Lombard Bank plc published its full-year results to 31 December 2008 following a Board of Directors’ meeting held on 12 March 2009. The Directors approved a gross final dividend of €0.10 per share to those shareholders on the Company’s register as at close of trading on Monday 16th March 2009. As in previous years, shareholders have the option of receiving the dividend in either cash or by the issue of new shares at an attribution price of €2.50 per share. The dividend is payable on 28 April 2009.
During the year to 31 December 2008, net interest income generated by the Lombard Group decreased by 6.2% to €14.6 million mainly due to the fact that interest margins came under pressure in a scenario of lower interest rates. The net interest margin edged 2.7 percentage points lower to 50.1%. This 6.2% decline in interest income was offset by the Group’s non – interest income which surged to €22.4 million as a result of the €19.5 million in postal income from the consolidation of MaltaPost plc.
Net fee and commission income increased to €2.3 million with other income of €44,000 (2007: €0.52 million). Trading profits including foreign exchange income dropped by 51% to €0.3 million due to the loss of income following Malta’s adoption of the euro on 1 January 2008.
Total operating income generated by the Lombard Group climbed significantly higher to €36.9 million (2007: €19.2 million) with postal services accounting for 53% of total income. It is interesting to note that whilst the Group’s income increased significantly by 92%, the Bank’s total income decreased by 10.5% to €16.1 million.
Non-interest expenses, comprising administrative costs and depreciation, increased to €23.9 million reflecting the growth of the Group which, according to the Directors, is in line with projections. Consequently, the Group’s cost to income ratio increased from 36.7% in 2007 to 64.7%. However, the Bank’s cost to income ratio remained at a very healthy level of 39.1%.
The Group’s operating profit before impairment allowances and other provisions amounted to €13.1 million, 7.3% higher than that registered in 2007. The Group recognised a net release in impairment allowances of €1.4 million (2007: net impairment of €1.9 million), which positively impacted Lombard’s profitability. Group pre-tax profit for the year ended 31 December 2008 amounted to a record figure of €14.1 million, 33% higher than 2007. The tax charge for the year under review amounted to €5.1 million. The Lombard Group generated a profit of €9.8 million (2007: €7.1 million) during the year to 31 December 2008. Earnings per share, based on the weighted average number of shares in issue during the period, increased from €0.206 in December 2007 to €0.241. Notwithstanding the strong contribution from postal services, Lombard Bank still managed to increase its profitability by 10% to €11.2 million.
Total assets of the Lombard Group as at 31 December 2008 amounted to €525.7 million as loans and advances to customers rose by €64.7 million (25%) to €325 million with a large percentage of the increase coming during the second half of the year. Customers’ deposits increased by 5.2% to €440 million. During the first half of the year deposits had dropped to €404 million, but climbed by €35.9 million between July and December possibly as a result of the increased efforts as the Bank offered more attractive term deposit rates. This resulted in an improvement in the loans to deposits ratio to 74% compared to 62% in 2007. Shareholders’ funds climbed 12% to €61 million with a pre-tax return on equity at an all-time high of 23.2%.