Lombard Bank Malta plc - Full-Year Results

On 14 March 2013, Lombard Bank Malta plc published its preliminary profit statement for the financial year ended 31 December 2012.

Performance Review

Net interest income in 2012 amounted to €13.8 million representing a 2.7% drop from the previous year’s figure largely due to the 4.3% decline in gross interest income to €23.8 million reflecting the Group’s prudent treasury management.

Non-interest income also dropped by 6.4% to €23.3 million but this is solely due to the €2 million gain on the disposal of financial instruments in 2011 which was not repeated during the year under review. In fact, the Group registered a 19.5% increase in net fee and commission income to €2.4 million as it placed increased focus on developing international banking business relationships. Meanwhile, postal income, was practically unchanged at €20 million.

The financials of the Lombard Group were also negatively impacted by the 4.9% increase in non-interest expenses to €26.7 million mainly reflecting the higher costs emanating from MaltaPost plc (the postal subsidiary) linked to the new cross border tariffs imposed by the Universal Postal Union (UPU) as well as the higher depreciation charge following a number of property investments undertaken by the postal subsidiary. Given the higher costs and lower total income, the cost to income ratio of the Group increased from 65.2% in 2011 to 72% in 2012 whilst that of the Bank reached 43.9% compared to 38% in the previous year.

Overall, the Lombard Group reported an operating profit before impairment allowances of €10.4 million, 23.7% below that registered in the previous year.

Despite remaining predominantly exposed to project finance through its loan book, the Directors reported that the impairment allowance of €0.99 million (2011: €2.2 million) is considered adequate.

As a result, pre-tax profits of the Lombard Group amounted to €9.4 million compared to €11.3 million the previous year. After accounting for taxation of €3.3 million (2011: €4.1 million), the Group’s net profit amounts to €5.7 million representing a 13.3% drop from the previous year’s comparable figure. This translates into an earnings per share figure of €0.1585 (2011: €0.1827).

The balance sheet as at 31 December 2012 shows that loans and advances to customers grew by 3.1% to €319.9 million whilst deposits were practically unchanged at €462.1 million. Nonetheless, the Bank still has a prudent advances to deposits ratio of 69% (2011: 67%). The preliminary profit statement also confirmed the Group’s strong capital ratios with a ‘Capital Adequacy Ratio’ of 18.5% which is significantly higher than the required regulatory minimum of 8%.

Dividend & Bonus Issue

Despite the drop in profitability, the Directors recommended the payment of a final gross dividend of €0.12 per share (net: €0.078) which is 4.3% higher than that paid out with respect to the 2011 financial year. Shareholders as at the close of trading on 20 March will be entitled to receive this dividend on 30 April 2013.

Moreover, the Directors announced a 1 for 10 bonus share issue to all shareholders as at close of trading on 22 May 2013. The bonus issue will be funded by a capitalisation of reserves amounting to €902,318 with effect from 28 May.

Both the dividend and the bonus share issue are subject to shareholder approval at the upcoming Annual General Meeting scheduled to be held on 25 April 2013.

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Lombard Bank Malta plc – Preliminary Profit Statement for the financial year ended 31 December 2012.