Fitch upgrades FIMBank to ’B+’ with stable outlook on improved assets

Investing.com -- Fitch Ratings has upgraded FIMBank p.l.c.’s Long-Term Issuer Default Rating to ’B+’ from ’B’ and its Viability Rating to ’b+’ from ’b’, with a Stable outlook.

The upgrade reflects FIMBank’s improved business profile sustainability following a significant reduction in non-performing assets and loan impairment charges since the end of 2022. These improvements have allowed the bank to generate better, though still modest, profitability, which is expected to benefit from improved capital buffers and a return to business growth.

FIMBank operates as a small trade finance bank with a moderate franchise in its niche markets. Despite expected slowdowns in world trade in 2025 due to geopolitical tensions and trade disputes, Fitch believes European trade finance banks will remain resilient and potentially rebound from 2026.

The bank has tightened its underwriting standards over the past four years by reducing country and client limits while exiting weaker credits and some higher-risk geographies. However, its risk profile remains above average due to exposure to emerging markets, material trading activities, and structurally high loan concentrations.

FIMBank significantly reduced its non-performing asset ratio to 2% at the end of 2024, down from 11% at the end of 2022, through large write-offs and satisfactory recoveries. The bank reported small operating profits in 2023 and 2024, with an operating profit to risk-weighted assets ratio of 0.9% in 2024, following three years of losses.

The bank’s common equity Tier 1 ratio reached 21.3% at the end of 2024, sitting 590 basis points above regulatory capital requirements plus Pillar 2 guidance. This represents a material improvement since the end of 2023, driven by deleveraging and internal capital generation.

Customer deposits represented about 73% of FIMBank’s funding at the end of 2024 and exceeded loans. The bank sources deposits mostly online, including outside Malta via third-party platforms, making them more price-sensitive than at traditional commercial banks.

A future upgrade would require further strengthening of FIMBank’s business profile, allowing it to improve its operating profit to risk-weighted assets ratio toward 1.5% on a sustained basis, supported by higher business volumes, well-managed costs, and manageable loan impairment charges.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.