Lombard Bank Malta plc - Full-Year Results

Wednesday, March 6th, 2019

On 6 March 2019, Lombard Bank Malta plc published the preliminary results for the financial year ended 31 December 2018.

Performance Overview

During 2018, the Group registered a 13.5% growth in net interest income to a record of €17.5 million (2017: €15.4 million), reflecting an increase of 8.2% in gross interest income to €23.2 million whilst interest expense contracted by a further 5.3% to €5.68 million. The growth in gross interest income was driven by a marked increase in customer loans which expanded by 19.3% to €511.1 million from €428.6 million as at the end of 2017. On the other hand, the bank noted how the prevailing negative interest rate scenario continued to be a drag on its profitability, especially in view of its cautious approach when it comes to lending and investments. Nonetheless, given the increased volume of business, the net interest margin improved further to yet another all-time high of 75.5% from 72% in 2017.

The growth in net interest income was complimented by a further increase of 6.7% in non-interest income to €45.3 million (also a new record). In this respect, the main driver was income from postal sales and other revenues as these increased by 5% (or €1.88 million) to €39.3 million, followed by net fee and commission income (+€0.58 million). The former represents the shareholding interest that the bank has in MaltaPost plc as the decline in letter mail volumes was offset by the continued growth in ecommerce and other services. Meanwhile, the increase in net fees and commissions was supported by the higher volumes of business in general.

On the expenditure side, operating costs increased by 6% to €48.8 million (2017: €46.1 million). This was mostly due to higher costs related to the postal operations, more stringent regulatory and compliance requirements, as well as investments in IT. On the other hand, the performance of Lombard was boosted by the much lower charge related to expected credit losses. In fact, in 2018, these amounted to just €0.23 million compared to €2.84 million in the previous comparable period. In this respect, the bank explained that the drop in the amount of provisions reflects the high quality of its assets as well as the adequate levels of collateral cover. Moreover, in 2018 Lombard remained focused on resolving those situations where repayments by borrowing customers were in arrears by 90 days or more, or more commonly known as ‘non-performing exposures’.

Following the 28% increase in adjusted pre-tax profits in 2017, profits before tax in 2018 surged by 55.3% to €13.8 million. After taking into account a tax charge of €4.83 million and minority interests of €0.49 million, the profit for the year amounted to €8.45 million (a new record level). As a result, the return on average equity jumped to a seven-year high of 8.3% from 5.4% in 2017.

The Statement of Financial Position shows that total assets expanded by 7.6% (or €67.3 million) to €950.1 million as the decline in cash balances (-€86.4 million) was substantially outweighed by the increases in investments (+€24.2 million), loans and advances to banks (+€43.3 million) and customer loans (+€82.5 million). Total liabilities increased by €54.4 million to €834.2 million which, in turn, emanated from higher levels of customer deposits. Nonetheless, the loans-to-deposits ratio still improved to just under 65% compared to 58.5% as at 31 December 2017. Meanwhile, shareholders’ funds grew by 12.7% to €108.3 million. This translates into a net asset value per share of €2.452 compared to €2.176 as at the end of 2017. The bank’s level of capitalisation also strengthened as the total capital ratio increased by 40 basis points and remained above minimum regulatory requirements at 14.7%.


The Board of Directors of Lombard are recommending the payment of a final net dividend of €0.0325 per share. This represents an increase of 25% over the net dividend per share of €0.026 paid out for the 2017 financial year. However, due to the higher increase in the profitability of the bank, the dividend payout ratio for 2018 dropped to 17% compared to 22.4% in the previous year.

Shareholders as at the close of trading on Friday 8 March 2019 will be eligible to receive the dividend on Wednesday 17 April 2019 subject to shareholders’ approval at the upcoming Annual General Meeting scheduled to be held on Thursday 11 April 2019.


Lombard Bank Malta plc – Preliminary Profit Statement for the financial year ended 31 December 2018.

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