On 28 February 2006, Lombard Bank Malta plc published its financial results for the year ended 31 December 2005. The Board of Directors have proposed a gross dividend of 20c per share to all shareholders on the Company’s share register as at close of trading on Monday 13 March 2006. At the forthcoming Annual General Meeting, the Board will once again be recommending that shareholders are given the option of receiving the dividend either in cash or by the issue of new shares at a price of Lm8.347 per share. The attribution price of this scrip dividend was based on the trade weighted average price of the Bank’s shares for the 3 months up to and including 28 February 2006.
During the year ended 31 December 2005, the Lombard Group’s total operating income increased by 21.2% to Lm5.6 million. This resulted from a surge in the Bank’s net interest income, which amounted to Lm4.8 million during the period under review – a rise of 30.2% over the previous year. Gross interest income on loans and advances and on debt securities increased by 10% whilst interest payable was 5.4% lower at Lm4.6 million. Meanwhile, non-interest income dropped 12.8% as a result of lower net trading income and lower gains on disposals of non-trading financial instruments. Lombard’s net interest margin continued to climb to record levels to reach 51.2% in 2005.
Despite a 7.1% rise in administrative expenses and depreciation, Lombard’s cost to income ratio improved to an impressive 38.2%. This is the healthiest ratio ever recorded by a local bank. The Group’s operating profit before impairment allowances and other provisions amounted to Lm3.5 million during the year under review. This represents a rise of 31.8% over the comparative period last year.
In 2005, there was a net impairment release of Lm290,000 as opposed to a Lm73,000 allowance taken in 2004. The Group has meanwhile set aside Lm103,000 as a provision in respect of liabilities and other charges. After taking these into account, Lombard Group’s profit before tax in 2005 amounted to Lm3.7 million, a rise of 44.2% over 2004. Taxation of Lm1.3 million (marginal tax rate of 35.5%) translates into a post-tax profit of Lm2.4 million. Earnings per share increased by 49% to 56c6. This is based on the weighted average number of shares in issue as at 31 December 2005.
The Group’s total assets as at the end of the year amounted to Lm188 million, a rise of 2.8%. Loans and advances to customers increased by 14% to Lm78.7 million over 2004 with deposits relatively unchanged at Lm165.6 million to see the loans to deposits ratio increase to 0.48. Shareholders’ funds as at the end of 2005 amounted to Lm16.7 million, a rise of 24.6% over the previous year. This is partly a result of an increase in the property revaluation reserve by Lm0.81 million following a revaluation of the Bank’s property in accordance with International Accounting Standards. The net asset value per share increased to Lm3.96 at the end of December.
The strong rise in profitability improved key financial indicators with the return on equity (profit after tax divided by average shareholders’ funds) increasing to 15.75% from 12.4% in 2004 and the Group’s return on average assets (profit before tax divided by average assets) increasing to 1.98% (2004: 1.4%).