Contents
Chairman’s statement to the shareholders
1
FIMBank group performance 2023
2
Directors’ report
5
Statement of compliance with the principles of good corporate governance
13
Remuneration report
24
Financial statements:
Statements of financial position
40
Statements of profit or loss
42
Statements of other comprehensive income
43
Statements of changes in equity
44
Statements of cash flows
48
Notes to the financial statements
50
Statement by the directors pursuant to Capital Markets Rule 5.68
194
Schedules to the annual report
Statements of profit or loss – 5 year summary
195
Statements of financial position – 5 year summary
196
Cash flow statements – 5 year summary
197
Accounting ratios – 5 year summary
198
Directors and executive management
199
FIMBank Group Annual Report & Financial Statements 2023
1
Chairman’s statement to the shareholders
Dear Shareholder,
As we close off another fiscal year, I take this opportunity to share my reflections on the Bank’s journey throughout the past twelve months. Although
the year brought about a number of challenges, we have once again demonstrated our resilience and commitment. The Bank’s unwavering focus
towards value creation for its clients and stakeholders enabled it to charter its path to offset the various obstacles faced during the year. The year
2023 unfolded within a global backdrop marked by elevated inflation levels, posing significant challenges for governments, central banks, individuals,
and businesses alike. The persistent conflict in Ukraine and escalating tensions in the Middle East as the year progressed were also main contributors
to global uncertainty.
For the period ending 31 December 2023, the FIMBank Group recorded a significant turnaround, registering a pre-tax profit of USD5.8 million, an
important development in comparison to the pre-tax loss of USD24.7 million in the previous year. Post-tax, the Bank achieved a break-even
performance, resulting in a profit of USD7,674. During 2023, the Group experienced considerable financial shifts, underscored by a 20% increase in
operating income, reaching USD54.8 million, supported by a favourable interest rate environment, alongside a 42% increase in net operating results
to USD11.4 million. In line with our efforts across the past years, the Group maintained a commitment to asset quality with a notable reduction in
net impairment losses and a decrease in the Non-Performing Loan Ratio. The turnaround that has been registered is a result of the ongoing recovery
efforts undertaken over the past years as the team worked relentlessly to improve the quality of our portfolio. The dedication of our Bank's
Management should not be underestimated. The role that they play is of crucial importance as we collectively strive towards the realisation of our
financial objectives.
While Group results mark a considerable improvement and demonstrate that a well-executed plan of action is starting to yield sustainable results,
it is crucial to convey that as Chairman, merely achieving break-even does not represent the slightest of our ambitions. With a strong foundation,
supported by an international network of offices in four continents and an expert team dedicated to excellence, we are uniquely positioned to
capitalise on our transformational efforts and achieve our aspirational goals. Looking ahead, we anticipate a promising 2024 with accelerated
performance improvements.
FIMBank also deems investor relations to be of utmost importance. Our actions in this respect are characterised by transparency and honesty.
Throughout the year, we have steadfastly upheld our commitment to actively engage with all our stakeholders. Central to our philosophy is the
principle of forthrightness, ensuring that both positive developments and challenges are communicated in a realistic manner, in keeping with the
professional standards expected of us.
It is with a sense of profound gratitude that I acknowledge the trust and loyalty our shareholders have shown us. I must extend special appreciation
to our majority shareholder, the KIPCO Group, for their resolute and continued support over the years. Their consistent backing has been
instrumental in helping us to navigate through the complexities of an ever-evolving landscape, providing encouragement as we continue to drive
towards our strategic ambitions.
I wish to take this opportunity to express my gratitude and appreciation to former CEO Mr. Adrian Gostuski for his commitment to strengthening
the foundation of the Bank, his dedication, and hard work during the last four years. His contribution will be remembered for years to come and
serves as a lasting testament to his leadership. I take this occasion to congratulate and welcome Mr. Mohammed Louhab, following his recent
appointment as Group Chief Executive Officer. I am confident that under the guidance of our new GCEO, the Bank will continue to build upon its
solid foundations and progress further in achieving sustainable results and complete its turnaround.
In closing, I wish to express my gratitude and appreciation to the Directors, Management, and employees of the FIMBank Group. We remain grateful
for their invaluable contribution and tireless efforts in executing our strategic objectives. Together, we have navigated another challenging year,
and I am confident in our collective ability to embrace and capitalise on the opportunities that lie ahead.
Signed by John C. Grech (Chairman) on 24 April 2024
FIMBank Group Annual Report & Financial Statements 2023
2
FIMBank Group performance 2023
CEO’s message
As we review the financial year ending 31 December 2023, it is with a sense of grounded optimism that I share our Group's performance details
with you. The financial year has been one of substantial improvement for FIMBank Group, marking a significant turnaround, posting a pre-tax profit
of USD5.8 million. This reflects a remarkable improvement from the previous year, where we reported a pre-tax loss of USD24.7 million. The financial
results of 2023 are the culmination of the efforts undertaken over the past years and serve as a strong indicator that the transformation that the
Group has undertaken is starting to yield results.
Midway through the year, our interim results indicated an encouraging upward trend in performance, suggesting the potential for an even more
favourable outcome by the end of the year. This was overshadowed by an increase in corporate tax, with the year-end results showing a modest
post-tax profit of USD7,674, effectively break-even. Notwithstanding, this remains a noteworthy recovery from the previous financial years.
I am pleased to report that for the fourth year running there are no new material non-performing loans. Banks with strong risk management,
diversified portfolios, and effective recovery processes are always better positioned to maintain lower non-performing ratios, and our objective is
to continue building on these positive recovery results in the years ahead. We are confident that our focus on robust risk management practices,
diversified portfolios, and efficient recovery processes will continue to enhance these ratios.
Since my appointment as Group Chief Executive Officer of the Bank on 30 November 2023, I have witnessed firsthand the resilience and
determination with which our team continues to overcome our existing challenges. As we look ahead, we see a stable business model that is poised
to capitalise on growth opportunities and business potential within the international and local markets. Our commitment to marching towards
sustainable growth, driven by our collective efforts, is aimed at forging a prosperous future that maximises shareholder value.
Overview of financial results
During this financial period, net interest income increased by 26% year on year, reaching USD55.2 million. This increase is primarily attributed to
the favourable interest rate environment, which allowed the Group to expand its interest margins. Moreover, the net fees and commission expense
saw a marked improvement, reducing to USD0.7 million, a decrease of USD1.2 million from the previous year. Operating results from the non-
trading portfolio increased by USD9.1 million to USD54.8 million, reflecting a growth of 20% over the previous year. The increase in operating results
from the non-trading portfolio reflects the successful execution of our diversified business strategy.
Turning our focus to trading performance, although we recorded a net trading loss of USD3.2 million for the year, this represents a significant
recovery from the previous year's USD6.9 million loss. The Group's trading operations encountered challenges stemming from the pervasive impact
of geopolitical unrest and fluctuations in economic policies within the primary markets we operate in. This situation was further exacerbated by the
default of an asset in our LFC subsidiary's trading book. Even in the face of these challenges, our strategic actions have been geared towards
minimizing impacts and ensuring financial stability. Through diligent planning and proactive measures, we remain steadfast in our commitment to
mitigating adverse effects and strengthening our financial resilience.
As of 31 December 2023, the Group’s total consolidated assets increased by 1.60% to USD1.58 billion, reflecting a prudent yet strategic approach
to steadily managing our asset size and capital positions. The Group’s consolidated liabilities increased slightly to USD1.40 billion, following the shift
of focus towards broadening the Bank’s deposit base through an enhanced emphasis on diversifying funding sources. During the period, customer
deposits increased by 6.7% to USD935 million. This was complemented by a strategic stance that actively promotes franchise deposits, targeting
stable, lower-cost deposits generated through our established reputation and strong customer relationships.
The Group’s Common Equity Tier 1 Ratio and TCR ratios stood at 18.3%, well above the overall capital requirements and supervisory pillar two
guidance.
Achieving a 6.46% reduction in the Non-Performing Loan (“NPL”) Ratio demonstrates our commitment to maintaining a healthy and resilient
portfolio. This result is a testament to our rigorous management of assets and our successful efforts in reducing net impairment losses.
Our financial performance has demonstrated remarkable improvement that encourages us to build on these results. Our strategic initiatives are
setting the stage for sustainability. As we progress further in our journey, our focus remains on optimizing our operational efficiency, solidifying our
risk management framework, and expanding our revenue generation capabilities, delivering superior value to our customers and shareholders. The
diverse business units within the bank are actively demonstrating their strong capabilities in originating new business, with a robust pipeline of
transactions consistently being converted, showcasing a dynamic and healthy business origination environment.
FIMBank Group Annual Report & Financial Statements 2023
3
Business unit performance
Trade Finance
The Bank continues to prioritise Trade Finance as one of its core businesses. During the year, the Trade Finance team successfully maintained a
steady client base while also integrating a select group of new clients. This diligent approach culminated in a notable uptick in trade finance volumes.
A significant effort was devoted to enhancing operational efficiency throughout 2023, including updated risk frameworks, streamlined processes,
upgrading of technology, and revised policies. These strategic improvements were aimed at optimizing service delivery. FIMBank is renowned for
its expertise in maritime finance, offering tailored banking and finance services for the shipping industry from a base in Dubai. In response to
emerging market dynamics, the Bank renewed its focus on re-entering trade finance operations within a select number of African countries.
Following the strategic decision taken the previous year, the Greek portfolio was transferred to Malta, and during 2023 continued to be managed
by a dedicated team of factoring specialists. The portfolio size remains stable, and this realignment has led to notable performance improvements.
Corporate Finance
Beyond trade finance, the local lending activity began with the establishment of the Real Estate Finance unit in 2016, offering project financing for
residential and commercial projects in Malta. Over the past eight years, the Real Estate portfolio has consistently delivered positive results,
maintaining portfolio stability at the desired levels. After achieving success in this sector and securing a substantial market share, the Bank took a
significant step forward in 2023 with the launch of its Corporate Finance proposition. This initiative spearheaded the development of a
comprehensive suite of financial solutions tailored specifically for corporate clients. The corporate offering includes business loans, overdrafts,
general banking facilities, and revolving loans, aimed at meeting the diverse needs of businesses operating in Malta. This initiative has resulted in
stable growth and heightened visibility in the home market, positioning the Bank to capitalise on potential opportunities for increased business and
diversification. Corporate Finance is well-positioned to grow in a sustainable manner while reinforcing the Bank’s presence and visibility in its home
country.
London Forfaiting Company Ltd (“LFC”)
The year 2023 was a very successful one for LFC, which returned a net profit after tax of USD8.64 million (2022: USD0.73 million) to its shareholder.
LFC also embarked on a strategy of diversifying its portfolio last year. LFC takes a proactive approach to managing its non-performing assets, and
whilst there was one new non-payment in 2023, this was fully provided for during the year. LFC experienced a general increase in underlying interest
rates following the tightening of monetary policy in many of the developed and developing economies. This trend was particularly relevant in
countries where LFC operates, significantly contributing to an enhancement in the company's profitability in 2023. Significantly, LFC celebrates its
40th anniversary in 2024, and its ability to adapt to constant economic and operational changes in the environment where it operates stands as a
testament to its longevity, robustness, and resilient business model.
India Factoring and Finance Solutions Private Ltd (“India Factoring”)
During the year in review, India Factoring registered a profit of USD0.30 million, compared to a loss of USD0.70 million registered in 2022. India
Factoring retained its leadership position in the provision of factoring services in India for the sixth 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 2023, India Factoring maintained its portfolio at
a similar level to that of the previous year in spite of various challenges such as geopolitical tensions, inflationary trends, rising interest rates, etc.
Despite strong outperformance in terms of operational profit, the subsidiary experienced an increase in provisions and deferred tax asset charge,
which impacted the overall 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 excellent.
The Egyptian Company for Factoring S.A.E. (“Egypt Factors”)
Egypt Factors registered a profit of USD1.9 million and an increase in its factoring portfolio during 2023. The subsidiary was the first licensed Egyptian
company specializing in factoring services, it is considered a pioneer in the financial services sector in Egypt and maintained its leading market
position measured by market share. It has consistently maintained its premier market position, as evidenced by its substantial market share. Egypt
Factors has built a strong reputation for its responsiveness to client needs, primarily through providing high-quality accounts receivable
management. This approach supports suppliers in fulfilling buyer expectations.
FIMBank Group Annual Report & Financial Statements 2023
4
Investment in technology
Digital and technology serve as indispensable catalysts for modern banking, and FIMBank has wholeheartedly embraced this ethos through
continuous investment over the years. In 2023, we achieved several significant milestones in our digital transformation voyage. Among our top
priorities was the enhancement of our digital banking platform, FIMBank Direct, for which most of the work was concluded in 2023. Our primary
focus remains on enriching our customers' digital experiences and broadening the platform's functional capabilities, thereby empowering them to
seamlessly manage their banking needs with heightened security. Throughout 2023, we have made substantial progress in replacing the legacy
Group factoring operating system with a successful migration to a new platform for our India business. The Bank also embarked on a new payments
project hub which is set to be launched in 2024. This initiative falls in line with the Bank’s commitment to modernise its payments framework and
support industry changes. These enhancements further solidify our dedication to innovation and excellence in banking services.
Corporate Social Responsibility
At FIMBank we believe that our actions have a direct impact upon the community in which we operate. During the period of 2023, the Bank has
sought to embark on a number of initiatives to support organisations making valid contributions to society. The Bank, along with its employees,
collectively contributed to Puttinu Cares through an internal initiative that supplemented the Bank’s own charitable donation. FIMBank supported
Pink October and Movember initiatives aimed at raising awareness for men's and women's health. Bank employees were encouraged to wear pink
or blue at the workplace to show solidarity towards the cause and enjoyed some sweet baked treats, all while collecting donations for Hospice
Malta.
Earlier in the year, the Bank backed the Valletta Concours event as part of its CSR program, celebrating automotive heritage and cultural
preservation. This sponsorship fosters historical appreciation through the showcasing of vintage and classic automobiles, educational platforms for
enthusiasts of all ages, while also bolstering tourism. Such engagement reflects a dedication to CSR by investing in initiatives that enrich lives and
promote sustainable cultural practices and community involvement.
Environmental, Social and Corporate Governance principles (ESG)
The FIMBank Group acknowledges the growing importance of Environmental, Social, and Governance (“ESG”) standards and our responsibility in
advancing sustainable practices. As an organisation operating in various continents across the globe, we have a direct influence on the well-being
of individuals across numerous countries, evident through our role as an employer, the nature of our products and services, and our broader impact
on the environment and local communities.
At FIMBank, we pledge to embed ESG considerations into our business strategy, facilitating the integration of sustainability principles into our
decision-making processes. We are steadfast in our belief that by championing sustainable practices, we contribute to forging a more resilient future
for all stakeholders, including customers, shareholders, employees, and broader society. As we continue to embed ESG into our operational
framework, we strive to effect positive change and uphold our duty as a responsible corporate entity.
We have engaged external consultants to aid in implementing an ESG framework within our organisation. This framework serves to align our efforts
with the European Union's ESG objectives and proactively manage environmental risks affecting the Group, our clientele, and society at large.
Concluding remarks
Whilst recent results have shown that recent efforts spearheaded over the years are now starting to bear fruit, our business approach remains
grounded and cautious, as we acknowledge that we must undertake more work. The priorities for 2024 have been clearly defined: the maximisation
of revenues through high-quality, good-yielding assets across various verticals while emphasizing a heightened awareness toward our cost base.
Furthermore, assessing capital consumption is instrumental in achieving higher returns and strategically balancing our portfolios to ensure optimal
performance. I am confident that with an approach focusing on collective collaboration, we will achieve our objectives.
I extend my gratitude to our dedicated team, our Board of Directors, and our stakeholders for their unwavering support and commitment to our
vision. Together, we are poised for success in the years to come.
Signed by Mohammed Louhab (Chief Executive Officer) on 24 April 2024
FIMBank Group Annual Report & Financial Statements 2023
5
Directors’ report
For the year ended 31 December 2023
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 2023. 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 profit after tax of USD7,674 and USD2,490,148 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
42 and 43 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 with the Dubai International Finance Centre, United Arab Emirates, which is regulated by the Regulator in the
United Arab Emirates.
• 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.
Please refer to Note 47 to the Financial Statements for information about the subsequent events of this entity.
• 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 part ies and third-party tenants.
• 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: and
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%).
FIMBank Group Annual Report & Financial Statements 2023
6
Review of performance
The financial period ending on 31 December 2023 marked a significant turnaround in both operating and financial performance for the Group. There
was a substantial shift from a pre-tax loss of USD24.7 million in the preceding financial period ending on 31 December 2022 to a pre-tax profit of
USD5.8 million in the current period. Furthermore, the Group achieved break-even post-tax, with a profit of USD7,674 for the financial period ending
on 31 December 2023, a remarkable improvement compared to the loss of USD26.7 million reported in the previous year.
The economic landscape in 2023 presented a myriad of simultaneous developments, making it quite complex to capture comprehensively. Amidst
the ongoing global recovery from the lingering effects of the COVID-19 pandemic, tensions continued to escalate in Eastern Europe, intensifying the
persisting cost-of-living crisis. Simultaneously, tensions heightened in the Middle East due to the Israel-Hamas conflict, leading to recent attacks on
shipping in the Red Sea that disrupted supply chains and sharply increased shipping costs.
Despite experiencing a faster-than-expected decline in inflation, it remained stubbornly high, prompting central banks to persist in raising interest
rates. This, in turn, increased borrowing costs and posed significant challenges for private individuals, corporations, and industries sensitive to
interest rates, such as manufacturing and business investment. Economic growth exhibited variability, with some economies surpassing expectations
while others remained subdued due to weak consumer sentiment and the lingering effects of high energy prices and inflationary pressures.
Nonetheless, there were discernible signs of supply-side expansion, including a broad-based increase in labour force participation, resolution of
pandemic-era supply chain disruptions, and decreasing delivery times.
The persistently high interest rate environment presents both advantages and drawbacks for the Group. On the positive side, it has contributed to
boosting the net interest margin, which reached USD55.2 million, as the rise in interest income surpassed the increase in interest expenses. Despite
the general negative impact of increasing interest rates on the fair valuation of trading assets, this effect was mitigated by a prudent risk focused
approach applied in managing the trading book. The average tenor of the trading book was kept short (under one year), and the majority of the
assets were linked to a floating rate, which helped mitigate any adverse effects from high interest rates.
The Group has persistently pursued the recovery of its legacy portfolio, yielding tangible results with a recovery exceeding USD16 million from
various non-performing clients. The ongoing de-risking efforts over the past few years have proven fruitful, with no material exposures classified as
non-performing for the third consecutive year. Furthermore, the Group conducted a thorough review of non-performing exposures, resulting in the
write-off of several fully provided exposures where remote recovery prospects were identified. This strategic action not only improved the Group's
asset quality and regulatory metrics, but also freed up Management’s resources to focus on other recovery initiatives while safeguarding and
improving the performing portfolio.
During the financial year ended 31 December 2023, Management has reconsidered its position on the reclassification of its long-term debt securities.
In 2022, the Group reclassified this portfolio from ‘Financial investments at fair value through other comprehensive income’ to ‘Financial investments
at amortised cost’. In 2023, the Group reclassified this portfolio back to ‘Financial investments at fair value through other comprehensive income’.
This decision followed various developments in the market surrounding interpretations of IFRS 9 requirements, in relation to reclassifications of
financial instruments between different classification and measurement categories. Please refer to Note 25.2 for further information on this
reclassification.
In the review period, the Group continued its medium-term strategy of refining its structure. Notably, efforts were directed towards finalising a
merger by acquisition between the Bank and FIM Business Solutions Limited, a process expected to conclude in 2024. This strategic initiative aims
to streamline the Group's business model and reduce operating expenses, aligning with its long-term objectives.
Notwithstanding the unpredictable operating environment due to ongoing conflicts in Eastern Europe and the Middle East, as well as monetary and
fiscal policies in its markets, LFC had an excellent year, closing with a USD11.3 million profit before tax compared to USD1.5 million in the previous
year. As a result of these strong financial results, LFC has fully utilized all of its deferred tax assets. Additionally, LFC closed the year with a trading
portfolio 16% lower than the previous year, reflecting the entity’s selective approach to emerging market exposures. LFC adopted a cautious
approach in managing its trading portfolio through sound credit assessment, insurance capacity, and enhanced oversight.
India Factoring maintained its factoring portfolio at a level similar to the previous year, while surpassing the previous year’s operating profits by
USD0.7 million. The entity increased its provision for a specific legacy group of connected clients due to delays in the recovery process while recorded
some recoveries and released some expected credit losses. As a result, the entity closed the year with a profit before tax of USD1.6 million, compared
to a loss of USD0.7 million incurred in the previous year. The entity strategically diversified its portfolio across various industries, with the majority
of the portfolio covered through import factor and credit insurance, effectively mitigating industry-specific risks. Furthermore, the successful
implementation of front-end software has significantly enhanced operational capabilities, including digital functionalities.
Throughout the year, India Factoring received numerous awards in India, recognizing excellence across various aspects of its business operations.
FIMBank Group Annual Report & Financial Statements 2023
7
Egypt Factors has observed a consistent invoice turnover in value terms, alongside a notable expansion in its factoring portfolio. Leveraging the
implementation of several government initiatives affecting trade, imports, and foreign currency in Egypt, the company capitalised on these
opportunities, resulting in a remarkable 50% increase in interest income. As a consequence, by the conclusion of 2023, Egypt Factors achieved a
substantial pre- and post-tax profit of USD1.9 million, marking a significant rise from the USD0.4 million reported in 2022.
The Group maintained a robust capital position throughout the year, with a Total Capital Ratio (“TCR”) of 18.3%, well exceeding the minimum
requirement of 16.1%. This surplus in capital provides the Group with an opportunity to pursue additional asset origination aligned with its risk
appetite, thereby generating incremental revenue streams. Anticipating further regulatory review, particularly the Supervisory Review and
Evaluation Process (“SREP”) by the MFSA, the Group expects a reduction in its Pillar 2 Requirement (“P2R”), which stood at 4.5% at year-end.
Moreover, the Group upheld a strong liquidity position, evidenced by an average Liquidity Coverage Ratio (“LCR”) of 288% and an average Net Stable
Funding Ratio (“NSFR”) of 141%. Both liquidity metrics comfortably surpassed regulatory minimums and the Group's internal risk appetite level,
underscoring its resilience and readiness to meet liquidity demands. Overall, these indicators affirm the Group's financial strength and adherence
to regulatory standards.
Statements of profit or loss
The Group registered a pre-tax profit of USD5.8 million for the financial period ending on 31 December 2023, compared to a pre-tax loss of USD24.7
million in the financial period ending on 31 December 2022. Post-tax, the Group reached break-even, with a marginal profit of USD7,674 for the
financial period ending on 31 December 2023. In the financial period ending on 31 December 2022, the Group suffered a loss of USD26.7 million.
Group earnings per share were negative at US cents 0.01 (2022: negative US cents 5.09). 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
2023
2022
Movement
USD
USD
USD
Net interest income
55,249,865
43,770,500
11,479,365
Net fee and commission expense
(739,577)
(2,004,678)
1,265,101
Dividend income
40,228
3,821,545
(3,781,317)
Fair Value Loss on Investment Property
(1,398,978)
-
(1,398,978)
Other operating income
1,665,027
163,542
1,501,485
Operating results from non-trading portfolio
54,816,565
45,750,909
9,065,656
Operating expenses
(43,840,601)
(38,262,423)
(5,578,178)
Income before net impairment and net trading results
10,975,964
7,488,486
3,487,478
Net trading results
(3,220,869)
(6,924,935)
3,704,066
Net impairment losses
(1,960,888)
(25,277,991)
23,317,103
Profit/(Loss) before taxation
5,794,207
(24,714,440)
30,508,647
Taxation
(5,786,533)
(1,957,610)
(3,828,923)
Profit/(Loss) for the year
7,674
(26,672,050)
26,679,724
The Group returned ‘Operating results from non-trading portfolio’ of USD54.8 million, exceeding last year’s results by USD9.1 million (20%). ‘Net
interest income’ rose by USD11.5 million (26%) year on year, to USD55.2 million, primarily due to higher interest rates allowing the Group to widen
its interest margins. ‘Net fees and commission expense’ at USD0.7 million improved from prior year by USD1.2 million.
During the year under review, the Group received a negligible amount of dividend from one of its investments, whereas in the previous year, the
Group had received USD3.8 million in dividends from its investment in unlisted sub-funds. However, 'Other operating income' includes a fair value
gain of USD0.8 million recognized on these investments in unlisted sub-funds, which are held at fair value through profit or loss, compared to a fair
value loss of USD0.3 million incurred in the previous year. Other elements of other operating income remained fairly stable.
The Group's investment property was subject to an external valuation, leading to a fair value loss of USD1.4 million. In December 2022, the same
property also underwent an external valuation, maintaining a stable value compared to the previous year.
FIMBank Group Annual Report & Financial Statements 2023
8
‘Operating expenses' for the year under review totalled USD43.8 million, marking a USD5.6 million (15%) increase from the previous financial year,
2022. In the prior year, the Group benefited from the depreciation of the Euro and the Pound Sterling against the US Dollar, as most expenses are
incurred in these currencies while the Group's functional currency is the US Dollar. During that year, this depreciation led to lower operating
expenses when converted back to USD. However, during 2023, both the Euro and the Pound Sterling appreciated against the US Dollar, reversing
the benefit observed in the previous year. Consequently, operating expenses incurred in these foreign currencies translated to higher expenses
when converted to the functional currency. Additionally, the Group faced higher costs in the transacted currencies due to inflationary pressures,
further contributing to the increase in operating expenses. Moreover, in 2023, the Bank recorded expenses related to the strategic transformation
project carried out by a highly reputable advisory firm as announced in previous publications.
'Net trading results' amounted to a loss of USD3.2 million, an improvement from the USD6.9 million loss in the prior year. The trading book, held at
the Group’s subsidiary LFC, was impacted by the default of an asset throughout 2023, which was party recovered from an insurance cover.
Additionally, the unpredictable operating environment resulting from the contagion effects of ongoing conflicts in Ukraine and Israel, as well as
monetary and fiscal policies from major markets, further affected net trading results.
Net impairment losses have normalized to USD2.0 million, a significant improvement from the USD25.2 million suffered in the previous year. The
Group reversed USD56.2 million of Stage 3 provisions, compared to USD13.4 million in 2022. Of this, USD60.3 million (2022: USD32.5 million) were
reversed due to write-offs or recoveries of non-performing exposures, while USD3.9 million (2022: USD19.5 million) was an increase in coverage for
legacy non-performing exposures and legal fees incurred during the recovery process.
Additionally, the Group recovered USD0.6 million in previously written-off debt, compared to USD1.6 million in 2022. The Group wrote off USD59.7
million of non-performing exposures in 2023, up from USD32.7 million in 2022. These write-offs were fully provided for in previous years, though
the Group still holds the option to enforce, sell, or transfer the credit to another entity.
These adjustments, along with other measures, led to a reduction of the NPL Ratio by approximately 6.5% within the review year to below 5%.
Management has made significant efforts over the past three years to decrease the NPL Ratio from 20% in 2020.
The Group also released USD0.7 million of Stage 1 and Stage 2 provisions for performing clients, in contrast to the USD1.9 million increase in
provisions seen in 2022. Additionally, the Group set aside USD0.4 million for liabilities and charges, compared to USD0.5 million in the previous year.
Notably, in 2022, the Group wrote off goodwill of USD5.2 million on Egypt Factors and India Factoring entirely. Consequently, no impairment
assessment of goodwill was necessary in 2023.
In 2023, provisions for tax for all Group entities amounted to USD5.8 million, compared to USD2.0 million in 2022. With the increased profitability
of the Group entities, some of the deferred taxation has been utilized. These entities have conducted assessments to ensure the recoverability of
the remaining recognized deferred tax assets before their finite expiry, where applicable.
Financial position
As of December 31, 2023, total consolidated assets amounted to USD1.58 billion, representing a USD25 million increase or 2% growth compared to
the end of 2022. However, the average total consolidated assets for the year were 12% lower than the previous year's average.
In comparison to the previous year, the Group closed the year with higher balances in treasury assets, including high-quality liquid assets (up by
USD96 million) and loans to banks (up by USD54 million). Conversely, there were lower balances in trading assets (down by USD70 million), factoring
assets (down by USD33 million), and trade finance (down by USD19 million).
Average loans to banks increased by USD27 million, reflecting the Group's strategic approach to managing risk. Despite the Group's ongoing efforts
to reduce exposure to higher-risk clients, the Financial Institutions portfolio has been cautiously managed in line with our prudent risk framework.
Nevertheless, there has been a concerted effort to attract business from jurisdictions and financial institutions that align with the Group’s risk and
compliance standards, while focusing on the portfolios’ risk adjusted returns.
The Group experienced a decline in average balances. Notably, factoring decreased by USD53 million, trading assets by USD29 million, and trade
and corporate finance by USD21 million. This reduction is primarily attributed to a cautious approach towards regulatory requirements, particularly
the Total Capital Ratio. Furthermore, the Group's ongoing strategic deployment of assets, marked by prudence in certain business activities,
jurisdictions, and customer segments, has further contributed to these declines. Additionally, market conditions affected by inflationary pressures
and geopolitical conflicts, such as those in Ukraine and the Middle East, have impacted demand and trade flows.
The average balances for treasury assets decreased by USD100 million. These assets comprise high-quality liquid assets and are primarily managed
to meet the Group's liquidity needs and regulatory liquidity ratios.
FIMBank Group Annual Report & Financial Statements 2023
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The Group conducted an assessment on deferred tax assets and investments across its subsidiaries, affirming the adequacy of their carrying
amounts. During these assessments, Management considered various factors significantly influencing the global economy and the specific activities
of these assets.
An external valuation of the head office premises in St. Julians, which is partially recognized under 'Property, plant, and equipment' and partially
under 'Investment property,' indicated that the fair value of the 'Property, plant, and equipment' increased by USD0.8 million, while the fair value
of the 'Investment property' decreased by USD1.4 million.
As of December 31, 2023, the Group's consolidated liabilities totalled USD1.40 billion, reflecting an increase of USD16 million from the previous
year. However, average balances for 2023 were lower than the previous year by USD165 million. Particularly, average balances for bank wholesale
funding decreased by USD133 million.
Total equity increased by USD8.8 million to USD179.3 million, attributed to a USD1.2 million net fair value gain on 'Property, plant, and equipment'
and an USD8.1 million fair value gain on 'Financial investments at fair value through other comprehensive income’. As of 31 December 2023, the
Group’s CET1 and TCR ratios stood at 18.3% (compared to 17.8% in 2022).
Total consolidated commitments amounted to USD147.8 million (compared to USD100.0 million in 2022), primarily comprising confirmed letters of
credit, documentary credits, commitments to purchase forfaiting assets, and undrawn credit facilities. Total consolidated contingent liabilities,
primarily composed of outstanding guarantee obligations, reached USD31.3 million (compared to USD14.7 million in 2022).
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 2023 Pillar 3 Disclosures
Report published on the Bank’s website.
Outlook for 2024
Global economic growth is forecasted to remain modest, initially slowing in the first half of the year before gaining momentum in the latter half.
The majority of economies are expected to grapple with the enduring effects of tightened monetary policies, compounded by weak trade dynamics
and subdued consumer and investor confidence. Despite regional variations, a gradual easing of inflation towards central bank targets is anticipated
across most economies. This deceleration in inflation is poised to bolster real incomes for households, thereby mitigating the extent of economic
downturns. Consequently, lower inflation rates should pave the way for central banks to contemplate reducing interest rates at some points
throughout the year.
The ongoing conflict in Ukraine shows no signs of diminishing in the near future. Tensions in the Middle East have the potential to escalate across
the broader region, a critical hub for oil and gas production. Furthermore, persistent attacks in the Red Sea, a key artery for global trade, are
compounding the challenges. These developments are fuelling fresh supply shocks to the global recovery, resulting in spikes in food, energy, and
transportation costs.
Taking these factors into account, the Group will proactively seek out business opportunities with a focus on achieving risk-adjusted returns, all
while maintaining alignment with its risk appetite and regulatory capital requirements. Following the cleanup efforts, the Group's balance sheet has
become more resilient, thanks to diminished legacy exposures and fortified, sustainable revenue streams.
Anticipated portfolio growth will likely be modest within our customer-centric approach. Our strategic priorities persist in emphasizing business
lines and geographical regions that present superior returns and lower risks, thereby ensuring consistent value generation for the Group. As we
progressively eliminate complex structures and streamline business lines, our presence in Malta continues to evolve and mature.
FIMBank Group Annual Report & Financial Statements 2023
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The Group remains focused on improving its strategy to pursue our long-term objective of expanding and future-proofing our shareholders’ value.
We are progressing in this initiative with a highly reputable advisory firm, employing a holistic approach covering business lines, markets, products,
and building competitive advantage. Certain recommendations from this initiative are set to be implemented as soon as 2024. Furthermore,
significant importance is placed on the Group’s cost structure, IT and data architecture design and integration, as well as the resources and
capabilities of the Group.
Another MFSA Supervisory Review and Evaluation Process (SREP), concluded in the early months of 2024, resulted in a 0.8% reduction of the Group’s
Pillar 2 requirement (P2R), a change welcomed by the Group. The MFSA acknowledged the Group’s improvements in profitability and its broadly
stable funding and liquidity profile. The Authority noted the constant efforts by Management to decrease the non-performing loan portfolio below
regulatory thresholds, and the Board has satisfactorily addressed the qualitative requirements and recommendations stemming from the SREP
performed in 2021.
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 (2022: Nil).
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 4 May 2023 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
2023 are as follows:
No of shares
% holding
United Gulf Holding Company B.S.C
420,019,110
80.40%
Burgan Bank K.P.S.C.
44,394,499
8.50%
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
FIMBank Group Annual Report & Financial Statements 2023
11
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 as 31 December 2023, the Bank had no securities with special control rights in accordance with the Capital Markets Rule 5.64.4.
Events after the financial reporting date
Merger
On 25 January 2024, the Bank issued a Company Announcement, announcing that as part of a streamlining initiative and corporate restructuring
exercise, the Bank’s Board of Directors has resolved to approve a merger by acquisition between the Bank, as the acquiring company, and FIM
Business Solutions as the company being acquired (the “Merger”).
Please refer to Note 47 to the Financial Statements for more information.
Dividends Received
In March 2024, the Bank received a cash dividend of USD2.0 million from its wholly owned subsidiary London Forfaiting Company Limited.
There were no other 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 Retired on 4 May 2023
Claire Imam Thompson CGC, BAC, BRC Resigned on 10 November 2023
Edmond Brincat BAC, NRC, BESG
Erich Schumacher BRC
Hussain Abdul Aziz Lalani BAC, BRC, BRIC, BESG
Majed Essa Ahmed Al-Ajeel CGC, NRC Retired on 4 May 2023
Mohamed Fekih Ahmed BCC Retired on 4 May 2023
Mohammed Louhab BCC, BESG
Rabih Soukarieh BCC
Rogers David LeBaron CGC, NRC Retired on 4 May 2023
Sunny Bhatia 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”)
• Board Environmental, Social and Governance Committee (“BESG”)
FIMBank Group Annual Report & Financial Statements 2023
12
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 2023, Ernst & Young Limited Malta were appointed as statutory auditors of the Group and Bank at the Annual General Meeting which was
held on 4 May 2023. Following such appointment, EY Malta and the Group/Bank mutually agreed to terminate their existing relationship and EY
Malta resigned from the engagement as statutory auditors of the Group and Bank. Accordingly, in January 2024, the Board of Directors of FIMBank
appointed PricewaterhouseCoopers (“PwC”) as the Group’s statutory auditors for the financial year ended 31 December 2023. The appointment of
PwC as the Group’s statutory auditors for the financial year ending 31 December 2024 will be proposed at the forthcoming Annual General Meeting.
Subject to the approval of the Shareholders, PwC will perform the statutory audit of the Group and Bank for the financial year ending 31 December
2024.
Approved by the Board of Directors and signed on its behalf by John C. Grech (Chairman) and Masaud M.J. Hayat (Vice Chairman) on 24 April
2024 as per Director’s Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Financial Statements
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 2023
13
Statement of compliance with the principles of good
corporate governance
For the year ended 31 December 2023
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.
In relation to the requirement to state how the Bank has applied the main principles emanating from the Code of Principles of Good Corporate
Governance, the Bank has done so by complying with and taking cognisance of the associated provisions (that is, the supporting principles and Code
provisions), unless otherwise stated within this Statement of compliance with the principles of good corporate governance.
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 Bank is headed by an effective board which leads and controls the company. 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 2023
14
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 Chairman
also facilitates the effective contribution of non-executive directors in particular and ensures constructive relations between executive and non-
executive directors. As the non-executive directors are not involved in the day-to-day running of the business, they can bring fresh perspectives and
contribute more objectively in supporting as well as constructively challenging and monitoring the Management team.
Whilst recognising that most shareholder contact is with the Chief Executive Officer and finance Director, the Chairman maintains sufficient contact
with major shareholders to understand their issues and concerns.
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 Bank’s strategy and running the day-to-day activities of the Group.
Principle 3: Board composition and appointment of directors
The Bank ensures that the Board is not so large as to be unwieldy. In this respect, the Board is of sufficient size that the balance of skills and
experience is appropriate for the requirements of the business and that changes to the Board’s composition can be managed without undue
disruption. The Board is composed of executive and non-executive Directors, including independent non-executives. 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
Retired on 4 May 2023
Majed Essa Ahmed Al-Ajeel
2013
Retired on 4 May 2023
Masaud M.J. Hayat (Vice Chairman)
2013
Mohamed Fekih Ahmed
2013
Retired on 4 May 2023
Rabih Soukarieh
2013
Edmond Brincat (Independent Director)
2017
Hussain Abdul Aziz Lalani
2017
Abdel Karim A.S. Kabariti
2020
Retired on 4 May 2023
Claire Imam Thompson (Independent Director)
2020
Resigned on 10 November 2023
Erich Schumacher
2022
Sunny Bhatia *
2023
Appointed on 4 May 2023
Mohammed Louhab **
2023
Appointed on 4 May 2023
‘ * ‘ Sunny Bhatia was appointed by the Shareholders on 4 May 2023 and regulatory approval was obtained on 23 August 2023.
‘ ** ‘ Mohammed Louhab was appointed by the Shareholders on 4 May 2023 and regulatory approval was obtained on 30 November 2023.
FIMBank Group Annual Report & Financial Statements 2023
15
Other than for their involvement in Board Committees as described below, all Directors hold office in a non-executive capacity with the exception
of Mohammed Louhab who is an Executive Director and the GCEO of the Bank.
The Board considered and resolved that all 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 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 Directors in March 2024. 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 2023, the Board of Directors consisted of:
Number of directorships held
(including FIMBank p.l.c. and its subsidiaries)
John C. Grech (Chairman)
4
Masaud M. J. Hayat (Vice Chairman)
1
Edmond Brincat
8
Hussain Abdul Aziz Lalani
1
Rabih Soukarieh
1
Erich Schumacher
1
Sunny Bhatia
1
Mohammed Louhab
2
Directorships having an executive or non-executive role held within the same group have been counted as a single directorship.
Principles 4 and 5: Duties and proceedings of directors
The Board ensures that its level of power is known by all Directors and the Senior Management of the Bank. The Board also ensures that any
delegation of responsibilities and functions are clear and unequivocal. Independently of any powers and functions that the Directors may from time
to time validly delegate to Management, it remains a fundamental responsibility of Directors to monitor effectively the implementation of strategy
and policy by Management.
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 six meetings in 2023. All Members of the Board were present for all six meetings except for Abdel Karim A.S. Kabariti, who was
excused in May, Sunny Bhatia was excused in June and Edmond Brincat was excused in July. Sunny Bhatia attended three meetings, one meeting as
an invitee and two meetings as an approved Member of the Board. Mohammed Louhab attended five meetings, four meetings as an invitee and
one meeting as an approved 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.
FIMBank Group Annual Report & Financial Statements 2023
16
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.
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.
All Directors have access to the advice and services of the company secretary, who is responsible to the Board for ensuring that board procedures
are complied with.
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 2023 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 the Nomination and Remuneration Committee (“NRC”) as the Committee entrusted to perform this function. The NRC 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.
In addition to the self-evaluation of the Board and its Committees, the Bank also conducts a suitability assessment using the Skills Matrix Template
to Assess the Collective Suitability of the Members of the Management Body. The latest assessment as completed in April 2023 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 2023.
The last evaluations from Directors were requested in the last quarter of 2023 and were presented to the NRC in March 2024.
FIMBank Group Annual Report & Financial Statements 2023
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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 in 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 24)
• Corporate Governance Committee
• Board Environmental, Social and Governance Committee
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 2023 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 seven occasions during 2023.
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 one individual who is also a Member of the Board Risk Committee.
The Members of the Board Audit Committee as at 31 December 2023 are the following:
Edmond Brincat (Chairman – Independent Director)
Hussain Abdul Aziz Lalani (Vice Chairman)
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.
FIMBank Group Annual Report & Financial Statements 2023
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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.
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 thirteen meetings during 2023 and all Members were present for all thirteen meetings. The Group Head of Internal
Audit was also invited to attend and attended all thirteen meetings. The External Auditors were invited to seven Board Audit Committee Meetings
and were only present for the agenda items which considered and discussed the 2023 Statutory External Audit (February 2023), 2022 Annual Report
and Management Letter (March 2023), Parent Statutory Reporting Audit Update (May 2023), Interim Report for the period ended 30 June 2023
(July 2023 and two meetings in August 2023) and Statutory Audit for Financial Year ending 31 December 2023 (December 2023).
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 2023 are the following:
Hussain Abdul Aziz Lalani (Chairman)
Erich Schumacher (Member)
During 2023, 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 31st December 2023, the voting
members of the ALCO were the following:
Mohammed Louhab (Chairman)
Zbigniew Makula (Vice-Chairman)
Adrian A. Gostuski (Member)
Simon Lay (Member)
Ronald Haverkorn (Member)
Juraj Beno (Member)
Modesto Luengo (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 2023, the Assets Liabilities Committee met on six occasions.
FIMBank Group Annual Report & Financial Statements 2023
19
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 2023 are the following:
John C. Grech (Chairman)
Rabih Soukarieh (Vice Chairman)
Mohammed Louhab (Member)
Adrian A. Gostuski (former GCEO) and Modesto Luengo (GCRO) are non-voting, permanent invitees of the BCC.
During 2023, the Board Credit Committee met on three occasions.
Nomination and remuneration committee
The Nomination and Remuneration Committee (“NRC”) is currently composed of three members, one of whom is an independent director. The NRC
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 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 and bonuses, as may be recommended by the
GCEO;
• preparing a Remuneration Report 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 2023
20
The Nomination and Remuneration Committee Members as at 31 December 2023 are the following:
Masaud M.J. Hayat (Chairman)
Edmond Brincat (Vice Chairman)
Sunny Bhatia
John C. Grech (FIMBank Chairman) and Mohammed Louhab (GCEO) and Adrian Gostuski, former GCEO are non-voting, permanent invitees of the
NRC.
During 2023, the Nomination and Remuneration Committee met on 5 occasions.
Attendance for the meetings was regular except for two instances, one involving an exiting Director in May at the time when the AGM was
reappointing a new Board and the other instance was at the June meeting when a newly appointed Director was still pending regulatory approval.
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 2023 are the following:
John C. Grech (Chairman)
Sunny Bhatia (Member)
During 2023, the Corporate Governance Committee met on five occasions.
Board Environmental, Social and Governance Committee
The Board Environmental, Social and Governance Committee ("BESG") is responsible for assisting the Board in setting the Bank’s Environmental
Social and Governance (“ESG”) policies, strategy and following-up on its execution and periodic review to ensure its effectiveness as well as to
enhance the effectiveness of the Board’s supervision over any matters relating to ESGC. The Board Environmental, Social and Governance Committee
terms of reference are included in the Board Environmental, Social and Governance Committee Charter.
The Members of the Board Environmental, Social and Governance Committee as at 31 December 2023 are the following:
Edmond Brincat (Chairman)
Hussain Abdul Aziz Lalani (Member)
Mohammed Louhab (Member)
The Board Environmental, Social and Governance Committee met on one occasion during 2023.
Changes to committee membership during 2023
During 2023, Rogers David LeBaron retired resulting in him no longer being a member of the Nomination & Remuneration Committee and the
Corporate Governance Committee.
Claire Imam Thompson resigned resulting in her no longer being a member of the Board Audit Committee, the Corporate Governance Committee,
and the Board Risk Committee.
Majed Essa Al-Ajeel retired resulting in him no longer being a member of the Nomination & Remuneration Committee and the Corporate Governance
Committee.
Abdel Karim Kabariti retired resulting in him no longer being a member of the Nomination & Remuneration Committee and the Corporate
Governance Committee.
Mohamed Fekih Ahmed resigned resulting in him no longer being a member of the Board Credit Committee.
Sunny Bhatia was thereafter appointed member of the Nomination & Remuneration Committee and the Corporate Governance Committee.
Mohammed Louhab was thereafter appointed member of the Board Credit Committee.
FIMBank Group Annual Report & Financial Statements 2023
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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 is held normally during the first half of the
year. 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 2023 the Bank issued sixteen announcements.
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
Directors' primary responsibility is to act in the interest of the Bank and its shareholders as a whole irrespective of who appointed them to the
Board. 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.
FIMBank Group Annual Report & Financial Statements 2023
22
The number of shares held in the Bank by Directors directly in their name as at 31 December 2023 is as follows:
John C. Grech (Chairman) * 1,760,000
Edmond Brincat Nil
Erich Schumacher * Nil
Hussain Abdul Aziz Lalani * Nil
Masaud M.J. Hayat (Vice Chairman) * Nil
Mohammed Louhab * Nil
Rabih Soukarieh * Nil
Sunny Bhatia * 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 significantly impacts our reputation and the communities where we operate.
Therefore, we take our Corporate Social Responsibilities (“CSR”) seriously and consider them fundamental to FIMBank's corporate culture.
We are committed to advancing our policies and systems across the Group, ensuring that we comprehensively address and monitor all CSR aspects
relevant to our business. The Bank's CSR strategy, centred around our core values, reflects our commitment to our clients, shareholders, employees,
and the Maltese community, which has been home to FIMBank's head office since its inception in 1994.
Our CSR program aims to maximize and protect shareholder value while fostering socially responsible and ethically robust relationships with clients
and partners. It also seeks to promote policies that maintain a work environment where our employees can excel professionally and achieve a
healthy work-life balance. Additionally, the CSR program focuses on serving the communities in which we operate, especially in their social and
environmental well-being.
Our commitment to CSR ensures that we operate under the highest standards of good governance and ethics. We strive to provide a constantly
evolving range of services that meet the changing needs and expectations of our clients and business partners. Our CSR activities are designed to
attract and retain employees who are not only technically skilled but also uphold strong ethical values. We expect our CSR initiatives to provide
meaningful support to the local community, enhancing the social and environmental impacts of our business practices.
We achieve our CSR objectives through sound corporate governance, compliance practices, and increased transparency in reporting these activities.
Maintaining ethical policies and providing training ensures that all employees uphold the highest standards of integrity and trust. This is supported
by programs that manage the long-term development of our employees, fostering an environment for growth and excellence. Our CSR efforts focus
on corporate philanthropy that enhances quality of life. The success of our CSR also depends on proper risk management and implementing data
security and privacy programs to safeguard all stakeholders.
Further details about the CSR initiatives undertaken by the Group in 2023 are provided in the GCEO’s Message in 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.
FIMBank Group Annual Report & Financial Statements 2023
23
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 August meeting of 2023, the NRC discussed the
annual employment market assessment related to Board succession planning as presented.
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 current Chairman of the Nomination and Remuneration Committee is not an independent member 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 the Chairman of the NRC has signed a written declaration whereby he has declared
that he undertakes to maintain in all circumstances his independence of analysis, decision and action. Furthermore, the Vice Chairman of the NRC
is deemed to be an Independent Director in terms of the Capital Market Rules.
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 24 April
2024 as per Director’s Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Financial Statements
2023.
FIMBank Group Annual Report & Financial Statements 2023
24
Remuneration report
For the year ended 31 December 2023
This Section incorporates the Statement of the Board 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 board nomination and remuneration committee (as per
section 8 of the principles)
Terms of reference and membership
The Board Nomination and Remuneration Committee (“NRC”) is responsible for ensuring that the Directors and Executive Management of FIMBank
have the appropriate mix of skills, qualifications and experience necessary to fulfil their supervisory and management responsibilities. The NRC also
reviews the remuneration of the Board of Directors and that of Executive Management on an annual basis 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.
From 1st January up to the Annual General Meeting (“AGM”) held on 4th May 2023 the NRC was composed of five members, Masaud M.J. Hayat
(Chairperson), Edmond Brincat (Vice-Chairperson and Independent Member), and Directors Abdel Karim A.S. Kabariti, Majed Essa Ahmed Al-Ajeel,
and Rogers David LeBaron who did not re-submit their candidacy to the May 2023 AGM. As at 31 December 2023, the NRC was composed of three
members, Masaud M.J. Hayat (Chairperson), Edmond Brincat (Vice-Chairperson and Independent Member) and Sunny Bhatia, a newly appointed
Director by the shareholders at the May 2023 AGM. John C. Grech and Mohammed Louhab, in their capacity as Chairperson of the Bank and Group
Chief Executive Officer (“GCEO”) respectively, attended the NRC’s meetings as permanent invitees. Adrian A. Gostuski, who held the position of
GCEO until 30 November 2023 and was thereafter appointed as advisor to the new GCEO, also attended the NRC meetings held in 2023. The Group
Chief Human Resources Officer (“GCHRO”) acted as Board Committee Secretary.
Meetings
The Committee met five times during the period under review, which meetings were attended as follows:
Members Attended
Masaud M.J. Hayat (Chairperson) 5 out of 5
Edmond Brincat (Member) (Vice-Chairperson) 5 out of 5
Sunny Bhatia 2 out of 3 (excused in June)
Abdel Karim A.S. Kabariti 1 out of 2 (excused in May)
Majed Essa Ahmed Al-Ajeel 2 out of 2
Rogers David LeBaron 2 out of 2
FIMBank Group Annual Report & Financial Statements 2023
25
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. Board Committees: new ESG Committee and memberships;
f. NRC Charter: annual review and checklist;
g. Report and recommendations by Internal Audit on the review of the Group Remuneration Policy;
h. Group Remuneration Policy;
i. Executive Management: recruitment, appointments, performance, promotions, succession and remuneration;
j. Group salary review, bonus allocation and out of cycle increases/payments;
k. Succession planning for all entities;
l. Control functions: independence, recruitment, succession and performance;
m. Performance review of GCEO and performance bonus award;
n. HR Policies;
o. Remuneration Policy Statement, Statement of the NRC, Directors’ Remuneration Report for Annual Report and Pillar 3 Disclosures;
p. Egypt Factors CEO’s new definite contract;
q. Suitability and Succession Policy and Skills Matrix Template;
r. Suitability assessment and succession of the Board, the GCEO and the Key Function Holders;
s. Sourcing of Independent non-executive Directors;
t. LFC Directors’ Remuneration;
u. Compensation and talent retention challenges; and
v. Review of the Recoveries function.
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 Bank 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 Bank.
Across FIMBank, remuneration is based on the below principles:
• Sound and effective risk management to discourage risk-taking that exceeds the Bank’s risk appetite;
• Non-discriminatory practices, consistent with the acknowledged principles of diversity as listed in FIMBank’s Diversity Policy. This includes the
principle that remuneration is gender neutral and thus all employees, independently of their gender are equally remunerated for work of equal
value. True merit determines all remuneration related decisions;
• Internal equity, with the application of fair distinction based on individual employee performance;
• External parity through an annual alignment exercise with local compensation data to ensure that the Bank’s remuneration packages are
competitive and in line with industry standards; and
• Affordability and sustainability, ensuring that the remuneration policy is in line with the Bank’s business strategy, business objectives, values
and long-term interests and incorporates measures to avoid conflicts of interest.
Remuneration policy
The Group Remuneration Policy is aligned with the principles emanating from the EU’s Capital Requirements Directive (‘CRD’), particularly in relation
to the monitoring of identified staff. As a basis for the compilation of the list of identified staff, the Bank refers to:
• the Commission Delegated Regulation (EU) 2021/923 (“MRT Regulation”);
• the EBA Guidelines on Sound Remuneration Policies (EBA/GL/2021/04) (“EBA Remuneration Guidelines”) as transposed into Banking Rule 21 on
Remuneration Policies and Practices (BR/21/2022) (“Banking Rule 21”); and
• Article 92(3) of Directive 2013/36/EU (“CRD IV"), as amended from time to time, including by Directive (EU) 2019/878 (“CRD V”) and as
transposed into Banking Rule 21.
Identified staff are employees who in their role and as part of their responsibilities are material risk takers (meaning that their professional activities
have a material impact on the Bank’s risk profile). The MRT Regulation establishes the qualitative and quantitative criteria to identify staff who are
material risk takers.
FIMBank Group Annual Report & Financial Statements 2023
26
The Bank’s Identified Staff includes the Management Body in its management or supervisory function and/or senior managers. The Management
Body in its management function includes the GCEO, the Deputy CEO and officers of the Bank who hold the grade Executive Vice President or higher
at FIMBank p.l.c. (the “Executive Management”). The Management Body in its supervisory function comprises the Directors of the Bank’s Board of
Directors. In relation to majority owned subsidiaries of the Bank, only the respective Chief Executive Officers (“CEOs”) are considered to be Identified
Staff, as the only function reporting directly to the GCEO.
The GCEO is appointed on a definite term contract which may vary from a one-year definite term contract to a three-year definite term contract.
The contract may be renewed for further definite term periods. The Deputy CEO is appointed pursuant to an indefinite term contract. The notice
periods applicable for both the GCEO and the Deputy CEO are in accordance with the prevailing legislation by which the respective employment
contract is governed in terms of jurisdiction. Members of the Executive Management of the Bank hold both definite and indefinite contracts with
varying notice periods, all of which are in line with locally applicable legislation. Directors are appointed pursuant to appointment letters. Their
appointment is for a period of one year renewed or otherwise at the subsequent Annual General Meeting of the Bank.
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.
Remuneration structure for non-executive directors
The total package payable to Non-Executive Directors consists of a fixed fee which is supplemented by additional fees payable inter alia with respect
to any memberships and/or chairpersonships of the different Board Committees. The fees also vary between Independent and Non-Independent
Directors. Board directorship fees to remunerate the Independent Directors are higher than that of Non-Independent Directors. This is mainly for
two reasons, the additional responsibility that Independent Directors have due to their required independence and because they do not receive any
other remuneration for employment positions within the KIPCO Group. The fees are reviewed annually in line with market conditions and the
maximum allocated budget requires the approval of the Annual General Meeting of the Bank.
Remuneration structure for executive directors and executive management
The remuneration structure of Executive Directors and Executive Management (together referred to as the “Executives”) comprises both fixed and
variable remuneration and is intended to attract, develop and retain a high-performing workforce while remaining aligned to FIMBank’s long-term
strategy, risk appetite, sustainable performance, good corporate governance, regulatory compliance, corporate values and long-term value creation
for shareholders. All compensation structures including those of the branches and the subsidiaries of FIMBank located in third countries are aligned
with the requirements emanating from the CRD unless local legislation in the respective jurisdiction mandates otherwise.
The NRC ensures that while its remuneration practices are compliant with existing EU/Maltese Directives and Regulations, including CRD and the
Capital Requirements Regulation (“CRR”), the remuneration packages reflect industry benchmarks. This makes it possible for the Bank to attract
and retain Executives with the right qualities and skills for the proper management of the Bank 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 to the Group
Remuneration Policy are envisaged for the financial year ending 2024.
The remuneration components for Executives are:
• fixed remuneration (including 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. Executives are not entitled to discretionary supplementary pension or early retirement schemes. The tables below describe the element
and purpose of Executives’ compensation and how each element operates, as well as the maximum opportunity of each element and any applicable
performance measures.
FIMBank Group Annual Report & Financial Statements 2023
27
Fixed remuneration
Element and purpose of remuneration
Operation
Performance measures
Base Salary
To provide the basis of market-competitive overall
remuneration package. It provides a fixed
remuneration which is sufficient to recruit and
retain individuals of the necessary calibre.
This is determined by:
a. the role and grade of the individual director;
b. the base salary structure for other employees across FIMBank; and
c. external factors such as economic conditions and market.
The base salary of Executives engaged on indefinite contracts is reviewed annually or when required to include
any statutory payments.
The fixed remuneration component of Executives engaged on definite or fixed-term contracts is as stipulated in
the contract of employment and compensation therein is reviewed if and when the definite contract is renewed
for a further term/s. The Executive is entitled to any newly 27introduced statutory payments or adjustments to
existing ones.
The base salary does not vary
according to performance of the
individual and the Bank, according
to the FIMBank pay structure
approved annually by the NRC.
Fixed allowances and benefits
To ensure business continuity and assist
executives in carrying out their duties efficiently.
The benefits may include different cash allowances and/or non-cash benefits as detailed in the respective contract
of employment and/or as may be applicable depending on the role of the individual and the employing entity.
N/A
Variable remuneration
Element and purpose of remuneration
Operation
Performance measures
Performance Bonus
To motivate Executives in maximising individual,
departmental and FIMBank’s performance.
Executives may be entitled to a performance bonus. Employee performance is measured in the
interim and annual performance appraisal detailed in the Bank’s Performance Management Policy
and Procedure.
A performance bonus relates to the Executive’s performance as defined in the multi-year
assessment where applicable and the cash component is paid by April.
The individual rating is based on the Executive’s
overall performance which is centred on
performance targets and core behaviours
(leadership, people management, personal
effectiveness, creativity, innovation, holistic
approach, teamwork, communication and company
values).
FIMBank Group Annual Report & Financial Statements 2023
28
Variable remuneration (continued)
Element and purpose of remuneration
Operation
Performance measures
Employee Share Award Scheme
To create alignment between the interests of
Executives and shareholders through the delivery of
rewards in the Company Shares
In addition to a performance bonus, subject to performance appraisal and a multi-year assessment
where applicable, Executives may also be entitled to share awards as stipulated in the ESAS 2019-
2023.
Share awards are subject to malus and clawback provisions.
N/A
Exceptional Bonus
To motivate Executives in maximising individual,
departmental and FIMBank’s performance.
Executives may be entitled to an Exceptional Bonus to reward remarkable performance in the
individual’s role which goes beyond the individual’s call of duty.
N/A
Retention Bonus
To ensure business continuity and assist executives
in carrying out their duties efficiently.
Executives may be entitled to a Retention Bonus on condition that the employee remains in
employment for a period of 12 months or more from the date of award.
Retention bonuses may be paid only in exceptional circumstances such as in the case of a
restructuring, wind-down, after a change in control or to ensure the completion of major projects.
Retention bonuses must be justified based on,
amongst other things, the following factors:
a. concerns relating to the risk that certain
Executives may choose to leave FIMBank;
b. the reasons why the retention of that
Executive is crucial for FIMBank;
c. the consequences if the relevant Executive
leaves FIMBank; and
d. whether the awarded amount is necessary and
proportionate to retain the targeted
Executive.
Severance Payments
To close the employment relationship in case of
redundancy, termination by the employer and/or of
a potential legal dispute.
Severance payments may include redundancy payments, such as if the Bank terminates the
employment contract due to the failure of the institution or following a material reduction of its
activities or if the Bank and an Executive mutually agree on a settlement in case of a dispute.
Unless stipulated by local regulation, the maximum severance payment awarded may be of a
maximum of three (3) months’ base salary.
N/A
FIMBank Group Annual Report & Financial Statements 2023
29
Variable remuneration (continued)
Element and purpose of remuneration
Operation
Performance measures
Guaranteed/Sign-On Bonus
To motivate Executives in maximising individual,
departmental and FIMBank’s performance.
FIMBank may pay out a Guaranteed Bonus in the first year of employment.
The sign-on bonus is exceptional and can only be awarded once to the same single employee and
cannot be awarded again if the same employee receives a new contract from the same Group entity
or another entity with the scope of consolidation of the Group.
N/A
Buy-Out Compensation of Previous Employment
Contract
FIMBank may, in exceptional circumstances (where the deferred variable remuneration of a new
Executive was reduced or revoked by the previous employer because of the termination of the
contract), pay a buy-out compensation to on-board a new Executive.
N/A
NRC decisions are determined by the guidelines set by the Board of Directors when reviewing the Group budget. In line with Article 135-139 of Banking Rule 21 (BR21/2022) issued by the Malta Financial Services
Authority, the Bank ensures that any variable remuneration awarded is not detrimental to its sound and strong capital base. In the unlikely event that the soundness of the capital base may be at risk, this will be
escalated and presented to the NRC.
FIMBank Group Annual Report & Financial Statements 2023
30
Variable remuneration (continued)
The variable remuneration awarded to Executives is also subject to the below provisions emanating from the Remuneration Policy Supplement:
Clawback and Malus
Any variable remuneration is subject to clawback and malus. Malus will be capable of being applied in respect of deferred elements of variable remuneration at any
time during the applicable deferral period. Clawback will apply during the period of four (4) years from the date of award or until the end of the applicable retention
period, as applicable.
FIMBank reserves the right to apply clawback and malus on 100% of bonus paid and/or deferred, in the case of gross misconduct as defined in the Disciplinary Policy
and in the event that conditions stipulated in the performance targets in the subsequent two years are not met.
Total Maximum Variable
Remuneration
The total annual variable remuneration for Executives is capped at 100% of total fixed annual remuneration for each individual. This cap may be increased up to a
maximum of 200% to total fixed annual remuneration provided that a) such an increase is approved by the shareholders and b) the regulator is duly informed of the
recommendation and the underlying reasons for it.
Other requirements
By virtue of Paragraph 20 of Banking Rule 21, given that a) the Bank does not meet the definition of a large institution as defined in Article 4(1) of the CRR; and b) the
value of the Bank’s assets over the four-year period immediately preceding the current financial year is less than €5 billion, the following requirements emanating
from Article 94 of CRD V are not applicable to the Bank, namely:
1. the principle that a minimum of 50% of any variable remuneration shall consist of shares; and
2. the principle that at least 40% of variable remuneration is deferred over a period of not less than 4 to 5 years.
FIMBank Group Annual Report & Financial Statements 2023
31
Information on remuneration in terms of code provision 8.A.5 of the MFSA capital
markets rules
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 on 4 May 2023, the Shareholders approved the maximum aggregate emoluments of the
Non-Executive Directors for the financial year ended 31 December 2023 at USD450,000 (2022: USD450,000). Executive Directors are only
remunerated as employees and do not receive any Directors’ fees. 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 ended 31 December
2023 amounted to USD180,276, which is included as part of the total payments received by Non-Executive Directors disclosed below.
For 2023, the total payments received by the Non-Executive Directors from the Bank were:
• fixed remuneration USD388,106
• variable remuneration Nil
• executive share options Nil
• fringe benefits USD391
The fixed annual remuneration is inclusive of remuneration with respect to Committee/s memberships. In this respect, the Directors’ emoluments
are within the limit approved by the Annual General Meeting of 4 May 2023.
For 2023, the total payments received by the GCEO, Deputy CEO and Executive Management from the Bank were:
• fixed remuneration USD2,243,555
• variable remuneration * USD461,788
• executive share options granted Nil
• fringe benefits USD594,573
' * ’ Variable remuneration represents the amounts attributable to the GCEO, Deputy CEO and Executive Management in respect of performance
year 2022, given that the variable remuneration in respect of the financial year ended 31 December 2023 will only be formally determined and
approved by the NRC subsequent to the reporting date.
Additional disclosures on the governance process related to the variable portion of remuneration have been made under the Directors’
Remuneration Report and under the Section discussing the Remuneration Policy of the 2023 Pillar 3 Disclosures Report published on the Bank’s
website.
None of the Directors received any fees for holding the office of Director by the Bank's parent entities or any other related undertakings in respect
of services rendered to the FIMBank Group, except for Mohammed Louhab who, in the period during which he was a Non-Executive Director of the
Bank, was awarded USD199,228 by United Gulf Holdings (“UGH”) for the services he rendered to the FIMBank Group. In this respect, the Directors
believe that the requirements emanating from paragraph (c) of Appendix 12.1 of the Capital Markets Rules, which requires the disclosure of “any
remuneration from any undertaking belonging to the same group where the term group means parent undertaking and all its subsidiary
undertakings” applies at the level of FIMBank p.l.c., the Bank's parent entity, and its subsidiary undertakings respectively, taking cognisance of their
role as Directors of the Bank. Accordingly, no disclosure in respect of their remuneration for any services which they might be providing at parent
entity level is being made within this report.
FIMBank Group Annual Report & Financial Statements 2023
32
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 (refer to policy in full on
https://www.fimbank.com/en/remuneration-policy-supplement). The result of the vote at the Annual General Meeting when the Policy was last
approved was 428,017,041 votes in favour, 53,658,126 “as he prefers” votes, 2,864,522 votes against, votes 6,736,120 abstentions and 17,609
invalid votes 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 Policy is effective for three years since the date of approval and will therefore be subject to another approval in the 2025 Annual General
Meeting. Nevertheless, the Policy is reviewed annually to reflect any new regulatory requirements or changes in Policy. Any material amendments
are approved by the NRC prior to being submitted to the General Meeting for its binding vote. No changes to the Policy were made in 2023.
However, it is not excluded that an updated version of the Policy shall be proposed for approval in the upcoming Annual General Meeting should
the NRC approve any amendments in the interim.
In terms of the requirements within Appendix 12.1 of the Capital Markets Rules the following sub-sections of the Directors’ Remuneration Report
present the total remuneration paid to each Director in respect of the financial year ended 31 December 2023 (analysed further between fixed and
variable remuneration), as well as the annual change of remuneration of the Executive Directors, of the Bank’s performance, and of average
remuneration on a full-time equivalent basis of the Bank’s employees (other than directors) over the three most recent financial years.
Non-executive directors
The Bank’s approach to remuneration is that of ensuring that the Bank is able to attract and retain talented and high performing Directors by
recognising, valuing and fairly rewarding their contributions while remaining aligned to the Bank’s long-term strategy, risk appetite, sustainable
performance and corporate values.
The total remuneration of each individual director is detailed in tables below. 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%.
For information about the general performance and events of material importance of the Bank refer to the Statements of Profit or Loss and the
Statements of Other Comprehensive Income on pages 42 and 43 and in the Review of Performance section within the Director’s Report. These did
not impact the total remuneration of Non-Executive Directors.
The Non-Executive Directors did not receive any base salary, variable remuneration or compensation in respect of extraordinary items and pension
contributions during the financial year ended 31 December 2023. In addition, Non-Executive Directors are not entitled to profit-sharing
arrangements, share options, shares or pension benefits.
FIMBank Group Annual Report & Financial Statements 2023
33
Directors’ remuneration
Difference
Difference
Difference
Name of director
2023
2022
2021
2023 vs 2022
2022 vs 2021
2021 vs 2020
Notes
USD
USD
USD
%
%
%
John C. Grech
* 100,891
100,400
101,032
0.5
(0.6)
2.8
The change in fee structure reflects a marginal increase following the appointment as
Chairperson of the Corporate Governance Committee as from May 2023.
Masaud M.J. Hayat
19,750
19,750
17,000
0.0
16.2
(17.1)
No change in fee structure in 2023.
Abdel Karim A.S. Kabariti
9,000
13,500
17,667
100
(23.6)
92.8
No change in fee structure. The fees for 2023 represent fees payable in respect of services
rendered until April 2023. Excused for Board and Committees commitments up to AGM in May
when he ceased to hold the position of director. In 2022, Mr. Kabariti attended 50% of Board
and Committee meetings. Therefore, the annualisation of fees paid to Mr. Kabariti in 2023
(considering the cessation of directorship on 4 May 2023) would result in fees which are double
the fees received in respect of services rendered in 2022 (taking into consideration the
absenteeism at Board and Committee meetings).
Claire Imam Thompson
38,333
46,000
38,333
0.0
0.0
NA
No change in fee structure. Fees represent services rendered up to October 2023, in view of
the cessation of directorship on 10 November 2023 when Ms. Imam Thompson resigned. The
annualisation of fees paid to Ms. Imam Thompson in 2023 would result in fees which are in
line with those paid in respect of 2022.
Edmond Brincat
51,356
46,000
47,333
11.6
(2.8)
1.6
Change in fee structure following change in committees’ composition, inclusive of the creation
of the Board ESG (BESG) Committee in August and Mr. Brincat’s appointment as its
Chairperson, resulting in an increase of 11.6% in remuneration compared to 2022.
Erich Schumacher
19,000
11,083
-
0.0
NA
NA
In 2022, Mr. Schumacher was only remunerated for part of the year, given that Mr.
Schumacher was appointed as Director in June 2022. The annualisation of fees paid to Mr.
Schumacher in 2022 would result in fees which are in line with those paid in respect of 2023.
Hussain Abdul Aziz Lalani
39,417
36,750
36,750
7.3
0.0
5.4
Change in fee structure following change in committees' composition in August. Mr. Lalani
was appointed as a member of the BESG Committee, resulting in an increase of 7.3% in
remuneration compared to 2022.
Majed Essa Ahmed Al-Ajeel
13,750
27,750
25,750
0.0
7.8
21.9
The fees for 2023 represent fees payable in respect of services rendered until April 2023,
where Mr. Al-Ajeel attended all Board and Committee meetings until 4 May 2023, which is
the date when Mr. Al-Ajeel ceased to hold the position of Director. These fees reflect Mr Al-
Ajeel’s contribution to the Board and the Committees for the period. For the purposes of the
annual percentage change between 2023 and 2022, the annualisation of fees in 2023
considers the pro-rated services for Board and Committee meetings separately, where c. 50%
of Board and Committee meetings where Mr. Al-Ajeel participates had been held by 4 May
2023. The annualisation of fees paid in 2023 would result in fees which are in line with those
paid in respect of 2022.
‘ * ’ The remuneration of Non-Executive Directors comprises fees only, except for the case of the Chairperson of the Board of Directors whose total emoluments for 2023 comprise USD100,500 in fees and USD391
in fringe benefits.
FIMBank Group Annual Report & Financial Statements 2023
34
Directors’ remuneration (continued)
Difference
Difference
Difference
Name of director
2023
2022
2021
2023 vs 2022
2022 vs 2021
2021 vs 2020
Notes
USD
USD
USD
%
%
%
Mohamed Fekih Ahmed
10,833
27,000
27,000
0.0
0.0
(4.7)
The fees for 2023 represent fees payable in respect of services rendered until April 2023, where
the Director attended all Board and Committee meetings until 4 May 2023, which is the date
when Mr. Fekih ceased to hold the position of Director. These fees reflect the Mr. Fekih’s
contribution to the Board and the Committees for the period. For the purposes of the annual
percentage change between 2023 and 2022, the annualisation of fees in 2023 considers the
pro-rated services for Board and Committee meetings separately, where 50% of Board
meetings and 33% of Committee meetings where Mr. Fekih participates had been held by 4
May 2023. The annualisation of fees paid in 2023 would result in fees which are in line with
those paid in respect of 2022.
Mohammed Louhab
17,750
NA
NA
NA
NA
NA
Fees represent services rendered by Mr. Louhab from his appointment on 4 May 2023 to 30
November 2023, on which date the Director was appointed as GCEO and, in this respect, Mr.
Louhab’s appointment changed from a Non-executive Director to Executive Director. As from
September, following the creation of the BESG Committee in August, Mr. Louhab started
receiving an additional fee accordingly. For a detailed analysis of Mr. Louhab’s remuneration
as an Executive Director, please refer to the ‘Executive Directors and Deputy CEO’ section.
Rabih Soukarieh
27,000
24,750
23,000
8.0
8.7
(11.87)
No change in fee structure. Mr. Soukarieh attended all meetings in 2023. In this respect, the
increase in fees between 2022 and 2023 is due to the number of sittings attended in 2023.
Rogers David LeBaron
30,167
63,000
63,000
0.0
0.0
(0.1)
The fees for 2023 represent fees payable in respect of services rendered until April 2023, where
Mr. LeBaron attended all Board and Committee meetings until 4 May 2023, which is the date
when Mr. LeBaron ceased to hold the position of Director. These fees reflect Mr. LeBaron’s
contribution to the Board and the Committees for the period. For the purposes of the annual
percentage change between 2023 and 2022, the annualisation of fees in 2023 considers the
pro-rated services for Board and Committee meetings separately, where c. 48% of Board and
Committee meetings where Mr. LeBaron participates had been held by 4 May 2023. The
annualisation of fees paid in 2023 would result in fees which are in line with those paid in
respect of 2022.
Sunny Bhatia
11,250
NA
NA
NA
NA
NA
Fees represent services rendered by the Director from 23 August 2023 when regulatory
approval was granted.
Note: The remuneration attributable to Non-Executive Directors in respect of the financial year ended 31 December 2023 included in the table above represents the fixed remuneration attributable to
performance year 2023.
In addition to the above fees, Directors John C Grech, Eric Schumacher, Hussain Lalani and Mohammed Louhab were also awarded remuneration for their services as Directors on the LFC Board of Directors. The fees
awarded are: John C Grech (Chairperson) USD15,000, Erich Schumacher USD10,000, Hussain Lalani USD10,000 and Mohammed Louhab USD10,000.
FIMBank Group Annual Report & Financial Statements 2023
35
Directors’ remuneration (continued)
The positions held by the Bank’s Directors during the financial year ended 31 December 2023 are presented hereunder:
Name of director
Position
John C. Grech
Non-Executive Director, Chairperson FIMBank BoD, Chairperson LFC BoD, Chairperson BRIC, Chairperson BCC, Chairperson CGC, Permanent Invitee NRC
Masaud M.J. Hayat
Non-Executive Director, Vice Chairperson BoD, Chairperson NRC
Abdel Karim A.S. Kabariti
Non-Executive Director, Member BoD, Member BCGC, Member NRC – retired May 2023
Claire Imam Thompson
Independent Non-Executive Director, Member BoD (independent member), Member BAC, Member BRC, Member BCGC - resigned November 2023
Edmond Brincat
Independent Non-Executive Director, Member BoD (independent member), Chairperson BAC, Chairperson BESGC, Vice Chairperson NRC
Erich Schumacher
Non-Executive Director, Member BoD, Member BRC, Member LFC BoD
Hussain Abdul Aziz Lalani
Non-Executive Director, Member BoD, Chairperson BRC, Vice Chairperson BAC, Vice Chairperson BRIC, Member LFC BoD
Majed Essa Ahmed Al-Ajeel
Non-Executive Director, Member BoD, Chairperson BCGC, Vice Chairperson NRC, Member LFC BoD - retired May 2023
Mohamed Fekih Ahmed
Non-Executive Director, Member BoD, Member BCC, Member LFC BoD -retired May 2023
Rabih Soukarieh
Non-Executive Director, Member BoD, Vice Chairperson BCC
Rogers David LeBaron
Non-Executive Director, Member BoD, Member BCGC, Member NRC, Permanent Invitee BAC - retired May 2023
Sunny Bhatia
Non-Executive Director, Member BoD, BCGC, Member NRC
Mohamed Louhab
Non-Executive Director up to 30 November 2023, Executive Director as from 1 December 2023, Member BoD, Member BCC, Member BESGC, Non-voting Member BRIC, Member
LFC BoD and invitee on Board Committees
FIMBank Group Annual Report & Financial Statements 2023
36
Executive Directors and Deputy CEO
In accordance with Capital Markets Rules 12.2A, the disclosure of information in terms of Capital Markets Rules 12.26K and Appendix 12.1 to Chapter 12 of the Capital Markets Rules is applicable in respect of
remuneration payable to both the GCEO as well as the Deputy CEO.
In this respect, the tables below present information in respect of remuneration received by the Bank’s outgoing GCEO (Adrian A. Gostuski), the newly appointed GCEO (Mohammed Louhab) and the Deputy
GCEO (Simon Lay). Adrian A. Gostuski and Mohammed Louhab did not receive any remuneration from the Bank’s subsidiaries, whereas the Deputy CEO received all his remuneration from London Forfaiting
Company (LFC), where he holds the position of CEO of this subsidiary of the Bank.
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
USD
Mohammed Louhab
33,357
-
13,492
NA
NA
9,716
-
56,565
NA
Adrian A. Gostuski
367,069
-
130,521
267,931
-
-
-
765,522
65% : 35%
Simon Lay
463,642
-
126,070
62,150
-
-
75,502
727,364
91.5% : 8.5%
‘ * ‘ the amounts in respect of officers in the position GCEO include: Travel, Accommodation, Car, Parking, Mobile, Pension Plan Allowances and Health, Personal Accident and Life insurance cover; the amount in
respect of the officer in the role of Deputy CEO include a Pension Plan Allowance and Health and Life insurance cover.
‘ ** ’ the amount reflects the relocation flights and other related costs.
‘ *** ‘ Note: The remuneration attributable to Directors in