Lombard Bank Malta plc - Full-Year Results

On 28 April 2023, Lombard Bank Malta plc published its Annual Report and Financial Statements for the year ended 31 December 2022.

Performance Overview

Net interest income surged by 13.9% to a record of €22.3 million (2021: €19.6 million) as the 12.8% growth in gross interest income to €29 million, largely reflecting the growth in the bank’s loan book, offset the 9.3% increase to €6.74 million in interest expense as the amount of deposits increased to above the €1 billion mark.

Meanwhile, Lombard reported a 14.1% drop in non-interest income to €37.4 million (2021: €43.5 million) as the increase in most of the Bank’s business lines were offset by the lower revenues generated from postal services.

On the expenditure side, total operating costs fell by 7.4% to €47.7 million (2021: €51.6 million) driven by lower costs related to postal services. As a result of the sharper reduction in costs than total operating income, Lombard’s cost efficiency ratio improved to 80.2% compared to 81.9% in 2021. Excluding the operations of MaltaPost plc, the Bank’s cost-to-income ratio improved to 57.4% compared to 60.8% in 2021.

The financial performance was also boosted by the net reversal in expected credit losses of €16.2 million, compared to a net reversal of €1.46 million taken in 2021. Lombard explained that Bank achieved the full recovery of its single largest non-performing loan and also reversed a number of pandemic-related expected credit losses that were booked in previous years.

Overall, Lombard’s pre-tax profits more than doubled to €27.7 million compared to €12.6 million in 2021. After taking into account a tax charge of €10 million and minority interests of €0.1 million, the profit for the year attributable to shareholders amounted to €17.5 million which translates into a return on average equity of 12.8% (2021: 5.68%).

The Statement of Financial Position shows that total assets expanded by 2.4% to €1.20 billion driven by the growth in customer loans (+10.7% to €711.6 million). Total liabilities increased by 3% to €1.06 billion largely reflecting the growth in customer deposits (+3.2% to €1.01 billion). Given the stronger increase in customer loans than the growth in customer deposits, the loans-to-deposits ratio increased to 70.6% compared to 65.8% as at the end of 2021. Meanwhile, shareholders’ funds eased by 0.8% to €136.2 million which translates into a net asset value per share of €1.5013 compared to €1.5133 as at the end of 2021 (adjusted for the bonus issue and share split) as the profit registered for the year under review was more than offset by the €17.9 million reduction in the fair value of financial assets (accounted for directly in equity). The Bank’s Total Capital Ratio eased to 15.4% (31 December 2021: 16.2%) but remained above the minimum regulatory requirement.

Bonus Share

In order to preserve capital, the Board did not recommend the payment of a dividend. However, the Directors received regulatory approval for a bonus share issue of one share for every forty-five (45) shares held. The bonus issue will be funded by a capitalisation of reserves amounting to €0.25 million and will be allotted to shareholders as at close of trading on 17 July, subject to approval of the AGM scheduled for 22 June 2023.


Lombard explained that the Bank remains committed to grow prudently while stepping up investment in its distribution network, human resources and information technology. In this regard, it continues to expand its physical retail presence in response to rising customer demand and to further grow the Bank’s support functions. In fact, the Bank is currently reviewing its core transaction processing systems, digital channels and card services. Moreover, it is planning further investment in the prevention of money laundering and regulatory reporting systems.

In conclusion, the Board stated that Lombard has the potential to grow considerably, thereby remaining a truly indigenous bank having the exclusive mission and vocation to focus on servicing the needs of the Maltese community at large. Nonetheless, for the Bank to execute its growth plans it requires more capital in line with present and forthcoming regulatory requirements. In this regard, the CEO noted that the Bank’s plans to launch a rights issue were effectively blocked by a qualifying shareholder. As such, the CEO hopes that this matter is resolved sooner rather than later so that the Bank will be able to obtain the required capital and in turn execute its growth plans.