Lombard Bank Malta plc - Interim Results

On 23 August 2018, Lombard Bank Malta plc published its 2018 interim financial statements covering the six-month period ended 30 June 2018.

Performance Overview

During the period under review, the bank registered a 24.3% increase in net interest income to €8.96 million (H1 2017: €7.21 million) as gross interest income surged by 15.1% to €11.8 million whilst interest expense contracted by almost 7% to €2.83 million. In this respect, Lombard explained that higher volumes of commercial credit activity boosted interest income whilst it also continued to manage its liquidity positions judiciously so as to limit the negative effects of low-to-negative interest rates.

Non-interest income also improved markedly to €26.5 million (H1 2017: €19.6 million), mostly reflecting much higher postal sales and other revenues (+39.1%) on the back of positive trends in international mail services, registered mail and parcel volumes.

The 32.2% upsurge in the bank’s total operating income was mostly offset by the near 35% increase in non-interest expenses to €28.3 million (H1 2017: €21 million) reflecting both higher employee compensation as well as investments in risk management and compliance.

Following the adoption of the new IFRS 09 accounting rule on 1 January 2018, Lombard provided for a €1.02 million charge in expected credit losses and also posted a minimal net reversal of credit impairment charges of €0.01 million. In comparison, Lombard had incurred a net impairment charge of €0.83 million in the first six months of 2017.

Overall, Lombard made a pre-tax profit of €6.09 million, representing an increase of over 28.4% over the previous comparable period. After accounting for a tax charge of €2.13 million and non-controlling interest of €0.24 million, the bank’s net profit amounted to €3.72 million compared to €2.67 million in H1 2017.

The Statement of Financial Position as at 30 June 2018, compared to the corresponding figures as at 31 December 2017, shows that total assets increased by 3.8% to €916.6 million (31 December 2017: €882.7 million) mostly driven by the near 11% growth in customer loans (or +€46.1 million). Total liabilities increased by 4% to €810.8 million, mostly reflecting the 2.5% growth in customer deposits to €751.8 million. Nonetheless, given the much higher increase in customer loans, the loans-to-deposit ratio improved markedly to 63.1% from 58.5% as at the end of 2017.

The Bank’s equity base expanded to €99.2 million, translating into a net asset value per share of €2.246 (Dec 2017: €2.176). Meanwhile, in view of the increase in risk-weighted assets reflecting expansion in both lending and investment activities, the Bank’s Common Equity Tier 1 ratio dropped to 13.6% from 14.1% as at 31 December 2017 . Likewise, the Total Capital Ratio fell to 13.6% from 14.3% previously.

Dividend

Similar to previous years, the Directors did not declare an interim dividend.

Outlook

In their commentary, the Directors expressed their satisfaction with the financial performance of Lombard. They also made reference to the transfer of a substantial amount of Lombard shares from Cyprus Popular Bank Public Co. Ltd. to the National Development and Social Fund (“NDSF”). In this respect, the Bank now looks forward to the next phase during which the NDSF divests itself of the larger part of the same shares.

Download

Lombard Bank Malta plc – Half-Yearly Results covering the six-month period ended 30 June 2018.