appointment, all Directors are offered an introduction to the Bank and Group which includes a tailored induction and familiarisation by
the GCEO and the Company Secretary. This usually covers legal and statutory responsibilities as well as a good overview of the Group’s business and
activities. Access to the services of the Company Secretary and resources of the Bank, including where necessary, independent professional advice
at the Bank’s expense, are also available.
Training sessions have been held in 2022 in order for Directors to have the necessary knowledge on their duties and responsibilities.
Moreover, the Board ensures that the GCEO maintains systems and procedures for the development and training of Management and employees
generally, in order to retain the best quality employees, optimise on Management and employee morale and to continue developing the succession
plan for Senior Management. The GCEO is responsible for the recruitment and appointment of Senior Management following the approval of the
Nomination and Remuneration Committee.
Principle 7: Evaluation of the board’s performance
Members of the Board of Directors are subject to comprehensive ‘fit and proper’ tests by the MFSA before they are formally cleared for appointment
to the Board. The Board undertakes an annual evaluation of its own performance and that of its Committees. The evaluation forms are then
evaluated by a Committee, which function has been entrusted to the Nomination and Remuneration Committee (“NRC”), which then reports directly
to the Board Chairman who is required to act on the results of the performance evaluation process. The outcome would be to ascertain the strengths
and to address the weaknesses of the Board and its Committees and to report this to the Board itself and, where appropriate, to report at the
Annual General Meeting. This exercise began in 2013 and has been repeated annually ever since. The self-evaluation of the Board and its Committees
and the suitability assessment was conducted in June 2022 through the Skills Matrix Template to Assess the Collective Suitability of the Members
of the Management Body, did not indicate that any changes were required. The only change in the membership composition was due to a direct
replacement of a Director who resigned. Details regarding the changes to Committee composition have been disclosed under Principle 8: Changes
to committee memberships during 2022. The last evaluations from Directors were requested in the last quarter of 2022 and were presented to the
NRC in March 2023.
Principle 8: Board committees
The Bank’s Articles of Association establish that the Directors may delegate certain powers, authorities and discretions to any person and/or
Committee appointed by them. The composition of such Committees, as well as the participation of Directors on them, is decided upon by the
Board.
Accordingly, the Board has established the following Committees:
• Board Review and Implementation Committee
• Board Audit Committee
• Board Risk Committee
• Assets Liabilities Committee
• Board Credit Committee
• Nomination and Remuneration Committee (further information can be found in the Remuneration Report on page 25)
• Corporate Governance Committee
FIMBank Group Annual Report & Financial Statements 2022
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Board review and implementation committee
The Board Review and Implementation Committee (“BRIC”) acts as the delegated authority by the Board in overseeing the activities and
management of the Group. The Board Review and Implementation Committee terms of reference are included in the Board Review and
Implementation Committee Charter.
The Members of the Board Review and Implementation Committee as at 31 December 2022 are the following:
John C. Grech (Chairman)
Hussain Abdul Aziz Lalani (Vice Chairman)
Adrian A. Gostuski (Non-Voting Member)
The Board Review and Implementation Committee met on nine occasions during 2022.
Board audit committee
The Board Audit Committee (“BAC”) assists the Board of Directors in fulfilling its supervisory and monitoring responsibilities, according to detailed
terms of reference included in the Board Audit Committee Charter and which reflect the requirements of the Capital Markets Rules, as well as
current best practices and recommendations of good corporate governance. The terms of reference of the Board Audit Committee, as detailed in
the Board Audit Committee Charter include:
• the monitoring of the financial reporting process, including the audit of the annual and consolidated accounts;
• the monitoring of the effectiveness of the Group’s internal control, internal audit, compliance and risk management systems;
• the maintenance of communication on such matters between the Board, Management, External Auditors, and the Internal Audit and Compliance
functions;
• the monitoring and reviewing of the External Auditor’s independence, and in particular, the provision of additional services to the Bank;
• the monitoring and reviewing of proposed transactions by the Group with related parties; and
• the performance of the Group’s Internal Audit and Compliance functions.
It is the responsibility of the Board Audit Committee to recommend the appointment of the Statutory Auditor in line with the Capital Markets Rules
5.127.6 and in accordance with Article 16 of the Statutory Audit Regulation. The Board Audit Committee also considers the nature of related party
transactions, vets and approves them. Both the Board Audit Committee’s and the Head of Internal Audit’s terms of reference clearly stipulate their
independence from other Board Committees and Management, and such independence is also acknowledged by external regulatory verification.
The Head of Internal Audit has direct access to the Board Audit Committee Chairman at all times and attends all meetings. The Group Chief
Compliance Officer also has direct access to the Board Audit Committee Chairman and attends all meetings. In addition, the composition of the
Members of the Board Audit Committee includes two individuals who are also Members of the Board Risk Committee.
The Members of the Board Audit Committee as at 31 December 2022 are the following:
Edmond Brincat (Chairman – Independent Director)
Hussain Abdul Aziz Lalani (Vice Chairman)
Claire Imam Thompson (Member– Independent Director)
Rogers David LeBaron is a non-voting, permanent invitee of the BAC.
In line with Capital Markets Rule 5.117.4, the Chairman of the Board Audit Committee is appointed by the Board of Directors. With reference to
Capital Markets Rule 5.117.3, which states that “at least one member of the audit committee shall be competent in accounting and/or auditing”,
the Bank notes that all Members of the Board Audit Committee are designated as competent in auditing and/or accounting as per the qualifications
listed hereunder.
Edmond Brincat joined the GO Group in 1999, part of the team entrusted to set up and launch Go Mobile, Malta’s second mobile operator and in
2006 he was appointed as the Group’s Chief Financial Officer, a position he held until 31 January 2018. In February 2018, Edmond Brincat joined
SmartCity (Malta), a subsidiary of Dubai Holding LLC, and currently acts as the company’s Chief Executive Officer. Edmond Brincat obtained a
Bachelor of Arts degree in accounts from the University of Malta in 1991 and is a Certified Public Accountant and a Fellow of the Malta Institute of
Accountants.
Hussain Abdul Aziz Lalani is the Chief Executive Officer of United Gulf Bank (“UGB”), Bahrain and has worked extensively with the Board of Directors
on advisory transactions in his previous capacity as UGB’s Chief Financial Officer. Hussain Abdul Aziz Lalani is a Chartered Accountant and a Certified
Information Systems Auditor and holds a Bachelor of Commerce degree from the University of Karachi, Pakistan.
Claire Imam Thompson currently holds the position of Executive Vice President, Head of Global Trade, Enterprise Partnerships at Mastercard. Claire
Imam Thompson is an accountant by profession and also holds a Bachelor of Science (Hons) in Business Studies which she obtained from the
University of Bradford.
FIMBank Group Annual Report & Financial Statements 2022
19
The Bank considers that the Committee Members as a whole have the relevant competence as required by the Capital Markets Rule 5.118, having
evaluated the balance of knowledge, skills, diversity and experience of the members of the Committee, thereby ensuring that they have the requisite
experience, personal abilities and integrity and that they adhere to sound professional practices.
All Members of the Board Audit Committee have signed a written declaration of independence. In effect, the Board of Directors of the Bank consider
these Members to be independent. Furthermore, the Committee Members as a whole, have the competence relevant to the sector in which the
Bank is operating.
The Board Audit Committee normally requests members of Management to attend its Meetings for selective items of the respective agenda.
The Board Audit Committee held ten meetings during 2022 and all Members were present for all ten meetings except for Claire Imam Thompson
who was excused for the meeting held on 16 February 2022. The Group Head of Internal Audit was also invited to attend and attended all ten
meetings. The External Auditors were invited to all Board Audit Committee Meetings and were only present for the agenda items which considered
and discussed the 2021 Statutory External Audit (February 2022), 2021 Annual Report (April 2022), 2021 Management Letter (April 2022), Parent
Statutory Reporting Audit Update (May 2022), Interim Report for the period ended 30 June 2022 (August 2022) and Statutory Audit Plan for Financial
Year ending 31 December 2022 (December 2022).
Board risk committee
The Board Risk Committee (“BRC”) is responsible for overseeing the Group’s risk management strategy, systems and policies, and for recommending
appropriate risk appetite parameters for approval by the Board of Directors. The Board Risk Committee is also responsible for the oversight of
operational, market, reputational and legal risk matters.
The Board Risk Committee Members as at 31 December 2022 are the following:
Hussain Abdul Aziz Lalani (Chairman)
Erich Schumacher (Member)
Claire Imam Thompson (Member)
During 2022, the Board Risk Committee met on nine occasions.
Assets liabilities committee
The Assets Liabilities Committee (“ALCO”) is a decision-making body responsible for allocating the Group’s assets and liabilities to meet the Group’s
risk and profitability objectives.
The ALCO is composed of representatives of Senior Management, vested with the power to make decisions. As at 31 December 2022, the voting
members of the ALCO were the following:
Adrian A. Gostuski (Chairman)
Zbigniew Makula (Member)
Julio Bonifacino (Member)
Simon Lay (Member)
Ronald Haverkorn (Member)
Modesto Luengo (Member)
Juraj Beno (Member)
Jason Zammit (Head of Corporate Finance Malta, Marketing & Administration), Chris Trapani (Head of Cash Management & Central Customer
Services), Tiziri Hamidouche (Deputy Head of Treasury), Corinne Lanfranco (Head of Financial Institutions & Deposits), Simon Vickery (Head of Non-
Credit Risk Management) and Clinton Bonnici (ALCO Secretary) are non-voting, permanent invitees of the ALCO.
During 2022, the Assets Liabilities Committee met on six occasions.
FIMBank Group Annual Report & Financial Statements 2022
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Board credit committee
The Board Credit Committee (“BCC”) is a Committee appointed by the Board of Directors of FIMBank. The Board Credit Committee is directly
responsible and accountable to the Board. The Board may delegate any of its authorities and powers in relation to the BCC to the Board Risk
Committee. The Board Credit Committee main powers and duties are to:
• review credit applications and approve credit limits and specific transactions, up to the legal lending limit of the Bank and within the guidelines
specified in the Group’s Credit Policy Procedures; and
• review and consider for approval country limit applications, within the guidelines specified in the Group’s Credit Policy Procedures.
The Board Credit Committee Members as at 31 December 2022 are the following:
John C. Grech (Chairman)
Rabih Soukarieh (Vice Chairman)
Mohamed Fekih Ahmed (Member)
Adrian A. Gostuski (GCEO) and Modesto Luengo (GCRO) are non-voting, permanent invitees of the BCC.
During 2022, the Board Credit Committee met on six occasions.
Nomination and remuneration committee
The Nomination and Remuneration Committee (“NRC”) is currently composed of five members, one of whom is an independent director. The
Nomination and Remuneration Committee is governed by the NRC’s Charter as may be amended by the Board of Directors (“Board”) in line with
the relevant laws and regulations. The Charter establishes the authority and responsibilities conferred by the Board to the NRC in line with Appendix
5.1 (8) (A) & (B) of the Code of Principles of Good Corporate Governance. The responsibilities of the NRC include having oversight, informing,
updating and deciding and/or making recommendations to the Board on all matters regarding nomination and remuneration. These include:
• presenting recommendations to the Board regarding nomination to the Board’s membership in accordance with approved policies, standards,
and instructions on nomination regulations for the Board’s membership;
• performing an annual review of the needs required with regard to suitable skills for Board membership and performing an annual review of the
Board of Directors’ structure and presenting recommendations on the changes which can be performed in accordance with the Bank’s strategy;
• performing an annual evaluation of the Board’s overall performance and the performance of each Member and the Board Committees;
• conducting as and when required, including on an annual basis, suitability assessments of prospective/appointed Directors, officers holding a
senior management position and key function holders;
• preparing/reviewing the Group Remuneration Policy and the Remuneration Policy Supplement in line with applicable regulations and legislation
and the principles of good corporate governance;
• overseeing the implementation and compliance with the Group Remuneration Policy and Supplement;
• assessing the mechanisms adopted to ensure that the remuneration process properly takes into account all types of risks, liquidity and capital
levels and that it promotes sound and effective risk management and is in line with the business strategy, objectives, corporate culture and
values, risk culture and long-term interest of the institution;
• monitoring the level and structure of Directors’ Remuneration by reviewing and updating when necessary, the individual remuneration to be
attributed to Directors, ensuring that they are consistent with the Remuneration Policy Supplement as approved by the Annual General Meeting;
• devising appropriate and annually reviewing remuneration packages which are: fair; equitable, gender neutral and in line with industry
benchmarks and the long-term interests of the Bank as needed to attract, retain and motivate Directors, the GCEO and Executives that hold the
knowledge, skills and abilities to lead the FIMBank Group;
• approving on an annual basis, the Group’s individual distribution of salary increases, promotions, bonuses and share awards, as may be
recommended by the GCEO;
• preparing a Remuneration Report and a Remuneration Statement for inclusion in the Annual Report; and,
• reviewing and assessing at least annually the adequacy of the NRC Charter and confirming that all the responsibilities set out in the Charter have
been duly executed.
Details regarding the Remuneration Policy and remuneration related matters have been disclosed under the Remuneration Policy and Remuneration
Report.
FIMBank Group Annual Report & Financial Statements 2022
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The Nomination and Remuneration Committee Members as at 31 December 2022 are the following:
Masaud M.J. Hayat (Chairman)
Majed Essa Ahmed Al-Ajeel (Vice Chairman)
Abdel Karim A.S. Kabariti (Member)
Edmond Brincat (Member)
Rogers David LeBaron (Member)
John C. Grech (FIMBank Chairman) and Adrian A. Gostuski (GCEO) are non-voting, permanent invitees of the NRC.
During 2022, the Nomination and Remuneration Committee met on six occasions.
All members were present for all six meetings except for Masaud M.J. Hayat who was excused for the January meeting and Abdel Karim A.S. Kabariti
who was excused for the March, April, and June meetings.
Corporate governance committee
The purpose of the Corporate Governance Committee (“CGC”) is to review the Bank’s internal delegations, policies and procedures to ensure
compliance with legislative and regulatory requirements and alignment to industry’s best practice.
The Corporate Governance Committee Members as at 31 December 2022 are the following:
Majed Essa Ahmed Al-Ajeel (Chairman)
John C. Grech (Vice Chairman)
Abdel Karim A.S. Kabariti (Member)
Claire Imam Thompson (Member)
Rogers David LeBaron (Member)
During 2022, the Corporate Governance Committee met on four occasions.
Changes to committee membership during 2022
During 2022, Erich Schumacher was appointed Member of the Board Risk Committee and Osama Talat Al-Ghoussein retired, resulting in Mr. Al-
Ghoussein no longer being a Member of the Board Risk Committee.
Principles 9 and 10: Commitment to institutional shareholders, an informed market and
transparency in dealings by directors, management and staff
The Chairman arranges for all Directors including the Chairmen of all the Committees to be available to answer questions at the Annual General
Meeting. All eligible Shareholders are served with a notice to attend the Annual General Meeting, which as a result of the pandemic and further to
legislative amendments carried out to the Companies Act in this respect, during the year 2022 the Annual General Meeting of the Bank was held in
June. The notice contains all the resolutions proposed for approval by the Annual General Meeting and, as necessary, notes accompanying such
resolutions. Pursuant to the Companies Act, notices are delivered to Shareholders at least fourteen clear days before the date of the Annual General
Meeting. Advance notification of the resolutions proposed for approval is also given by way of a Company Announcement as soon as these are
decided and approved, normally at the same Board Meeting that approves the Annual Financial Statements. The Board also considers the Annual
Report to be an effective document which, in addition to the statutory disclosures, contains detailed information about the Group’s performance.
Moreover, the Board ensures that the Annual General Meeting serves as a medium at which information is communicated to Shareholders in a
transparent and accountable manner. Additionally, the Bank holds meetings from time to time with financial intermediaries and financial market
practitioners to disseminate information about the Group’s progress, activities and financial performance. These meetings are usually organised to
follow the publication of the half yearly and annual financial results as well as in connection with other Group developments and events. Procedures
are in place to resolve conflicts between minority shareholders and controlling shareholders.
The Board complies with the provisions of the Bank’s Memorandum and Articles of Association, as well as all legislation, rules and regulations that
require it to maintain a fair and informed market in the Bank’s equity securities. It discharges its obligations by having in place, formal procedures
for dealing with potentially price-sensitive information and ensuring the proper conduct of its officers and employees in that regard. Regular contact
with Shareholders and the general market is maintained through Company Announcements, which are issued in conformity with the obligations
arising from the Capital Markets Rules. During 2022 the Bank issued nine announcements.
FIMBank Group Annual Report & Financial Statements 2022
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The Board also complies with the provisions of the Bank’s Articles of Association insofar as minority rights are concerned. In accordance with article
65 of the Bank’s Articles of Association, minority Shareholders may convene an Extraordinary General Meeting, in the same manner, as nearly as
possible, as that in which meetings may be convened by the Directors.
The Bank also maintains a presence on the web through www.fimbank.com which, includes an informative and comprehensive Investor Relations
section that contains, amongst other things, all Company Announcements, Annual General Meeting information and regulated information.
The FIMBank Financial Instruments Internal Code of Dealing which has been drawn up in accordance with the requirements of the Capital Markets
Rules contains dealings restriction guidelines and reporting procedures to be observed by Directors, management and employees when dealing, or
prospecting to deal, in the Bank’s equity securities. Directors and employees are also notified by the Company Secretary of their obligations to
observe the restricted ‘time-windows’ accompanying the publication of half yearly and annual financial results during which no dealings in the
Bank’s equity securities are allowed.
Control by any Shareholder, whether direct or indirect, and any potential abuse thereof, is regulated by the Banking Act and Rules issued thereunder.
The Act and such Rules provide mechanisms for, and obligations on, persons intending to acquire control, as well as on all Directors and
management, to notify and report to the supervisory authorities in such eventuality. There are additional obligations on Directors in terms of the
Capital Markets Rules and there is good communication in place between the management, the Company Secretariat and the Board to ensure that
any issues are flagged and acted upon appropriately.
Principle 11: Conflicts of interest
While the overall tone for instilling a strong culture about the proper management of conflicts of interest is set at the top, situations of potential
conflicts of interest with Board Members are in the first instance specifically regulated by Clauses 119 and 120 of the Bank’s Articles of Association.
In terms of the Articles of Association, in the event of a conflict-of-interest situation, real or potential, arising in connection with any matter, the
interest has to be declared. In particular, the Director concerned refrains from taking part in proceedings relating to the matter and his vote is
excluded from the count of the decision. The minutes of Board Meetings, as well as those of Board Committees, invariably shall include a suitable
record of such declaration and of the action taken by the individual Director concerned. In the event that such steps do not eliminate the grounds
for conflict then the Director should consider resigning. Similar arrangements apply to management in the course of the conduct of their duties at
Board Committees. Besides, where Directors and management have related party involvements, these are reported and it is an integral part of the
Board Audit Committee’s terms of reference to provide oversight on related party transactions.
The number of shares held in the Bank by Directors directly in their name as at 31 December 2022 is as follows:
John C. Grech (Chairman) * 1,760,000
Abdel Karim A.S. Kabariti * Nil
Claire Imam Thompson Nil
Edmond Brincat Nil
Erich Schumacher* Nil
Hussain Abdul Aziz Lalani * Nil
Majed Essa Ahmed Al-Ajeel * Nil
Masaud M.J. Hayat (Vice Chairman) * Nil
Mohamed Fekih Ahmed * Nil
Rabih Soukarieh * Nil
Rogers David LeBaron Nil
‘ * ‘ Aside from these direct interests in the shareholding of the Bank, these Directors are considered to be associated with companies that hold a
beneficial interest in the Bank’s shareholding. No Shareholder is entitled to any automatic right to nominate or appoint a Director on the Board.
Details of outstanding loans, guarantees or similar facilities made available to related parties or beneficial interests thereof, including Directors, are
disclosed in the Notes to the Financial Statements.
Principle 12: Corporate social responsibility
We recognise that our social, environmental and ethical conduct has an impact on our reputation and the communities within which we operate,
and we therefore take our corporate social responsibilities (CSR) seriously. We consider CSR to be fundamental for FIMBank’s corporate culture.
We are committed to advancing our policies and systems across the Group to ensure that we address and monitor all aspects of CSR that are relevant
to our business. The Bank’s CSR strategy is built around our core values, thus reflecting the corporate commitments we make to our clients,
shareholders, employees and the Maltese community, which has hosted FIMBank’s head office since its inception.
FIMBank Group Annual Report & Financial Statements 2022
23
The objectives of our CSR programme are to maximise and protect shareholder value, while building socially responsible and ethically robust
relationships with clients and partners. It also aims to further policies which help maintain a work environment in which all our employees can thrive
professionally, while achieving a positive work-life balance. The CSR programme also has a strong focus on serving the communities in which we
operate, in terms of their social and environmental well-being.
Our commitment to CSR is aimed at ensuring that we perform in accordance with the highest standards of good governance and ethics, while
providing a constantly developing range of services that meets the rising expectations and changing requirements of our clients and business
partners. Our CSR programme is designed to allow us to attract and retain employees who are both technically qualified and guided by strong ethical
values. Our CSR initiatives are expected to provide meaningful support to the local community, while improving the social and environmental
impacts of our business practices.
Our CSR objectives are achieved by ensuring sound corporate governance and compliance practices, and increased transparency on reporting on
those activities, while maintaining ethical policies and providing training to ascertain that all employees perform with high standards of integrity
and trust. This will be supported through the provision of programmes designed to manage the long-term development of our employees, while
fostering an environment where employees can grow and excel. Our CSR efforts are based on driving corporate philanthropy that advances quality
of life. Given the market and regulatory environment in which the Bank operates, the success of our CSR also hinges on ensuring proper risk
management, data security and privacy programmes to safeguard all stakeholders.
Further details of CSR initiatives undertaken by the Group in 2022 are explained in the CEO’s Message of the Annual Report.
Part 2: Non-compliance with the principles
Principle 2.3: Chairman and chief executive
The existing Chairman of the Board of Directors is not an independent member in terms of the Capital Markets Rules. This notwithstanding, the
Bank considers the non-compliance with this Principle not to be of concern in view of the fact that John C. Grech has signed a written declaration
whereby he has declared that he undertakes to maintain in all circumstances his independence of analysis, decision and action, not to seek or accept
any unreasonable advantages that could be considered as compromising his independence and to clearly express his opposition in the event that
he finds that a decision of the Board may harm the Bank.
Principle 3: Composition of the board
Principle 3 in Appendix 5.1 of the Capital Markets Rules requires that the Board should be composed of executive and non-executive directors
including independent non- executives. The Board of Directors of FIMBank is comprised solely of Non-Executive Directors. This notwithstanding, the
Bank considers the non-compliance with this Principle not to be of concern in view of the fact that members of senior management and the Group
Chief Executive Officer attend Board Meetings by invitation depending on the agenda content and relevance. Furthermore, the Board Review and
Implementation Committee already consists of a mix of Non-Executive Directors and a member that forms part of the Bank’s Executive Management.
This provides the balance suggested in Principle 3.The Bank considers the non-compliance with principle 3 not to be of concern in view of the fact
that all Directors signed the written declaration of independence in 2022, whereby they all declared that they undertake to maintain in all
circumstances their independence of analysis, decision and action, not to seek or accept any unreasonable advantages that could be considered as
compromising their independence and to clearly express their opposition in the event that they find that a decision of the Board may harm the
Bank.
Principle 4: Succession policy for directors
Capital Markets Rule 4.2.7 calls on the Directors to develop a succession policy for the future composition of the Board, and ‘particularly the
executive component thereof, for which the Chairman should hold key responsibility’. The NRC, during its August meeting, discussed Directors’
succession planning on the basis of an internet-based global market research which among others took into consideration factors like gender, and
experience in financial services, IT and ESG including experience at international level. During the June and August meetings of 2022, the NRC
discussed the management succession plan as presented ensuring that the succession plan for management identifies both interim and long-term
successors.
FIMBank Group Annual Report & Financial Statements 2022
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Principle 8: Nomination and remuneration committee
The manner in which the Directors are nominated for appointment follows the procedure set out in the Articles of Association, i.e. any nomination
must be seconded by a Member or Members who in the aggregate holds at least 20,000 shares. This process is also rendered public with an
announcement in the Maltese press, usually in the first quarter of the financial year and in good time before the Annual General Meeting, which
allows at least ten business days for any nomination to be made to the Company Secretary.
The existing Chairman and Vice Chairman of the Nomination and Remuneration Committee are not independent members in terms of the Capital
Markets Rules, as set out in terms of Principle 8.A.1 of the Code of Principles of Good Corporate Governance. This notwithstanding, the Bank
considers the non-compliance with this Principle not to be of concern in view of the fact that both the Chairman and Vice Chairman of the NRC have
signed a written declaration whereby they have declared that they undertake to maintain in all circumstances their independence of analysis,
decision and action.
Internal control
The Board is ultimately responsible for the identification and evaluation of key risks applicable to the different areas of the business of the Group,
and for ensuring that proper systems of internal control are in place. The Board has delegated management with the task of creating an effective
control environment to the highest possible standards. The Internal Audit function performs periodic audits to specifically test compliance with
policies, standards and procedures and the effectiveness of the internal control environment within the Group. To ensure the effectiveness of the
internal systems of control the Head of Internal Audit reviews and tests such systems independently from management, adopting a risk-based
approach. The Internal Auditor reports to the Board Audit Committee, however, the Chairman of the Board of Directors is copied with all Internal
Audit Reports issued.
The Board has identified key features within the Group’s environment of internal controls to ensure compliance with the Principles. The
management is responsible for the identification and evaluation of key risks applicable to the respective areas of business. The Board receives
regular reports from management giving detailed and comprehensive analysis of financial and operational performance, including variance analysis
between budgeted and actual figures, activities and prospects.
Capital Markets Rule 5.97.5 and Rule 5.97.8
Capital Markets Rule 5.97.5 and Rule 5.97.8 are not applicable. Whilst Capital Markets Rule 5.97.5 is not applicable, this information is found in the
Directors’ Report.
It is also hereby declared that the contents of the Directors’ Report and of this Statement of Compliance with the Principles of Good Corporate
Governance cover the requirements of the provisions of Capital Markets Rule 5.97.
Approved by the Board of Directors and signed on its behalf by John C. Grech (Chairman) and Masaud M.J. Hayat (Vice Chairman) on 22 March
2023
FIMBank Group Annual Report & Financial Statements 2022
25
Remuneration report
For the year ended 31 December 2022
This Section incorporates the Statement of the Nomination and Remuneration Committee and the Directors’ Remuneration Report as required by
Chapters 5 and 12 of the Capital Markets Rules, respectively.
Statement of the Nomination and Remuneration Committee (as per
Section 8 of the Principles)
Terms of reference and membership
The Nomination and Remuneration Committee (“NRC”) is responsible for ensuring that the Directors and Executive Management of FIMBank Group
have the appropriate mix of skills, qualifications and experience necessary to fulfil their supervisory and management responsibilities. The NRC also
reviews on an annual basis, the remuneration of the Board of Directors and that of Executive Management and ensures that it is in line with the EBA
Guidelines on Sound Remuneration Policies EBA/GL/2022/04, Banking Rule 21 on Remuneration Policies and Practices and principles of good
governance.
As at 31 December 2022, the NRC was composed of five members, Masaud M.J. Hayat (Chairperson), Majed E. Al-Ajeel (Vice-Chairperson), Rogers
D. LeBaron, Edmond Brincat (Independent Member) and Abdel Karim A.S. Kabariti. John C. Grech and Adrian A. Gostuski in their capacity as
Chairperson of the Group and Group Chief Executive Officer (“GCEO”) respectively, attended the NRC’s meetings as permanent invitees. The Group
Chief Human Resources Officer (“GCHRO”) acted as Board Committee Secretary.
Meetings
The Committee met six times during the period under review, which meetings were attended as follows:
Members Attended
Masaud M.J. Hayat (Chairperson) 5
Majed Essa Ahmed Al-Ajeel (Vice-Chairperson) 6
Abdel Karim A.S. Kabariti (Member) 3
Edmond Brincat (Member) 6
Rogers David LeBaron (Member) 6
The following matters were discussed and, or determined:
a. Group appointed Directors;
b. Chairperson’s role and performance;
c. Directors’ remuneration;
d. Board of Directors evaluation, Director’s self-assessment and Board Committees self-assessment;
e. NRC Charter;
f. Board Committees memberships;
g. Group Remuneration Policy and Remuneration Policy Supplement;
h. Executive Management recruitment, appointments, performance, promotions, succession and remuneration;
i. Group salary review, bonus allocation and out of cycle increases/payments;
j. Succession planning for all entities;
k. Control functions (independence, recruitment, succession and performance);
l. Performance review of GCEO;
m. HR Policies;
n. NRC and Remuneration Policy statements for Annual Report;
o. Renewal of Egypt Factors CEO’s definite contract;
p. Issuance of Banking Rule 21;
q. Retirement and replacement of Director/Group appointed Director;
r. Remuneration Policy Statement, Statement of the NRC and Directors’ Remuneration Report – Approval for Annual Report;
s. Group Salary Review and Bonus Allocation;
t. Suitability and Succession Policy and Skills Matrix Template; and,
u. Board of Directors Suitability Assessment and Succession Planning / Board Succession Planning.
FIMBank Group Annual Report & Financial Statements 2022
26
Remuneration statement
The NRC has the role of making recommendations to the Board of Directors’ on remuneration. Decisions taken by the NRC are presented by the
NRC Chairperson to the Board for ratification or otherwise. The guiding principle, as outlined in the Remuneration Policy and the Remuneration
Policy Supplement, is that the remuneration for the Directors shall be competitive to ensure that the Group attracts and retains outstanding
individuals of integrity, calibre, credibility and who have the necessary skills and experience to bring an independent judgement to bear on the
issues of strategy, performance and resources for the success of the Group. Directors are remunerated through a fixed-remuneration structure
which varies according to whether the appointment is that of an independent Director or otherwise and to whether the Directors are chairpersons
or members of the other respective Board Committees.
The Annual General Meeting of Shareholders approves the maximum annual aggregate remuneration which the Directors may receive for the
holding of their office. At the Annual General Meeting held remotely on 14 June 2022, the Shareholders approved the maximum aggregate
emoluments of the Directors for the financial year ending 31 December 2022 at USD450,000 (2021: USD450,000). Directors, in their capacity as
Directors of the Bank, are not entitled to profit sharing, share options or pension benefits. The total fees paid specifically for Board of Directors
Meetings for the financial year ending 31 December 2022 amounted to USD201,720.
Code provision 8.A.5
For 2022, the total payments received by the Directors from the Bank and the Group were:
• fixed remuneration USD415,833
• variable remuneration Nil
• executive share options Nil
• fringe benefits USD400
The fixed annual remuneration is inclusive of remuneration with respect to Committee/s memberships.
The NRC ensures that while its remuneration practices are in compliance with existing EU/Maltese Directives and Regulations, including the
applicable Capital Requirements Directive V and the Capital Requirements Regulation, it also ensures that the remuneration packages reflect
industry benchmarks. This makes it possible for the Group to attract and retain Executives with the right qualities and skills for the proper
management of the Group as well as the proper execution of the strategy as laid down by the Board of Directors. Unless the current economic
scenario changes materially, no new significant changes are envisaged for the financial year ending 2023.
The various remuneration components, including that for Executive Management are:
• fixed remuneration (incl. fringe benefits); and
• variable remuneration
These components are combined to ensure an appropriate and balanced remuneration package that reflects the employee’s grade and professional
activity within the Group. Executive Management were not entitled to discretionary supplementary pension or early retirement schemes.
For 2022, the total payments received by Executive Management (members within the C-suite) from the Bank and the Group were:
• fixed remuneration (incl. fringe benefits) USD2,547,042
• variable remuneration USD621,763
• executive share options granted Nil
Additional disclosures on the governance process related to the variable portion of remuneration have been made under the Directors’
Remuneration Report and under the Remuneration Policy which can be found in the 2022 Pillar 3 Disclosures Report published on the Bank’s
website.
Executive Management of the Bank hold both definite and indefinite contracts with varying notice periods, all of which are in line with local
legislation. The contracts of Directors and Executive Management do not include provisions for termination payments and other payments linked
to early termination, except for those required by law.
NRC decisions are determined by the guidelines set by the Board of Directors when reviewing the Group budget.
FIMBank Group Annual Report & Financial Statements 2022
27
Directors’ Remuneration Report (as per Capital Market Rules 12.26K)
This Report is being included with the purpose of providing the level of transparency as required with effect from reporting year 2020, following the
enactment of Directive EU2017/828 (often referred to as “SRDII”) and the consequential changes to the Capital Markets Rules, more specifically
Chapter 12 which deals with shareholders’ rights. The amounts disclosed reflect the Remuneration Policy Supplement (“Policy”) as approved by the
Annual General Meeting held on 14 June 2022 and published on the Bank’s website. The Policy was implemented without making any derogations
and, or deviations from the procedure for the implementation of the Remuneration Policy as defined in Chapter 12 of the Capital Markets Rules.
The total remuneration of each individual director is detailed in tables below. The non-executive Directors only receive fixed fees for their
participation at Board and Committee level. Consequently, the percentage split between fixed and variable should be taken as 100% vs 0%. The
tables include remuneration received by the Bank’s Directors and the GCEO of the Bank, confirming that they did not receive any remuneration
from the Bank’s subsidiaries. The Deputy CEO, also included in the tables below in line with the requirement of Chapter 12 of the Capital Markets
Rules, received all his remuneration from London Forfaiting Company (LFC), the subsidiary where he holds the position of CEO. For information
about the general performance and events of material importance of the Group refer to the Statements of Profit or Loss and the Statements of
Other Comprehensive Income on pages 32 and 33 and in the Review of Performance section within the Director’s Report. These did not impact the
total remuneration of Directors. The Group’s approach to remuneration is that of ensuring that the Group is able to attract and retain talented and
high performing Directors by recognising, valuing and fairly rewarding their contributions while remaining aligned to the Group’s long-term strategy,
risk appetite, sustainable performance and corporate values.
The non-executive Directors did not receive any base salary, variable remuneration or compensation in respect of extraordinary items and pension
contributions.
Directors’ remuneration
*Difference
*Difference
2022
2021
RFY vs RFY-1
RFY-1 vs RFY-2
Name of director
USD
USD
%
%
Notes
John C. Grech
**100,400
101,032
(0.6)
2.84
No change in remuneration structure. Difference due
to minor change in the utilisation of fringe benefits in
2022 vs 2021
Masaud M.J. Hayat
19,750
17,000
16.2
(17.12)
No change in remuneration structure. Difference due
to number of meetings attended in 2022 vs 2021
Abdel Karim A.S. Kabariti
13,500
17,667
(23.6)
140.69
No change in remuneration structure. Difference due
to number of meetings attended in 2022 vs 2021
Claire Imam Thompson
46,000
38,333
0.0
-
No change in remuneration structure. Difference due
to 2022 being a full year
Edmond Brincat
46,000
47,333
(2.8)
1.64
No change in remuneration structure. Difference due
to change in committee membership in 2022 vs 2021
Eric Schumacher
7,917
-
NA
NA
Remuneration for 2022 is pro-rata representing
(August to December). % difference not applicable
Hussain Abdul Aziz Lalani
36,750
36,750
-
5.43
No change in remuneration structure
Majed Essa Ahmed Al-Ajeel
27,750
25,750
7.8
21.94
No change in remuneration structure. Difference due
to number of meetings attended in 2022 vs 2021
Mohamed Fekih Ahmed
27,000
27,000
-
(4.74)
No change in remuneration structure
Osama Talat Al-Ghoussein
3,167
19,000
(33.3)
(1.60)
No change in remuneration structure. Retired at the
end of Q1. Annualised difference due to number of
meetings attended in Q1
Rabih Soukarieh
25,000
23,000
8.7
(11.77)
No change in remuneration structure. Difference due
to number of meetings attended in 2022 vs 2021
Rogers David LeBaron
63,000
63,000
-
(0.07)
No change in remuneration structure
‘*’ Percentage annual change of remuneration (RFY vs RFY-1 vs RY-2) was based on annualised remuneration to allow for a meaningful comparison.
‘**’ The remuneration of the non-executive Directors comprises fees only, except for the case of the Chairperson of the Board of Directors whose
total emoluments for the 2022 comprise USD100,000 in fees and USD400 in fringe benefits.
FIMBank Group Annual Report & Financial Statements 2022
28
Name of director
Position
John C. Grech
Chairperson FIMBank BoD, Chairperson LFC BoD, Chairperson BRIC, Chairperson BCC, Vice Chairperson CGC,
Permanent Invitee NRC
Masaud M.J. Hayat
Vice Chairperson BoD, Chairperson NRC
Abdel Karim A.S. Kabariti
Member BoD, Member CGC, Member NRC
Claire Imam Thompson
Member BoD (independent member), Member AC, Member BRC, Member CGC
Edmond Brincat
Member BoD (independent member), Chairperson AC, Member NRC
Eric Schumacher
Member BoD, Member BRC
Hussain Abdul Aziz Lalani
Member BoD, Chairperson BRC, Vice Chairperson AC, Vice Chairperson BRIC, Member LFC BoD
Majed Essa Ahmed Al-Ajeel
Member BoD, Chairperson CGC, Vice Chairperson NRC, Member LFC BoD
Mohamed Fekih Ahmed
Member BoD, Member BCC, Member LFC BoD
Osama Talat Al-Ghoussein
Member BoD, Vice Chairperson BRC – retired on 31 March 2022
Rabih Soukarieh
Member BoD, Vice Chairperson BCC
Rogers David LeBaron
Member BoD, Member CGC, Member NRC, Permanent Invitee AC
Executive remuneration
2022
2021
*Difference
RFY vs RFY-1
*Difference
RFY-1 vs RFY-2
Name of executive
USD
USD
%
%
Notes
Adrian A. Gostuski
787,996
634,882
24.1
15.56
Increase in remuneration in 2022 vs 2021 is mainly due
to a higher variable remuneration and an increase in
fixed remuneration following the signing of a new
definite contract
Simon Lay
861,899
782,889
10.1
7.55
Increase in remuneration in 2022 vs 2021 is mainly due
to a salary increase and higher variable remuneration
‘ * ‘ Differences also include fluctuation in rate of exchange.
Name of executive
Position
Adrian A. Gostuski
GCEO FIMBank, Chairperson MCC, Chairperson ALCO, Member ERPC, Member ITSC, Member ORMC, Member
NCIC, Non-Voting Member BRIC, Chairperson Egypt Factors BoD, Chairperson India Factoring BoD, Chairperson
FPI BoD, Member Brasil Factors BoD, Member FBS BoD
Simon Lay
Deputy CEO FIMBank, CEO LFC, Member MCC, Member ALCO, Member ERPC
The Executives received all remuneration from the Bank with the exception of Simon Lay whose remuneration is received from a subsidiary of the
Bank.
Company performance
Performance indicators
2022
2021
2020
Difference RFY
vs RFY-1
Difference RFY-1
vs RFY-2
USD
USD
USD
%
%
Operating income/(loss) before net impairment
4,206,308
3,237,112
(5,823,426)
*29.9
*155.6
Loss for the year
(22,010,084)
(663,219)
(55,976,602)
**(3,218.7)
*98.8
Gross non-performing assets
94,001,953
119,068,469
174,337,048
*21.1
*31.7
‘ * ‘ Percentages in respect of FIMBank Performance are being shown as positive given that they denote improvements in these metrics.
‘**’ Percentage in respect of FIMBank Performance is being shown as negative given that this figure denotes a deterioration in this metric.
Average remuneration on full-time equivalent basis of employee
2022
2021
2020
Difference RFY
vs RFY-1
Difference RFY-1
vs RFY-2
USD
USD
USD
%
%
Employees of the Company
77,158
76,206
69,573
1.2
9.5
Employees of the Group
72,226
73,137
64,944
(1.2)
12.6
FIMBank Group Annual Report & Financial Statements 2022
29
Remuneration for executives for financial year 2022
Fixed remuneration
Variable remuneration
Name of
executive
Base
salary
Fees
Fringe
benefits
One-year
variable
Multi-
year
variable
Extraordinary
items
Pension
Expense
Total
remuneration
Proportion of
fixed and variable
remuneration
USD
USD
USD
USD
USD
USD
USD
USD
Adrian A. Gostuski
386,454
-
139,862
261,680
-
-
-
787,996
67%-33%
Simon Lay
425,334
-
128,175
210,768
-
-
97,622
861,899
76%-24%
The variable remuneration awarded to Executives during the reporting year (performance bonus in respect of financial year 2021) reflects their
overall performance. In determining the variable remuneration of both the GCEO and the Deputy CEO, their performance was assessed by the NRC
against specific goals related to financials as well as other criteria namely, service/client delivery, risk and control, leadership and people
management, market position and project and initiatives. On the basis of this assessment, the NRC approved an award of 100% of the maximum
awardable performance bonus to both the GCEO and the Deputy CEO. This in view of the GCEO’s extraordinary efforts to strategically redirect the
Group towards a more sustainable business model and Deputy CEO’s material contribution in ensuring that LFC remains a profit-making entity for
the Group also in 2021.
The Group did not reward any of its Directors with any share-based remuneration. Likewise, there was no need to reclaim any variable remuneration,
neither in the form of malus nor in the form of clawback.
Denotes membership of:
• FIMBank Board of Directors (BoD)
• Audit Committee (AC)
• Board Credit Committee (BCC)
• Board Review and Implementation Committee (BRIC)
• Board Risk Committee (BRC)
• Corporate Governance Committee (CGC)
• Nomination and Remuneration Committee (NRC)
• Asset Liabilities Committee (ALCO)
• Management Credit Committee (MCC)
• Emerging Risk and Provisioning Committee (ERPC)
• IT Steering Committee (ITSC)
• Operational Risk Management Committee (ORMC)
• Non-Credit Insurance Committee (NCIC)
In accordance with Capital Markets Rule 12.26N, the external auditors have checked that all information, as required in terms of Appendix 12.1 of
Chapter 12 of the Capital Markets Rules, has been included in the Directors’ Remuneration Report within this Remuneration Report.
FIMBank Group Annual Report & Financial Statements 2022
30
Statements of financial position
As at 31 December 2022
Group
Bank
2022
2021
2022
2021
Note
USD
USD
USD
USD
Assets
Balances with the Central Bank of Malta,
treasury bills and cash
19
211,883,765
239,982,048
Derivative assets held for risk management
20
1,610,475
841,688
Trading assets
21
-
-
Loans and advances to banks
22
130,851,134
182,458,548
Loans and advances to customers
23
729,767,493
745,564,139
Financial assets at fair value through
profit or loss
24
18,179,220
19,966,163
Financial assets at fair value through
other comprehensive income
25
-
162,408,542
Financial assets at amortised cost
26
183,292,866
9,914,754
Investments in subsidiaries
27
152,687,573
159,448,858
Property and equipment
28
4,770,241
1,965,249
Investment property
29
-
-
Intangible assets and goodwill
30
3,099,853
3,774,315
Current tax assets
-
66,667
Deferred tax assets
31
15,004,834
16,336,538
Other assets
32
4,291,634
3,848,321
Total assets
1,455,439,088
1,546,575,830
Liabilities and equity
Liabilities
Derivative liabilities held for risk management
20
818,031
1,533,556
Amounts owed to banks
33
386,787,784
497,633,356
Amounts owed to customers
34
877,538,831
838,675,598
Debt securities in issue
35
-
-
Current tax liabilities
-
-
Deferred tax liabilities
31
-
-
Provision for liabilities and charges
36
121,209
201,775
Other liabilities
37
10,498,948
7,921,481
Total liabilities
1,275,764,803
1,345,965,766
Equity
Share capital
38
261,221,882
261,221,882
Share premium
38
858,885
858,885
Reserve for general banking risks
38
-
2,218,995
Currency translation reserve
38
(13,717,527 )
(10,941,184 )
-
-
Fair value reserve
38
-
(1,074,305)
Other reserve
38
2,681,041
2,681,041
Accumulated losses
38
(67,240,656 )
(42,869,373 )
(85,087,523)
(65,296,434)
Total equity attributable to equity holders of the Bank
179,674,285
200,610,064
Non-controlling interests
39
-
-
Total equity
179,674,285
200,610,064
Total liabilities and equity
1,455,439,088
1,546,575,830
FIMBank Group Annual Report & Financial Statements 2022
31
Statements of financial position
As at 31 December 2022
Group
Bank
2022
2021
2022
2021
Note
USD
USD
USD
USD
Memorandum items
Contingent liabilities
40
36,131,883
39,327,362
Commitments
41
91,414,423
107,469,111
The official middle rate of exchange issued by the European Central Bank between US Dollar and Euro as at 31 December 2022 was 1.0666 (2021:
1.1326).
The Notes on pages 40 to 157 are an integral part of these Financial Statements.
The Financial Statements on pages 30 to 157 were approved and authorised for issue by the Board of Directors on 22 March 2023.
Signed by John C. Grech (Chairman) and Masaud M.J. Hayat (Vice Chairman) on 22 March 2023
FIMBank Group Annual Report & Financial Statements 2022
32
Statements of profit or loss
For the year ended 31 December 2022
Group
Bank
2022
2021
2022
2021
Note
USD
USD
USD
USD
Interest income
9
27,401,735
19,588,232
Interest expense
9
(17,663,162 )
(12,603,475 )
(13,509,191)
(10,457,006)
Net interest income
9
13,892,544
9,131,226
Fee and commission income
10
6,177,499
4,940,843
Fee and commission expense
10
(6,590,340 )
(5,061,985 )
(2,510,399)
(2,165,538)
Net fee and commission income
10
3,667,100
2,775,305
Net trading results
11
(6,924,935 )
1,411,029
(594,353)
Net (loss)/gain from other financial instruments carried
at fair value
12
(337,257 )
(337,257)
1,137,221
Dividend income
13
10,321,545
16,989,049
Gains/(Losses) on lease modifications
43.1
106,101
(27,037)
Other operating income
14
460,373
133,940
Other operating expenses
15
(364,205 )
(128,908 )
(364,205)
(128,906)
Operating income before net impairment
29,157,230
29,416,445
Net impairment charge on financial assets
5
(20,028,684 )
(1,970,935 )
(17,424,101)
(3,699,557)
Net impairment (charge)/gain on non-financial assets
-
-
Provision for other liabilities and charges
36
(500,000 )
-
-
Impairment of goodwill
30
(5,249,307 )
-
-
Impairment of investments in subsidiaries
27
(8,261,536)
(87,356)
Operating income
3,471,593
25,629,532
Administrative expenses
16
(34,660,839 )
(37,085,595 )
(22,139,252)
(23,213,366)
Depreciation and amortisation
28/30
(3,101,584 )
(3,334,779 )
(2,811,670)
(2,965,967)
Total operating expenses
(37,762,423 )
(40,420,374 )
(24,950,922)
(26,179,333)
Loss before tax
(24,714,440 )
(1,292,934 )
(21,479,329)
(549,801)
Taxation
17
(1,957,610 )
(2,319,589 )
(530,755)
(113,418)
Loss for the year
(26,672,050 )
(3,612,523 )
(22,010,084)
(663,219)
Loss attributable to:
Owners of the Bank
(26,590,278 )
(3,840,703 )
(22,010,084)
(663,219)
Non-controlling interests
39
(81,772 )
-
-
(26,672,050 )
(3,612,523 )
(22,010,084)
(663,219)
Earnings per share
Basic loss per share (US cents)
18
(5.09 )
(0.74 )
(4.21)
(0.13)
The Notes on pages 40 to 157 are an integral part of these Financial Statements.
FIMBank Group Annual Report & Financial Statements 2022
33
Statements of other comprehensive income
For the year ended 31 December 2022
Group
Bank
2022
2021
2022
2021
USD
USD
USD
USD
Loss for the year
(26,672,050 )
(3,612,523 )
(22,010,084)
(663,219)
Other comprehensive expense:
Items that will not be reclassified to profit or loss:
Movement in fair value reserve:
– Property and equipment - net change in fair value
(399,566 )
-
-
Related tax
-
-
(399,566 )
-
-
Items that are or may be reclassified subsequently to
profit or loss:
Movement in translation reserve:
– Foreign operations - foreign currency translation differences
(2,840,781 )
(1,677,971 )
-
-
Movement in fair value reserve:
– Debt investments in fair value through other comprehensive
income - net change in fair value
(3,484,283 )
-
(3,484,283)
– Debt investments in fair value through other comprehensive
income - reclassified to profit or loss
(749,186 )
-
(749,186)
– Debt investments in fair value through other comprehensive
income - reclassification to amortised cost
2,406,009
-
Related tax
(1,331,704 )
(1,331,704)
745,583
(1,766,476 )
(5,165,857 )
1,074,305
(3,487,886)
Other comprehensive (expense)/income, net of tax
(1,296,199 )
(5,565,423 )
1,074,305
(3,487,886)
Total comprehensive expense
(27,968,249 )
(9,177,946 )
(20,935,779)
(4,151,105)
Total comprehensive expense attributable to:
Owners of the Bank
(27,822,039 )
(9,399,277 )
(20,935,779)
(4,151,105)
Non-controlling interests
(146,210 )
-
-
(27,968,249 )
(9,177,946 )
(20,935,779)
(4,151,105)
FIMBank Group Annual Report & Financial Statements 2022
34
Statements of changes in equity
For the year ended 31 December 2022
Group
Attributable to equity holders of the Bank
Share
capital
Share
premium
Reserve for
general
banking risks
Currency
translation
reserve
Fair value
reserve
Other
reserve
Accumulated
loss
Total
Non-
controlling
interests
Total
equity
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
Balance at 1 January 2022
(10,941,184 )
(42,869,373 )
Total comprehensive expense
Loss for the year
(26,590,278 )
(26,590,278 )
(81,772 )
(26,672,050 )
-
Other comprehensive expense:
Fair value reserve:
– Debt investments at fair value through other
comprehensive income - net change
in fair value
– Debt investments at fair value through other
comprehensive income - reclassified
to profit or loss
– Debt investments at fair value through other
comprehensive income – reclassification to
amortised cost
– Property and equipment - net change in fair value
Translation reserve:
– Foreign operations - foreign translation difference
(2,776,343 )
(2,776,343 )
(64,438 )
(2,840,781 )
Total other comprehensive expense
(2,776,343 )
(1,231,761 )
(64,438 )
(1,296,199 )
Total comprehensive expense
(2,776,343 )
(26,590,278 )
(27,822,039 )
(146,210 )
(27,968,249 )
Transfer between reserves
(2,218,995 )
Balance at 31 December 2022
(13,717,527 )
(67,240,656 )
FIMBank Group Annual Report & Financial Statements 2022
35
Statements of changes in equity
For the year ended 31 December 2022
Group
Attributable to equity holders of the Bank
Share
capital
Share
premium
Reserve for
general
banking risks
Currency
translation
reserve
Fair value
reserve
Other
reserve
Accumulated
loss
Total
Non-
controlling
interests
Total
equity
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
Balance at 1 January 2021
(10,011,229 )
(39,027,680 )
Total comprehensive expense
Loss for the year
(3,840,703 )
(3,840,703 )
(3,612,523 )
Other comprehensive expense:
Fair value reserve:
– Debt investments at fair value through other
comprehensive income - net change
in fair value
(2,738,700 )
(2,738,700 )
(2,738,700 )
– Debt investments at fair value through other
comprehensive income - reclassified
to profit or loss
(749,186 )
(749,186 )
(749,186 )
– Property and equipment - net change in fair value
(399,566 )
(399,566 )
(399,566 )
Translation reserve:
– Foreign operations - foreign translation difference
(1,671,122 )
(1,671,122 )
(6,849 )
(1,677,971 )
Total other comprehensive expense
(1,671,122 )
(3,487,886 )
(399,566 )
(5,558,574 )
(6,849 )
(5,565,423 )
Total comprehensive expense
(1,671,122 )
(3,487,886 )
(4,240,269 )
(9,399,277 )
(9,177,946 )
Transfer between reserves
(1,139,743 )
Balance at 31 December 2021
(10,941,184 )
(42,869,373 )
FIMBank Group Annual Report & Financial Statements 2022
36
Statements of changes in equity
For the year ended 31 December 2022
Bank
Share
capital
Share
premium
Reserve for
general
banking risks
Fair value
reserve
Other
reserve
Accumulated
losses
Total
equity
USD
USD
USD
USD
USD
USD
USD
Balance at 1 January 2022
261,221,882
858,885
2,218,995
(1,074,305)
2,681,041
(65,296,434)
200,610,064
Total comprehensive expense
Loss for the year
-
-
-
-
-
(22,010,084)
(22,010,084)
Other comprehensive income:
Fair value reserve:
– Debt investments at fair value through other comprehensive income
net change in fair value
-
-
-
-
-
-
-
– Debt investments at fair value through other comprehensive income
reclassified to profit or loss
-
-
-
-
-
-
-
– Debt investments at fair value through other comprehensive income
reclassification to amortised cost
-
-
-
1,074,305
-
-
1,074,305
Total other comprehensive income
-
-
-
1,074,305
-
-
1,074,305
Total comprehensive expense
-
-
-
1,074,305
-
(22,010,084)
(20,935,779)
Transfer between reserves
-
-
(2,218,995)
-
-
2,218,995
-
Balance at 31 December 2022
261,221,882
858,885
-
-
2,681,041
(85,087,523)
179,674,285
FIMBank Group Annual Report & Financial Statements 2022
37
Statements of changes in equity
For the year ended 31 December 2022
Bank
Share
capital
Share
premium
Reserve for
general
banking risks
Fair value
reserve
Other
reserve
Accumulated
losses
Total
equity
USD
USD
USD
USD
USD
USD
USD
Balance at 1 January 2021
261,221,882
858,885
3,358,738
2,413,581
2,681,041
(65,772,958)
204,761,169
Total comprehensive expense
Loss for the year
-
-
-
-
-
(663,219)
(663,219)
Other comprehensive expense:
Fair value reserve:
– Debt investments at fair value through other comprehensive income
net change in fair value
-
-
-
(2,738,700)
-
-
(2,738,700)
– Debt investments at fair value through other comprehensive income
reclassified to profit or loss
-
-
-
(749,186)
-
-
(749,186)
Total other comprehensive expense
-
-
-
(3,487,886)
-
-
(3,487,886)
Total comprehensive expense
-
-
-
(3,487,886)
-
(663,219)
(4,151,105)
Transfer between reserves
-
-
(1,139,743)
-
-
1,139,743
-
Balance at 31 December 2021
261,221,882
858,885
2,218,995
(1,074,305)
2,681,041
(65,296,434)
200,610,064
FIMBank Group Annual Report & Financial Statements 2022
38
Statements of cash flows
For the year ended 31 December 2022
Group
Bank
2022
2021
2022
2021
USD
USD
USD
USD
Cash flows from operating activities
Interest and commission receipts
41,447,798
28,973,357
Exchange received
15,912,422
9,317,492
Interest and commission payments
(22,566,935 )
(12,647,022 )
(13,460,067)
(13,639,330)
Payments to employees and suppliers
(36,264,817 )
(34,541,419 )
(22,429,122)
(21,384,875)
Operating profit before changes in operating
assets/liabilities
21,471,031
3,266,644
(Increase)/Decrease in operating assets:
– Trading assets
(3,788,591 )
-
-
– Loans and advances to customers and banks
(49,314,586 )
33,519,596
9,902,960
– Other assets
(513,833 )
(345,894)
1,878,571
(Decrease)/Increase in operating liabilities:
– Amounts owed to customers and banks
(7,758,320 )
(102,639,099 )
(13,640,792)
(114,492,171)
– Other liabilities
(217,251 )
(40,600 )
(223,771)
(31,993)
– Net advances from subsidiary companies
(13,749,925)
(19,141,340)
Net cash generated from/(absorbed by) operating activities
before income tax
(121,280,101 )
27,030,245
(118,617,329)
Income tax paid
(1,282,984 )
(409,062 )
(476,091)
(115,683)
Net cash flows generated from/(used in) operating activities
(121,689,163 )
26,554,154
(118,733,012)
Cash flows from investing activities
Payments to acquire financial assets at fair value
through other comprehensive income
(74,874,050 )
-
(74,874,050)
Payments to acquire financial assets at amortised cost
(40,118,426 )
(40,118,426)
-
Payments to acquire treasury bills at amortised cost
(429,590,021 )
(429,590,021)
-
Payments to acquire shares in subsidiary companies
(252)
-
Payments to acquire property and equipment
(1,113,450 )
(518,656 )
(916,620)
(399,511)
Payments to acquire intangible assets
(318,308 )
(779,861 )
(318,308)
(779,881)
Proceeds on disposal of financial assets at fair value
through profit or loss
127,493
160,770
Proceeds on disposal of financial assets at fair value
through other comprehensive income
-
50,918,619
Proceeds on disposal of financial assets at amortised cost
22,800,719
-
Proceeds on disposal of treasury bills at amortised cost
296,265,806
-
Proceeds on disposal of property and equipment
1,565
9,751
Receipt of dividend
8,821,545
4,889,049
Net cash flows used in investing activities
(148,104,913 )
(23,994,238 )
(142,926,499)
(20,075,253)
Decrease in cash and cash equivalents c/f
(103,023,455 )
(145,683,401 )
(116,372,345)
(138,808,265)
FIMBank Group Annual Report & Financial Statements 2022
39
Statements of cash flows
For the year ended 31 December 2022
Group
Bank
2022
2021
2022
2021
USD
USD
USD
USD
Decrease in cash and cash equivalents b/f
(103,023,455 )
(145,683,401 )
(116,372,345)
(138,808,265)
Cash flows from financing activities
– Net movement in debt securities
(29,806,615 )
(5,490,217 )
-
-
– Payment of lease liabilities
(700,703 )
(1,139,127 )
(1,330,082)
(1,787,096)
Net cash flows used in financing activities
(30,507,318 )
(6,629,344 )
(1,330,082)
(1,787,096)
Decrease in cash and cash equivalents
(133,530,773 )
(152,312,745 )
(117,702,427)
(140,595,361)
Analysed as follows:
– Effect of exchange rate changes on cash and cash equivalents
(15,406,845 )
(24,586,990 )
(14,867,995)
(26,036,980)
– Net (decrease) in cash and cash equivalents
(118,123,928 )
(127,725,755 )
(102,834,432)
(114,558,381)
Decrease in cash and cash equivalents
(133,530,773 )
(152,312,745 )
(117,702,427)
(140,595,361)
Cash and cash equivalents at beginning of year
127,314,325
267,909,686
Cash and cash equivalents at end of year
(43,919,669 )
9,611,898
127,314,325
FIMBank Group Annual Report & Financial Statements 2022
40
Notes to the financial statements
For the year ended 31 December 2022
1
Reporting entity
25
Financial assets at fair value through
2
Basis of preparation
other comprehensive income
3
Significant accounting policies
26
Financial assets at amortised cost
4
Changes in accounting policies
27
Investments in subsidiaries
5
Financial risk review
28
Property and equipment
6
Fair values of financial instruments
29
Investment property
7
Classification of financial assets and liabilities
30
Intangible assets and goodwill
8
Operating segments
31
Deferred taxation
9
Net interest income
32
Other assets
10
Net fee and commission income
33
Amounts owed to banks
11
Net trading results
34
Amounts owed to customers
12
Net (loss)/gain from other financial instruments
35
Debt securities in issue
carried at fair value
36
Provision for liabilities and charges
13
Dividend income
37
Other liabilities
14
Other operating income
38
Equity
15
Other operating expenses
39
Non-controlling interest
16
Administrative expenses
40
Contingent liabilities
17
Taxation
41
Commitments
18
Earnings per share
42
Cash and cash equivalents
19
Balances with the Central Bank of Malta,
43
Leases
treasury bills and cash
44
Related parties
20
Derivatives held for risk management
45
Capital commitments
21
Trading assets
46
Financial commitments
22
Loans and advances to banks
47
Subsequent events
23
Loans and advances to customers
48
Ultimate parent company
24
Financial assets at fair value through profit or loss
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Statement by the directors pursuant to Capital Markets
Rule 5.68
For the year ended 31 December 2022
We, the undersigned, declare that to the best of our knowledge, the Financial Statements set out on pages 30 to 157 prepared in accordance with
the requirements of International Financial Reporting Standards as adopted by the EU give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Bank and its subsidiaries included in the consolidation taken as a whole and that this report includes a fair review
of the development and performance of the business and the position of the Bank and its subsidiaries included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they face.
Signed on behalf of the Board of Directors by John C. Grech (Chairman) and Masaud M.J. Hayat (Vice Chairman) on 22 March 2023
FIMBank Group Annual Report & Financial Statements 2022
159
Independent auditors’ report
To the shareholders of FIMBank p.l.c.
1 Report on the audit of the financial statements
Opinion
We have audited the financial statements of FIMBank p.l.c. (the “Bank” or the “Company”) and of the Group of which the Company is the parent,
which comprise the statements of financial position as at 31 December 2022, the statements of profit or loss and other comprehensive income,
changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory
information.
In our opinion, the accompanying financial statements:
a. give a true and fair view of the financial position of the Bank and the Group as at 31 December 2022, and of their financial performance and
their cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the EU; and
b. have been properly prepared in accordance with the provisions of the Companies Act, 1995 (Chapter 386, Laws of Malta) (the “Act”) and the
Banking Act, 1994 (Chapter 371, Laws of Malta) (the “Banking Act”) and, additionally, specifically in relation to those of the Group, with the
requirements of Article 4 of the Regulation on the application of IFRS as adopted by the EU.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further
described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We are independent of the Company
in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards) (“IESBA Code”), together with the ethical requirements that are relevant to our audit of the financial
statements in accordance with the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy
Profession Act (Chapter 281, Laws of Malta), and we have fulfilled our other ethical responsibilities in accordance with these requirements and
the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of
the current year (selected from those communicated to the audit committee), and include a description of the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We summarise below the key audit matters, together with our response by way of the audit procedures we performed to address that matter
in our audit, and key observations arising with respect to such risks of material misstatement.
FIMBank Group Annual Report & Financial Statements 2022
160
Independent auditors’ report
To the shareholders of FIMBank p.l.c.
Key audit matters (continued)
Assessment of the carrying amounts of goodwill at group level and investment in subsidiaries at
company level
Accounting policy notes 2.4.2, 3.1.1, 3.1.2, 3.16, 3.19 and 3.20 to the financial statements and notes 27 and 30 for further disclosures.
‘Goodwill’ (Group: Nil); and ‘Investment in subsidiaries’ (Company: USD152,687,573).
‘Investment in subsidiaries’ includes, among others, the investment in The Egyptian Company for Factoring S.A.E. (referred to as “Egypt Factors”)
and, indirectly through FIM Factors B.V., the investment in India Factoring and Finance Solutions Private Limited (referred to as “India
Factoring”), to which the key audit matter relates.
The Group
During the current year, the Group has written off all goodwill which arose in prior years in relation to the acquisition of the interests in Egypt
Factors and India Factoring (the “components”). Both components are separately identified by the Group as cash generating units (“CGU” or
”CGUs”), in line with the applicable financial reporting framework, as they generate cash-inflows for the Group that are largely independent of
the cash inflows generated by other assets or groups of assets.
At Group level, an assessment of each CGU is required annually by the relevant financial reporting framework to establish whether the
recoverable amount is at least equal to the carrying amount, and therefore, whether any impairment should be recorded. Significant judgement
is required in determining the recoverable amount of each CGU.
The Company
‘Investments in subsidiaries’ are carried at cost less any impairment losses in the Company’s statement of financial position. That financial
statement caption includes the components to which those CGUs relate (Egypt Factors and India Factoring). Any impairment relating to those
CGUs may result in the Company’s investment in subsidiaries being impaired should such impairment result in the recoverable amount of the
related investment being lower than its carrying amount.
Our response
For the Egypt Factors CGU, as part of our procedures:
• we evaluated the reasonableness of the data used in the preparation of the cash flow forecasts (in the main, projected factoring volumes
and margins) with reference to our understanding of the component’s historical trends and the current economic environment;
• we involved our valuation specialist to assist us in assessing the valuation of Egypt Factors. Involvement included assessing (i) the
appropriateness of the selected valuation model; and (ii) whether the discount rates and the expected long-term growth rates applied to the
cash flow forecasts were within a reasonable range by comparison with market data;
• we assessed the impact of reasonable possible changes in the key assumptions in the valuation model including discount rates and expected
long term growth rates used for estimating the recoverable amount of the CGU in concluding on the impairment assessment, and assessed
whether there were any indicators of management bias in the selection of those assumptions;
• we compared the Group’s and Company’s 2022 budgets with the actual performance for the reporting period, and made enquiries as to the
reasons for any significant variations identified and assessed the reasonableness of the explanations provided, by corroborating these against
our knowledge of the Group; and
• we assessed whether the impairment loss on goodwill and investment in Egypt Factors recognised as at 31 December 2022 is appropriate.
FIMBank Group Annual Report & Financial Statements 2022
161
Independent auditors’ report
To the shareholders of FIMBank p.l.c.
Key audit matters (continued)
Assessment of the carrying amounts of goodwill at group level and investment in subsidiaries at
company level (continued)
Our response (continued)
For the India Factoring CGU, as part of our procedures:
• we evaluated the reasonableness of the data and assumptions used in determining the fair value less cost to dispose;
• we involved our valuation specialist to assist us in assessing the valuation of India Factoring. Involvement included assessing
i. the appropriateness of the selected valuation model; and
ii. whether the fair value less cost to dispose is reflective of the price that would be received to sell an asset in an orderly transaction
between market participants at the measurement date under current market conditions, less incremental costs directly attributable to
the disposal of the CGU;
• we assessed the impact of reasonable possible changes in the key assumptions in the valuation model including discount rates and price to
book multiple; and
• we assessed whether the impairment loss on goodwill and investment in India Factoring recognised as at 31 December 2022 is appropriate.
We have no key observations to report, specific to this matter.
Recoverability of recognised deferred tax assets
Accounting policy note 3.9 to the financial statements and note 31 for further disclosures.
‘Deferred tax assets’ (Group: USD22,001,417 and Company: USD15,004,834).
The Group and the Company recognised deferred tax assets in respect of the future benefit of net deductible temporary differences and
accumulated tax losses. In accordance with the applicable financial reporting framework, the recognition of those deferred tax assets is
permitted to the extent that it is probable that future taxable profits will be available against which these assets can be used. Such restrictions
are more pronounced in certain jurisdictions, in which the Group operates, where the carry forward of losses to future periods are time-barred.
The recognition of deferred tax assets, therefore, requires significant judgement in estimating future profitability (and the extent of taxable
profits) based on business plans drawn up by the directors. Due to estimation uncertainty, the projected relief of the tax losses, for which the
deferred tax assets are recognised, might be materially different from the amount ultimately relieved.
Our response
As part of our procedures:
• we assessed the applicability of enacted and substantively enacted tax laws that support the recognition of the deferred tax assets;
• we evaluated the assumptions underlying the Company’s and its subsidiaries’ projections used to support the recognition of the deferred tax
asset having regard to:
i. our understanding of the respective jurisdiction and applicable fiscal legislation; and
ii. the current pipeline of new business;
• specifically in relation to carry forward losses subject to time-barring, we also assessed the impact of reasonable possible changes in the
underlying assumptions of the forecasts on the Group’s ability to utilise the losses before their expiry; and
• we compared the Group’s and Company’s 2022 budgets with the actual performance for the reporting period, and made enquiries as to the
reasons for any significant variations identified and assessed the reasonableness of the explanations provided, by corroborating these against
our knowledge of the Group and by evaluating the sales pipeline and evidencing a significant shift in lower risk business as a result of the
Group’s continued de-risking process.
We have no key observations to report, specific to this matter.
FIMBank Group Annual Report & Financial Statements 2022
162
Independent auditors’ report
To the shareholders of FIMBank p.l.c.
Key audit matters (continued)
Measurement of impairment allowances on loans and advances measured at amortised cost,
including off-balance sheet elements of the allowance
Accounting policy note 3.10.8 to the financial statements and notes 2.4.1, 2.4.2, 5.2.1.1, 5.2.1.4, 22, 23, and 36 for further disclosures.
Expected credit loss allowance on loans and advances to banks at amortised cost (Group: USD155,157,319 and Company: USD131,301,380)
amounted to USD474,691 - Group and USD450,246 - Company.
Expected credit loss allowance on loans and advances to customers at amortised cost (Group: USD667,862,065 and Company: USD798,128,409)
amounted to USD75,076,908 - Group and USD68,360,916 - Company.
Expected credit loss provision on off-balance sheet credit exposures (Group: USD112,135,905 and Company: USD 127,546,306) amounted to
USD320,895 - Group and USD121,209 - Company.
Subjective estimate
The calculation of Expected Credit Loss (“ECL”) involves significant judgement and estimates. Of all the Group’s financial instruments, the most
significant impact in terms of complexities around the measurement of the ECL and of the materiality of the resultant allowances was in relation
to the Group’s lending activities to banks and customers (and the related off-balance sheet elements). In that regard, our key areas of audit
focus in the Group’s calculation of the ECL were the following:
• Model estimation - Inherently judgmental modelling is used to estimate ECLs which involve determining ‘Probabilities of Default’ (“PD”),
‘Loss Given Default’ (“LGD”), and ‘Exposures at Default’ (“EAD”). In particular, the PD models are the key drivers of the Group’s ECL calculation
and are therefore the most significant judgmental element of the Group’s ECL modelling approach;
• Economic scenarios - Significant judgment is applied in determining the selection of (i) forward-looking macroeconomic scenarios, (ii) the
associated scenario probabilities and (iii) the material economic variables which drive the scenarios and the related weightings;
• Qualitative adjustments to the model-driven ECL results may be raised by the Group to address known impairment model limitations or
emerging trends. Estimating those adjustments also involves significant judgement;
• Identification of a significant increase in credit risk (“SICR”) is also a key area of judgement within the Group’s ECL calculation, as the
application of the SICR criteria determines whether a twelve month or lifetime provision is recorded; and
• Individually assessed as stage 3 exposures may be materially misstated if individual impairments are not appropriately identified and
estimated. The calculation of expected credit losses includes a range of estimates of future cash flows and valuation of collateral, which are
inherently uncertain and judgemental.
The disclosures regarding the application of IFRS 9 are key to explaining the key judgements made, as referred to in this key audit matter, and
inputs used to generate the IFRS 9 ECL results.
FIMBank Group Annual Report & Financial Statements 2022
163
Independent auditors’ report
To the shareholders of FIMBank p.l.c.
Key audit matters (continued)
Measurement of impairment allowances on loans and advances measured at amortised cost,
including off-balance sheet elements of the allowance (continued)
Our response
As part of our procedures:
• we assessed the design and implementation as well as the operating effectiveness of controls within the ECL process with respect to (a) the
approval of the credit application by the Credit Committee or the delegated authority (depending on monetary value); and (b) the review of
ECL provision levels and movements by the Head of Finance and the Chief Risk Officer;
• we involved our financial risk modelling specialists in evaluating:
o the appropriateness of the Group’s selected IFRS 9 impairment methodologies within the ECL model by reference to the sensitivity
analysis as performed by the Group with respect to the ECL model results; and
o the appropriateness of the SICR criteria used; and
• we involved our economics specialists to assist in assessing:
o the appropriateness of the Group’s methodology for determining the macroeconomic scenarios used and the reasonableness of the
probability weightings applied to them; and
o the relevance of the key macroeconomic variables used in the ECL model.
Specifically in relation to a sample of performing loans (‘stage 1’ and ‘stage 2’), we:
• performed testing over key data elements (EAD, PD and LGD) impacting the ECL calculations to assess the accuracy of information used; and
• performed tests to determine whether a significant increase in credit risk was appropriately identified by the Group, including ‘days past
due’.
Specifically in relation to a sample of loans and advances discussed in the Board Risk Committee and the Credit Committee (the “focus
exposures”), including those not otherwise automatically captured by the ECL model as non-performing loans (‘stage 3’):
• we performed credit reviews focusing on the borrowers’ ability to repay from normal operations, the performance history of the account
and receipts after the financial reporting date; and
• in the case of non-performing loans, we evaluated the appropriateness of the inputs, particularly the LGD and discount rates used in the ECL
model. In cases where the LGD involved the realisation of collateral, we corroborated the extendible value of collateral with external data
sources.
We assessed management’s determination for the need of any post model adjustments required to capture possible model defects.
We assessed whether the disclosures in relation to IFRS 9 adequately explain the key judgements made and significant inputs used in the
recognition of expected credit losses as at the end of the financial reporting period.
We have no key observations to report, specific to this matter.
FIMBank Group Annual Report & Financial Statements 2022
164
Independent auditors’ report
To the shareholders of FIMBank p.l.c.
Key audit matters (continued)
Valuation of unquoted assets measured at fair value
Accounting policy notes 2.4.2, 3.10.9 and 3.12 to the financial statements and notes 21 and 24 for further disclosures.
Shares in two sub-funds of a local unlisted collective investment scheme (Bank and Group: USD17,373,300) included within ‘Financial assets at
fair value through profit or loss’; and ‘Trading assets’ (Group: USD444,583,661).
The fair value of certain financial assets held by the Group is determined through the application of valuation techniques that involve the exercise
of judgement, and the use of assumptions based on limited observable market data. These unquoted assets relate primarily to:
• the equity instruments in the form of shares (classified as financial assets at fair value through profit or loss) held in two sub-funds of a local
unlisted collective investment scheme (“the Funds”) which hold assets that cannot be valued through observable market data; and
• the trading assets, held by London Forfaiting Company Limited (“LFC”), that represent forfaiting assets (discounted receivables generated
from an export contract) whose valuation incorporates significant unobservable inputs.
Our response
For equity instruments held in the Funds we performed the following:
• we assessed the audited financial information of the Funds and quarterly net asset value as published by the fund administrator;
• we evaluated available financial information in relation to direct exposures held by the Funds and assessed replies to further enquiries in
relation to these direct exposures; and
• we considered other relevant publicly available information.
In relation to forfaiting financial assets, as part of our procedures:
• we assessed the design and implementation as well as the operating effectiveness of the following controls:
o Approval levels for all deals;
o Authorisation of accounting instructions; and
o Management review control – Review of rationale of risk margin.
• we involved our valuation specialist to independently reprice a sample of fixed and floating forfaiting assets in order to determine a range
of the fair value, for the purpose of testing the LFC’s methodology. The final sample included counterparties and contracts which cover each
country and industry in the forfaiting assets portfolio where exposure was material;
• we tested a sample of exposures covering all countries and industries within the residual population, by challenging LFC as to the validity of
the assumptions used in setting the risk premium within the discount rate by assessing consistency with publicly available information and
information from other sources;
• we tested the accuracy of the LIBOR rates and other inputs (such as the average life at value date, average LIBOR) employed by LFC by
comparing the LIBOR rates with information available to the public from tested sources, and other inputs to data within the forfeiting system;
and
• we also back tested a sample of disposals during the year to determine the appropriateness of the prior period valuations. This was achieved
by comparing the disposal price of the asset with the latest fair value, at end of the month prior to sale of the asset to determine whether
those fair values were appropriate.
We have no key observations to report, specific to this matter.
FIMBank Group Annual Report & Financial Statements 2022
165
Independent auditors’ report
To the shareholders of FIMBank p.l.c.
Other information
The directors are responsible for the other information. The other information comprises the:
• the ‘Chairman’s statement to the shareholders’;
• the ‘FIMBank group performance 2022’;
• the ‘Directors’ report’;
• the ‘Statement of compliance with the principles of good corporate governance’;
• the ‘Remuneration report’;
• the ‘Statement by the directors pursuant to Capital Markets Rule 5.68’; and
• the ‘Schedules to the annual report’
but does not include the financial statements and our auditors’ report thereon.
Our opinion on the financial statements does not cover the other information and, other than in the case of the directors’ report on which we
report separately below in our ‘Opinion on the Directors’ Report’, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information, and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial statements
The directors are responsible for the preparation of financial statements that (a) give a true and fair view in accordance with IFRS as adopted by
the EU, and (b) are properly prepared in accordance with the provisions of the Act and the Banking Act, and, additionally, specifically in relation
to those of the Group, with the requirements of Article 4 of the Regulation on the application of IFRS as adopted by the EU. The directors are
also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s and the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the Company and/or the Group or to cease operations, or have no realistic alternative but to do so.
The directors are also responsible for overseeing the financial reporting process.
FIMBank Group Annual Report & Financial Statements 2022
166
Independent auditors’ report
To the shareholders of FIMBank p.l.c.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. ‘Reasonable assurance’ is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
• Consider the extent of compliance with those laws and regulations that directly affect the financial statements, as part of our procedures
on the related financial statement items. For the remaining laws and regulations, we make enquiries of directors and other management,
and inspect correspondence with the regulatory authority, as well as legal correspondence. As with fraud, there remains a higher risk of
non-detection of other irregularities (whether or not these relate to an area of law directly related to the financial statements), as these
may likewise involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s and the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s and the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the
Company and/or the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to
express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
We communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and
communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit of the
financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law
or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
FIMBank Group Annual Report & Financial Statements 2022
167
Independent auditors’ report
To the shareholders of FIMBank p.l.c.
2 Opinion on the directors’ report
The directors are responsible for preparing a directors’ report in accordance with the provisions of article 177 of the Act and other applicable
legal requirements, and is to include a statement that the Company is a going concern with supporting assumptions or qualifications as
necessary, as required by Capital Markets Rule 5.62 issued by the Listing Authority in Malta.
We are required to consider whether the information given in the directors’ report for the accounting period for which the financial statements
are prepared is consistent with those financial statements; and, if we are of the opinion that it is not, we shall state that fact in our report. We
have nothing to report in this regard.
Pursuant to article 179(3) of the Act, other than for the non-financial information that is exclusively required to be disclosed by paragraph 8 of
the Sixth Schedule of the Act with respect to the Bank, and paragraph 11 of the Sixth Schedule of the Act with respect to the Group (and on
which we report separately below in our ‘Report on Other Legal and Regulatory Requirements’), we are also required to:
• express an opinion on whether the directors’ report has been prepared in accordance with the applicable legal requirements; and
• state whether, in the light of the knowledge and understanding of the entity and its environment obtained in the course of our audit of the
financial statements, we have identified material misstatements in the directors’ report, giving an indication of the nature of any such
misstatements.
Pursuant to Capital Markets Rule 5.62 of the Capital Markets Rules issued by the Listing Authority in Malta, we are required to review the
directors’ statement in relation to going concern.
In such regards:
• in our opinion, the directors’ report has been prepared in accordance with the applicable legal requirements;
• we have not identified material misstatements in the directors’ report; and
• we have nothing to report in relation to the statement on going concern.
FIMBank Group Annual Report & Financial Statements 2022
168
Independent auditors’ report
To the shareholders of FIMBank p.l.c.
3 Report on other legal and regulatory requirements
Matters on which we are required to report by the Act, specific to public-interest
entities
Pursuant to article 179B(1) of the Act, we report as under matters not already reported upon in our ‘Report on the Audit of the Financial
Statements’:
• we were first appointed as auditors by the shareholders on 8 November 1994, and subsequently reappointed at the Company’s general
meetings for each financial period thereafter. The period of total uninterrupted engagement is twenty-eight years;
• our opinion on our audit of the financial statements is consistent with the additional report to the audit committee required to be issued by
the Audit Regulation (as referred to in the Act); and
• we have not provided any of the prohibited services as set out in the Accountancy Profession Act.
Matters on which we are required to report by the Banking Act and by exception by
the Act
Pursuant to article 31(3)(a), (b) and (c) of the Banking Act, in our opinion:
• we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of
our audit;
• proper books of account have been kept by the Bank so far as appears from our examination thereof; and
• the Bank’s financial statements are in agreement with the books of account.
Furthermore, we have nothing to report in respect of the above matters, where the Act requires us to report to you by exception pursuant to
articles 179(10) and 179(11).
Pursuant to article 31(3)(d) of the Banking Act, in our opinion and to the best of our knowledge and belief and, on the basis of the explanations
given to us, the financial statements give the information required by law in force in the manner so required.
FIMBank Group Annual Report & Financial Statements 2022
169
Independent auditors’ report
To the shareholders of FIMBank p.l.c.
Report on compliance with the requirements of the Commission Delegated Regulation
(EU) 2018/815 supplementing Directive 2004/109/EC (the “ESEF Regulation”), by
reference to Capital Markets Rule 5.55.6 issued by the Listing Authority
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board
in terms of the Accountancy Profession Act, 1979 (Chapter 281, Laws of Malta), the Accountancy Profession (European Single Electronic Format)
Assurance Directive, on the Group’s Annual Report and Financial Statements for the year ended 31 December 2022, prepared in a single
electronic reporting format.
Responsibilities of the directors for compliance with the requirements of the ESEF Regulation
As required by Capital Markets Rule 5.56A, the directors are responsible for the preparation of the Annual Report and Financial Statements in
XHTML format, including the specified mark-ups, in accordance with the requirements of the ESEF Regulation.
In addition, the directors are responsible for such internal control as they determine is necessary to enable the preparation of the Annual Report
and Financial Statements that is in compliance with the requirements of the ESEF Regulation.
Auditors’ responsibilities to report on compliance with the requirements of the ESEF Regulation
Our responsibility is to obtain reasonable assurance about whether the Annual Report and Financial Statements in XHTML format, including the
specified mark-ups, comply in all material respects with the ESEF Regulation based on the evidence we have obtained.
In discharging that responsibility, we:
• obtain an understanding of the entity’s financial reporting process, including the preparation of the Annual Report and Financial Statements,
in accordance with the requirements of the ESEF Regulation;
• perform validations to determine whether the Annual Report and Financial Statements has been prepared in accordance with the
requirements of the technical specifications of the ESEF Regulation; and
• examine the information in the Annual Report and Financial Statements to determine whether all the required mark-ups therein have been
applied and whether, in all material respects, they are in accordance with the requirements of the ESEF Regulation.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the Annual Report and Financial Statements for the year ended 31 December 2022 has been prepared, in all material respects,
in accordance with the requirements of the ESEF Regulation, by reference to Capital Markets Rule 5.55.6.
The Principal authorised to sign on behalf of KPMG on the audit resulting in this independent auditors’ report is Thomas Galea.
Signed by Thomas Galea on 22 March 2023
KPMG
Registered Auditors
FIMBank Group Annual Report & Financial Statements 2022
170
Independent assurance report
To the shareholders of FIMBank p.l.c.
Report required by Capital Markets Rules 5.98 and 12.26N issued by the
Malta Financial Services Authority (the “MFSA”)
We were engaged by the Directors of FIMBank p.l.c. (the “Bank”) to report on the disclosures of specific elements in the Corporate Governance
Statement and the Remuneration Report (the “Disclosures”) as at 31 December 2022, in the form of an independent reasonable assurance
conclusion, as to whether they are, in all material respects, in compliance with the corporate governance regulations and information to be provided
in the Remuneration Report set out in the Capital Markets Rules issued by the MFSA (the “Capital Market Rules”). More specifically, we are required
to report on the Disclosures in the form of an independent reasonable assurance conclusion about whether:
a. in light of our knowledge and understanding of the Bank and its environment obtained in the course of the statutory audit, we have identified
material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 (dealing with the Bank’s internal control and
risk management systems in relation to the financial reporting process) and 5.97.5 (where a takeover bid applies). Where material misstatements
are identified in relation to those requirements, we shall, in addition to our conclusion, provide an indication of the nature of such
misstatements;
b. the Disclosures include the other information required by Capital Markets Rule 5.97, insofar as it is applicable to the Bank; and
c. the Disclosures include the information required by Appendix 12.1, ‘Information to be provided in the Remuneration Report’, to Chapter 12 of
the Capital Markets Rules (as applicable).
Responsibilities of the Directors
The Directors are responsible for preparing and presenting the Disclosures that are free from material misstatement in accordance with the
requirements of the Capital Market Rules and for the information contained therein.
This responsibility includes designing, implementing and maintaining internal control as they determine is necessary to enable the preparation and
presentation of the Disclosures that are free from misstatement, whether due to fraud or error.
The Directors are also responsible for preventing and detecting fraud and for identifying and ensuring that the Bank complies with laws and
regulations applicable to its activities. The Directors are responsible for ensuring that personnel involved in the preparation and presentation of the
Disclosures are properly trained, systems are properly updated and that any changes in reporting relevant to the Disclosures encompass all
significant business units.
Our Responsibilities
Our responsibility is to examine the Disclosures prepared by the Bank and to report thereon in the form of an independent reasonable assurance
conclusion based on the evidence obtained. We conducted our engagement in accordance with International Standard on Assurance Engagements
3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information (“ISAE 3000”) issued by the International
Auditing and Assurance Standards Board. That standard requires that we plan and perform our procedures to obtain reasonable assurance about
whether the Disclosures are properly prepared and presented, in all material respects, in accordance with the requirements set out in the relevant
Capital Markets Rules.
The firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality
management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and
regulatory requirements.
We have complied with the independence and other ethical requirements of the International Ethics Standards Board for Accountants’ International
Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), together with the ethical requirements
that are relevant to our assurance engagement in accordance with the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued
in terms of the Accountancy Profession Act (Chapter 281, Laws of Malta), and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the IESBA Code. The IESBA Code is founded on fundamental principles of integrity, objectivity, professional competence
and due care, confidentiality and professional behavior.
FIMBank Group Annual Report & Financial Statements 2022
171
Independent assurance report
To the shareholders of FIMBank p.l.c.
Our Responsibilities (continued)
The procedures selected and our determination of the nature, timing and extent of those procedures, will depend on our judgment, including the
assessment of the risks of material misstatement of the preparation and presentation of the Disclosures whether due to fraud or error.
In making those risk assessments, we have considered internal control relevant to the preparation and presentation of the Disclosures in order to
design assurance procedures that are appropriate in the circumstances, but not for the purposes of expressing a conclusion as to the effectiveness
of the Bank’s internal control over the preparation and presentation of the Disclosures. Reasonable assurance is less than absolute assurance.
We are not required to, and we do not, consider whether the Directors’ statements on internal control and risk management systems cover all the
risks and controls in relation to the financial reporting process or form an opinion on the effectiveness of the Bank’s corporate governance
procedures or its risks and control procedures, nor on the ability of the Bank to continue in operational existence. Our opinion in relation to the
disclosures pursuant to Capital Markets Rules 5.97.4 and 5.97.5 (as appropriate) is based solely on our knowledge and understanding of the Bank
and its environment obtained in forming our opinion on the audit of the financial statements.
As part of this engagement, we have not performed any procedures by way of audit, review or verification of the Disclosures nor of the underlying
records or other sources from which the Disclosures were extracted.
Other Information
We also read the other information included in the Annual Report that contains the Disclosures, and our report thereon, in order to identify material
inconsistencies, if any, with the Disclosures. We have nothing to report in this regard.
Conclusion
Our conclusion has been formed on the basis of, and is subject to, the matters outlined in this report.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
In our opinion:
a. in light of our knowledge and understanding of the Bank and its environment obtained in the course of the statutory audit, we have not identified
material misstatements with respect to the information requirements referred to in Capital Markets Rules 5.97.4 and 5.97.5;
b. the Disclosures include the other information required by Capital Markets Rule 5.97; and,
c. the Disclosures include the information required by Appendix 12.1 to Chapter 12 of the Capital Markets Rules.
The Principal authorised to sign on behalf of KPMG on the work resulting in this assurance report is Thomas Galea.
Signed by Thomas Galea on 22 March 2023.
KPMG
Registered Auditors
FIMBank Group Annual Report & Financial Statements 2022
172
Schedule I
Statements of profit or loss
Five-year summary – Bank
2022
2021
2020
2019
2018
USD
USD
USD
USD
USD
Interest income
27,401,735
19,588,232
22,721,724
30,311,233
35,303,561
Interest expense
(13,509,191)
(10,457,006)
(11,482,001)
(14,037,860)
(19,139,771)
Net interest income
13,892,544
9,131,226
11,239,723
16,273,373
16,163,790
Fee and commission income
6,177,499
4,940,843
5,366,867
7,753,143
12,849,903
Fee and commission expense
(2,510,399)
(2,165,538)
(2,552,278)
(3,078,283)
(2,799,252)
Net fee and commission income
3,667,100
2,775,305
2,814,589
4,674,860
10,050,651
Net trading results
1,073,772
542,868
(554,107)
3,107,935
2,632,452
Dividend income
10,321,545
16,989,049
7,240,817
43,591,794
17,660,271
Gains/(Losses) on lease modifications
106,101
(27,037)
-
-
-
Other operating income
460,373
133,940
120,725
118,904
125,068
Other operating expenses
(364,205)
(128,906)
-
-
-
Operating income before net impairment
29,157,230
29,416,445
20,861,747
67,766,866
46,632,232
Net impairment charge on financial assets
(17,424,101)
(3,699,557)
(34,272,400)
(14,210,257)
(15,514,849)
Impairment of investments in subsidiaries
(8,261,536)
(87,356)
(9,314,000)
-
(1,455,270)
Operating income/(expense)
3,471,593
25,629,532
(22,724,653)
53,556,609
29,662,113
Administrative expenses
(22,139,252)
(23,213,366)
(23,722,803)
(20,305,701)
(23,787,047)
Depreciation and amortisation
(2,811,670)
(2,965,967)
(2,962,370)
(2,896,531)
(1,022,470)
Total operating expenses
(24,950,922)
(26,179,333)
(26,685,173)
(23,202,232)
(24,809,517)
(Loss)/Profit before tax
(21,479,329)
(549,801)
(49,409,826)
30,354,377
4,852,596
Taxation
(530,755)
(113,418)
(6,566,776)
(765,433)
(1,115,249)
(Loss)/Profit for the year
(22,010,084)
(663,219)
(55,976,602)
29,588,944
3,737,347
FIMBank Group Annual Report & Financial Statements 2022
173
Schedule II
Statements of financial position
Five-year summary – Bank
2022
2021
2020
2019
2018
USD
USD
USD
USD
USD
Assets
Balances with the Central Bank of Malta,
treasury bills and cash
211,883,765
239,982,048
319,267,749
208,259,407
151,891,005
Derivative assets held for risk management
1,610,475
841,688
1,019,288
96,285
109,727
Loans and advances to banks
130,851,134
182,458,548
179,364,067
232,351,750
321,550,241
Loans and advances to customers
729,767,493
745,564,139
779,834,360
811,152,849
730,708,445
Financial assets at fair value through profit or loss
18,179,220
19,966,163
20,385,323
125,342,798
173,438,374
Financial assets at fair value through other
comprehensive income
-
162,408,542
153,327,686
79,367,556
87,468,166
Financial assets at amortised cost
183,292,866
9,914,754
9,839,457
9,785,496
9,923,499
Investments in subsidiaries
152,687,573
159,448,858
147,436,214
147,948,385
102,595,614
Property and equipment
4,770,241
1,965,249
3,507,509
5,229,059
968,472
Intangible assets
3,099,853
3,774,315
4,008,725
4,647,642
4,669,342
Current tax assets
-
66,667
76,225
226,886
-
Deferred tax assets
15,004,834
16,336,538
15,590,954
22,011,162
22,599,041
Other assets
4,291,634
3,848,321
5,570,563
8,824,153
7,352,443
Total assets
1,455,439,088
1,546,575,830
1,639,228,120
1,655,243,428
1,613,274,369
Liabilities and equity
Liabilities
Derivative liabilities held for risk management
818,031
1,533,556
1,629,434
193,691
2,928,925
Amounts owed to banks
386,787,784
497,633,356
387,900,641
405,072,025
398,815,757
Amounts owed to customers
877,538,831
838,675,598
1,037,118,337
978,134,002
961,292,743
Debt securities in issue
-
-
-
-
14,849,948
Provision for liabilities and charges
121,209
201,775
173,051
85,159
269,784
Other liabilities
10,498,948
7,921,481
7,645,488
13,077,128
5,708,599
Total liabilities
1,275,764,803
1,345,965,766
1,434,466,951
1,396,562,005
1,383,865,756
Equity
Share capital
261,221,882
261,221,882
261,221,882
261,221,882
252,720,107
Share premium
858,885
858,885
858,885
858,885
9,275,773
Reserve for general banking risks
-
2,218,995
3,358,738
2,323,486
1,242,511
Fair value reserve
-
(1,074,305)
2,413,581
357,233
758,254
Other reserve
2,681,041
2,681,041
2,681,041
2,681,041
2,681,041
Accumulated losses
(85,087,523)
(65,296,434)
(65,772,958)
(8,761,104)
(37,269,073)
Total equity
179,674,285
200,610,064
204,761,169
258,681,423
229,408,613
Total liabilities and equity
1,455,439,088
1,546,575,830
1,639,228,120
1,655,243,428
1,613,274,369
Memorandum items
Contingent liabilities
36,131,883
39,327,362
44,246,902
61,628,654
67,466,612
Commitments
91,414,423
107,469,111
105,245,766
143,026,427
158,386,020
FIMBank Group Annual Report & Financial Statements 2022
174
Schedule III
Cash flow statements
Five-year summary – Bank
2022
2021
2020
2019
2018
USD
USD
USD
USD
USD
Net cash flows generated from/(used in)
operating activities
26,554,154
(118,733,012)
61,848,191
28,447,866
(115,353,903)
Cash flows from investing activities
Payments to acquire financial assets at
fair value through profit or loss
-
-
-
(2,469,245)
(18,092,429)
Payments to acquire financial assets at fair value
through other comprehensive income
-
(74,874,050)
(109,616,706)
(84,984,922)
-
Payments to acquire financial assets at
amortised cost
(40,118,426)
-
-
-
(9,881,423)
Payments to acquire treasury bills at amortised
cost
(429,590,021)
-
-
-
-
Payments to acquire shares in
subsidiary companies
(252)
-
(1,801,829)
(5,352,772)
-
Payments to acquire shares in other investments
-
-
-
-
(35,210)
Payments to acquire property and equipment
(916,620)
(399,511)
(142,744)
(372,658)
(344,451)
Payments to acquire intangible assets
(318,308)
(779,881)
(393,096)
(951,219)
(2,543,743)
Proceeds on disposal of financial assets at
fair value through profit or loss
127,493
160,770
105,639,259
50,000,000
-
Proceeds on disposal of financial assets at fair
value through other comprehensive income
-
50,918,619
49,246,582
93,035,159
15,000,000
Proceeds on disposal of financial assets at
amortised cost
22,800,719
-
-
-
-
Proceeds on disposal of treasury bills at
amortised cost
296,265,806
-
-
-
-
Proceeds on disposal of property and equipment
1,565
9,751
-
3,551
-
Receipt of dividend
8,821,545
4,889,049
240,817
4,628,411
7,472,717
Net cash flows (used in)/generated from
investing activities
(142,926,499)
(20,075,253)
43,172,283
53,536,305
(8,424,539)
Cash flows from financing activities
Issue of share capital
-
-
-
84,887
54,557,207
Net movement in debt securities
-
-
-
(14,834,943)
14,834,942
Payment of lease liabilities
(1,330,082)
(1,787,096)
(997,729)
(2,354,026)
-
Net cash flows (used in)/from
financing activities
(1,330,082)
(1,787,096)
(997,729)
(17,104,082)
69,392,149
(Decrease)/Increase in cash and cash equivalents
(117,702,427)
(140,595,361)
104,022,745
64,880,089
(54,386,293)
Cash and cash equivalents at beginning of year
127,314,325
267,909,686
163,886,941
99,006,852
153,393,145
Cash and cash equivalents at end of year
9,611,898
127,314,325
267,909,686
163,886,941
99,006,852
FIMBank Group Annual Report & Financial Statements 2022
175
Schedule IV
Accounting ratios
Five-year summary – Bank
2022
2021
2020
2019
2018
%
%
%
%
%
Net interest income and other operating income to total assets
2.20
2.05
1.43
4.28
3.06
Operating expenses to total assets
(1.71)
(1.69)
(1.63)
(1.40)
(1.54)
(Loss)/Profit before tax to total assets
(1.48)
(0.04)
(3.01)
1.83
0.30
Pre-tax return on capital employed
(11.95)
(0.27)
(24.13)
11.73
2.12
(Loss)/Profit after tax to equity
(12.25)
(0.33)
(27.34)
11.44
1.63
2022
2021
2020
2019
2018
Weighted average number of shares in issue (000’s) *
522,444
522,444
522,444
514,568
459,637
Net assets per share (US cents) *
34.39
38.40
39.19
50.27
49.91
Basic earnings per share (US cents) *
Basic
(4.21)
(0.13)
(10.71)
5.75
0.81
Diluted
(4.21)
(0.13)
(10.71)
5.75
0.81
‘ * ‘ Weighted average number of shares in issue and ratios for 2018 have been restated to reflect the number of shares in issue as a result
of the 2019 bonus issue of shares.
FIMBank Group Annual Report & Financial Statements 2022
176
Directors and executive management
Board of Directors John C. Grech (Chairman)
Masaud M.J. Hayat (Vice Chairman)
Abdel Karim A.S. Kabariti
Claire Imam Thompson
Edmond Brincat
Eric Schumacher
Hussain Abdul Aziz Lalani
Majed Essa Ahmed Al-Ajeel
Mohamed Fekih Ahmed
Rabih Soukarieh
Rogers David LeBaron
Company Secretary Andrea Batelli
Registered Address Mercury Tower
The Exchange Financial and Business Centre
Elia Zammit Street
St. Julian’s STJ 3155
MALTA
Contact Number Tel: +356 2132 2100
Executive Management
FIMBank p.l.c.
Group Chief Executive Officer Adrian A. Gostuski
First Executive Vice President Simon Lay Deputy Chief Executive Officer
Executive Vice Presidents Andrea Batelli Group General Counsel,
Head of Investor Relations & Company Secretary
Christine Coleiro Group Chief Human Resources Officer
Julio Bonifacino Chief Investment Officer, Structuring Executive
& Advisor to the GCEO
Juraj Beno Group Chief Financial Officer
Thomas Dodd Group Chief Compliance Officer & MLRO
Ronald Haverkorn Advisor to the GCEO
London Forfaiting Company Limited
Chief Executive Officer Simon Lay
Company Secretary William Ramzan Head of Finance
India Factoring and Finance Solutions (Private) Limited
Chief Executive Officer Ravi Valecha
Company Secretary Swati Zawar Manager – Compliance
The Egyptian Company for Factoring S.A.E.
Chief Executive Officer Ahmed Shaheen
Company Secretary Mohamed Gamaleldien Head of Legal