Lombard Bank Malta plc - Full-Year Results

On 23 March 2020, Lombard Bank Malta plc published its Annual Report and financial statements for the year ended 31 December 2019.

Performance Overview

During 2019, Lombard registered a 12.4% increase in net interest income to a record of €19.7 million (2018: €17.5 million), largely reflecting the growth of 9% in gross interest income to a nine-year high of €25.3 million which was also supported by a minimal drop in interest expense to €5.61 million. In this respect, the bank explained that the positive performance was driven by robust credit activity as well as judicious treasury management aimed to minimise the impact of negative interest rates coupled with repricing of liabilities at lower interest rates.

On the other hand, non-interest income contracted by 11.1% to €40.3 million. However, the drop only reflects lower postal sales and revenues as these contracted by 14.5% to €33.6 million amid lower letter mail volumes which outweighed growth in other areas of postal business including international parcels. Conversely, Lombard registered growth in the other main components of its non-interest revenue streams, including net fee and commission income (+14.6% to €5.41 million) and trading profits (+12.7% to €1 million).

On the expenditure side, operating costs dropped by almost 10% to €44.1 million, driven by the considerable decline in foreign outbound mail charges which were however partly offset by higher investments in HR amid tight labour market conditions. Nonetheless, the cost efficiency ratio at the bank level still improved to 47.1% compared to 47.4% in 2018.

In 2019, Lombard took an expected credit impairment loss of €0.55 million compared to €0.23 million in 2018. In this respect, the bank noted that the low level reflects the high quality of its assets as well as the adequate levels of collateral. Furthermore, Lombard remained determined 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’.

Overall, Lombard registered an 11.1% increase in pre-tax profits to €15.3 million. After taking into account a tax charge of €5.42 million and minority interests of €0.55 million, the profit for the year amounted to a new record of €9.32 million representing an increase of 10.3% over the comparable figure of €8.45 million posted in the previous financial year. The increase in profitability did not however translate into a higher return on equity as this remained virtually unchanged at 8.2% due to a much higher equity base.

The Statement of Financial Position shows that total assets expanded by 9.7% (or +€92.2 million) to €1.04 billion reflecting growth across all principal assets, namely customer loans (+8% to €552 million), investments (+11.7% to €111.7 million) and cash and short-term funds (+12.7% to €303.4 million). Total liabilities also increased to €915.5 million (+9.7%), largely reflecting the 9.8% growth (or +€76.9 million) in customer deposits to €865 million. The loans to deposits ratio also deteriorated slightly to 63.8% compared to 64.9% as at the end of 2018.

Meanwhile, shareholders’ funds increased by 10% to €119.1 million. This translates into a net asset value per share of €2.70 compared to €2.452 as at the end of 2018. The bank’s level of capitalisation also strengthened as the total capital ratio increased by 1.3 percentage points to 16% from 14.7% as at 31 December 2018.


The Board of Directors of Lombard are recommending the payment of a final net dividend of €0.0455 per share. This represents an increase of 40% over the net dividend of €0.0325 per share paid out for the 2018 financial year and a payout ratio of 21.6% compared to 17% for the previous financial year.

In view of the current circumstances arising from the ‘COVID-19’ pandemic, including the restrictions on mass events, the Board of Directors of Lombard decided to postpone the Annual General Meeting which was previously scheduled for 23 April 2020, to a later date which shall be notified to the market once confirmed. The record date and the dividend distribution date shall be likewise communicated.


In their commentary, the Directors of Lombard explained that the performance achieved in 2019 took place within a context of prudent business practices despite uncertainty that weighted on business sentiment and persistent low interest rates. Furthermore, the bank noted that the positive set of results instils the necessary confidence for the realisation of the Group’s strategic priorities, namely: (i) further strengthening the bank’s governance, risk and compliance functions; (ii) maintaining sound asset quality in line with prudent risk appetite; (iii) developing new business lines for these to become relevant revenue contributors; (iv) widening physical representation; (v) maintain a personalised approach to business; and (vi) continue investing in the bank’s human resources.

Going forward, Lombard added that it is expecting to be well positioned to successfully pursue these priorities, which should result in the further enhancement of stakeholder value.


Lombard Bank Malta plc – Annual Report & Financial Statements for the year ended 31 December 2019.