Lombard Bank Malta plc - 2006 Interim Results

On 8 August 2006, Lombard Bank Malta plc published its financial results for the six months ended 30 June 2006. Similar to last year the Board of Directors did not declare an interim dividend.

During the six months ended 30 June 2006, Lombard Bank Malta plc and its subsidiary registered Lm4.7 million in gross interest income, 6% higher than the Lm4.3 million generated in the half year to 30 June 2005. This increase in gross interest income was mainly fuelled from the 15.7% rise in interest receivable from loans and advances to customers, balances with the Central Bank and holdings of treasury bills. This accounts for 78% of the total gross interest income. The balance of Lm1 million in gross interest income was received from debt and other fixed income instruments. Interest expenditure remained practically unchanged from the previous comparative period at Lm2.2 resulting in a 16% increase in net interest income to Lm2.4 million (June 2005: Lm2.1 million). Lombard Bank has again increased its net interest margin to 52% (June 2005: 48.3%).

During the review period the non-interest income of the Lombard Group grew to Lm416,000, an improvement of 7.2% over the comparative period last year. This increase is attributed to the marginal increase in net fee and commission income and the 8.3% growth in trading profits which together account for 93% of non-interest income. The progress in both net interest and non-interest income has helped total operating income improve by 14.6% to Lm2.8 million (June 2005: Lm2.5 million). The main driver was the positive performance in net interest income which accounts for 85.4% of total operating income.

Administrative expenses edged 2.7% higher to Lm1.04 million whilst the charge for depreciation of Lm54,000 represents a significant hike over the charge incurred during the first six months of 2005. Total non-interest expenses of Lm1.1 million results in a cost to income ratio of 38.4% – a significant improvement from the 42.7% in June 2005.

The Group’s operating profit before provisions for impairment allowances and contingent liabilities amounted to Lm1.75 million, representing a rise of 23% compared to the Lm1.42 million in the first six months of 2005. Lombard Bank accounted for a net impairment allowance of Lm96,000 in the first half of the year against a reversal of Lm136,000 in the 2005 comparative period. The Group’s profit before tax therefore amounted to Lm1.66 million, 6% higher than the pre-tax profit generated in the first six months of last year.

After accounting for taxation of Lm589,000 the profits attributable to shareholders for the first half of 2006 amounted to just over Lm1.07 million (June 2005: Lm1.01 million). Earnings per share, based on the weighted average number of shares in issue came out at 12c7, 4% higher than the 2005 comparative figure of 12c2. This was restated to reflect the 2 for 1 share split effected in May 2006.

The balance sheet as at the end of June 2006 shows total assets almost unchanged at Lm185.4 million. Loans and advances to customers at Lm86 million reflects an increase of Lm11.5 million (15.5%) over the level of loans and advances as at 30 June 2005. In the first six months of the year, loans grew by Lm7.35 million (9.3%). On the liabilities side, customers’ deposits decreased by Lm4.7 million in the first six months of the year to Lm161 million. Despite this, the advances to deposits ratio as at the end of June 2006 stood at 0.53 from 0.45 in June 2005. Shareholders’ funds grew to Lm17.7 million resulting in a net asset value per share of Lm2.08. The annualised return on average assets (profit before tax divided by average assets) increased from 1.7% in June 2005 to 1.8% however the annualised return on equity (profit after tax divided by average shareholders’ funds) decreased from 15.07% to 13.35%.

In the review of performance issued with the Company Announcement, the Board of Directors noted that “The record profit achieved during the first six months of the year is in line with expectations and underlines improved operating profits and efficient cost to income ratios. The selective business approach adopted by the Bank increased shareholder value and provided opportunities for further business expansion.”

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