Lombard Bank Malta plc - Interim Directors’ Statement

On 19 November 2020, Lombard Bank Malta plc published an Interim Directors’ Statement to update the market on the Group’s performance during the third quarter of this year.

The Directors reiterated that the ongoing COVID-19 pandemic negatively impacted some lines of business also during the third quarter of 2020. Consequently, profit before tax was lower than that registered for the same period in the previous year and it is expected that the financial results for the year will be subdued compared to the original targets. The Bank’s results are being adversely impacted by narrower interest margins in the prevailing low to negative interest rate scenario, lower commission income on the back of weakened business sentiment and reduced economic activity as well as additional expenditure incurred to ensure that customers and staff remain safe.

Meanwhile, the overall financial position remains strong and there are no indications of significant deterioration in the Bank’s assets while both the capital and liquidity ratios remained well in excess of the regulatory requirements.

The Directors noted that the Bank’s ‘Loans and Advances to Customers’ include facilities in respect of medium-term projects which should not be unduly impacted by the adverse short-term economic environment and the majority of the lending exposures are well secured by high quality collateral. Nonetheless, it is anticipated that, in view of the worsening economic forecasts factored into the calculation of Expected Credit Losses, the Bank is likely to register an increase in these expected credit loss allowances for 2020.

The ‘Loan to Deposit’ ratio meanwhile hovered around a prudent 65%, with customer deposits tending to grow faster than loans and advances despite the Bank’s participation in the COVID-19 Guarantee Scheme introduced by the Malta Development Bank.

MaltaPost plc, the Bank’s main subsidiary, continued its operations uninterruptedly, with only minor disruptions mainly in deference to health and safety precautions. After significant logistical difficulties during the second quarter of 2020 due to unavailability of international transport facilities, delivery of postal items picked up in earnest in the third quarter so that activity, although not at full capacity, reached an acceptable level.

As stated in previous company announcements, the Bank will continue to closely monitor developments and remains committed to ensuring that the best interests of its stakeholders are given priority and safeguarded at all times.