Lombard Bank Malta plc - Interim Directors’ Statement

On 19 May, Lombard Bank Malta plc issued its Interim Directors’ Statement to update the market on its performance since the start of the year.

The Directors explained that world real gross domestic product (GDP) growth is projected to pick up gradually over the next few years with moderate growth in 2014 and gaining pace in 2015. Furthermore, Malta’s GDP growth is expected to continue to outpace that of the euro area during 2014. However, the “one size fits all” regulatory regime being imposed on the local banking sector by the European regulators is giving rise to uncertainty as to how its implementation will affect the local financial sector and the economy in general. As such, although Lombard Bank remains committed to ensuring a robust balance sheet and healthy liquidity levels, the cost of complying with additional regulation, including more stringent interpretations of ‘forbearance’ and ‘delayed payments’, may dampen the pace of growth in the short term and put pressure on profits.

The Bank’s Loans and advances portfolio and deposit base remained relatively unchanged during the period under review however there was no deterioration in the credit quality of its loan book. On the income statement, the Directors noted some pressure on the interest margins following increased competition in the domestic banking sector with regard to both loans as well as deposits.

The announcement also revealed that the results from MaltaPost (interim net profit up 23% to €0.8 million) provide encouraging signs of steady development.

In conclusion, the announcement noted that the Bank maintained high liquidity and capital adequacy ratios that comfortably exceeded regulatory and prudential requirements. In this respect, the Directors explained that the Bank predominantly conducts in business within the Maltese territory and continues to hold no exposure to any overseas sovereign debt. Looking ahead, the Directors believe that the Group remains well-positioned to reach the targets set for the first half of this year.