Lombard Bank Malta plc - Full-Year Results

Thursday, March 10th, 2016

On 10 March, Lombard Bank Malta plc published its full-year results for the financial year ended 31 December 2015.

Performance Overview

During the period under review, the Group suffered a decline of 8.2% in net interest income to €13.1 million (2014: €14.3 million) as the reduction in gross interest income (as a result of lower lending rates and reduced income from Treasury activities) outweighed the decline in interest expense.

On the other hand, non-interest income improved for the third consecutive year as it increased by a further 12.3% to a record €29.1 million (2014: €25.9 million) largely due to the 8.4% increase in income from postal sales and services to €24.6 million (2014: €22.7 million) and the 26.4% increase in net fee and commission to €3.2 million. Furthermore, trading profits, dividend income and other operating income also registered gains but their combined contribution to the Group’s bottom-line remains immaterial at €1.3 million.

Thus, Lombard’s total operating income grew by 5.0% to a record level of €42.3 million (2014: €40.2 million).

On the other hand, the overall growth in income was mostly offset by the 6.6% increase in non-interest expenses to €31.3 million (2014: €29.3 million), reflecting higher administrative, compliance and regulatory expenses as well as continued investments in the Group’s I.T. infrastructure and the Bank’s card services. Meanwhile, depreciation increased by 16.9% to €1.45 million (2014: €1.24 million). Accordingly, Lombard’s cost to income ratio deteriorated to 74.0% at Group level (2014: 72.9%) and to 50.1% at Bank level (2014: 47.0%).

The income statement of Lombard Bank Malta plc was boosted by a 33.3% reduction in impairment charges to €3.08 million (2014: €4.62 million). In calculating impairment allowances for individually assessed exposures, Lombard continued with its conservative approach, with particular attention given to the assessment of “Non-Performing Exposures” – i.e. exposures where repayments fall in arrears by 90 days or more. The Specific Impairment charge for 2015 amounted to €2.71 million, compared with €4.11 million in 2014. Most of the Specific Impairment Allowance related to the accumulated interest element of such exposures. The Collective Impairment Allowance charge for the year at €0.37 million was €0.13 million lower when compared to the previous year.

As a result, pre-tax profits of the Lombard Group advanced by 25.6% to €7.84 million (2014: €6.24 million) and after accounting for a tax charge of €2.8 million (2014: €2.3 million) as well as profits attributable to minority interests of €0.66 million (2014: €0.55 million), the net profit of the Group amounted to €4.38 million, representing an increase of 30.3% from the previous year’s comparable figure. This translates into an earnings per share of €0.100 (2014: €0.077).

The statement of financial position shows that total assets grew by 12.4% to €777.5 million (2014: €691.5 million) largely reflecting the €31.6 million increase in balances held with the Central Bank of Malta and other quasi-cash securities, the €31.0 million increase in total loans and advances as well as the €21.2 million growth in investments. Likewise, total liabilities increased by 13.1% to €682.0 million (2014: €603.2 million), largely reflecting the €77.6 million increase in deposits. Shareholders’ funds (excluding minority interests) increased by 8.0% to €89.4 million (2014: €82.8 million) mostly reflecting the profit registered during the period under review as well as other increases in the Group’s other reserves including the revaluation reserve. This is equivalent to a net asset value per share of €2.042 (2014: €1.891). The return on equity (net profit divided by average shareholders’ funds) advanced to 5.1% (2014: 4.2%). Similarly, the Group’s return on assets (pre-tax profit on average assets) gained 11 basis points to 1.07% from 0.96% for 2014.

As at the end of 2015, Lombard’s common equity Tier 1 Ratio and Total Capital Ratio stood at 16.4% and 17.4% respectively.


The Directors recommended the payment of a final gross dividend of €0.04 per share (net: €0.026) representing a 5% increase from the previous year’s dividend and a payout ratio of 26.0% (2014: 32.2%). This takes into consideration the requirements of Banking Rule 09 which obliges all banks to create a new capital reserve against non-performing loans. Taking into consideration the contributions made by the Group in the previous two years, Lombard is now fully compliant with such an obligation.

Shareholders as at the close of trading on 23 March will be eligible to receive the dividend on 6 May subject to shareholder approval at the upcoming Annual General Meeting scheduled to be held on 28 April. The Directors are also giving shareholders the option to receive the dividend either in cash or by the issue of new shares at the attribution price of €2.18 per share.


Lombard Bank Malta plc – Preliminary Profit Statement for the financial year ended 31 December 2015.

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