Lombard Bank Malta plc - Interim Results
On 12 August 2022, Lombard Bank Malta plc published its interim financial statements covering the six-month period ended 30 June 2022.
During the period under review, net interest income increased by 1.4% to €10.1 million (H1 2021: €10.0 million) as the growth in gross interest income (on the back of the increase in credit activity which offset the continued downward pressure on interest margins) outweighed the higher level of interest expense which amounted to €3.23 million.
Meanwhile, non-interest income dropped by 18.7% to €18.5 million mostly due to the much lower contribution (-24%) from the Bank’s postal subsidiary – MaltaPost plc.
On the expenditure side, operating costs declined by 11% to €23.4 million (H1 2021: €26.3 million) as the marginal increase in employee compensation was outweighed by lower levels of other operating costs.
Lombard’s financial performance was boosted by a net impairment reversal of €12.1 million compared to expected credit losses amounting to €0.87 million in the first half of 2021. In this respect, the bank noted that this was mainly attributable to a significant recovery on a commercial non-performing loan which had already been largely provided for in previous years.
Overall, Lombard posted pre-tax profits amounting to €17.3 million compared to €5.49 million in the first half of 2021. After accounting for a tax charge of €6.19 million and non-controlling interest of €0.10 million, the bank’s net profit for the period under review amounted to €10.9 million (H1 2021: €3.19 million).
The Statement of Financial Position as at 30 June 2022, when compared to the corresponding figures as at 31 December 2021, shows that total assets grew by 2.9% to €1.21 billion driven by the increases in customer loans (+€61.9 million to €704.8 million) and investments (+€9.8 million to €237.3 million). Likewise, total liabilities increased by 3.4% to €1.06 billion largely reflecting the 3.3% increase (or +€32.4 million) in customer deposits to €1 billion. As a result of the sharper increase in customer loans when compared to the growth in customer deposits, the advances-to-deposits ratio improved to 69.8% compared to 65.8% as at the end of 2021. Shareholders’ funds eased by 0.3% to €136.8 million which, in turn, translates into a net asset value per share of €3.016.
In their commentary, the Directors of Lombard explained that demand for general banking services remained strong, particularly in commercial and retail credit. In this regard, the Directors are considering initiatives to increase capacity, including accessing the capital markets.
Furthermore, while Lombard continues to invest in providing services through digital channels, the Directors remain committed to gradually expanding the branch network to enable further physical access throughout the Maltese Islands. The Bank is confident that there are ample opportunities for growth in the traditional banking sector.