Lombard Bank Malta plc - Interim Results

On 28 August 2024, Lombard Bank Malta plc published its interim financial statements covering the six-month period ended 30 June 2024.

Net interest income increased by 4.8% to €13.3 million (H1 2023: €12.7 million) as the growth in gross interest income in absolute terms (+13% to €18.4 million) outweighed the higher level of interest expenses (+41.8% to €5.06 million). Lombard explained that the main driver was the increase in customer lending, but treasury activities also benefitted from the higher market interest rates.

Non-interest income surged by 6.2% to €22.6 million reflecting the higher level of business of the Bank’s postal subsidiary MaltaPost plc, as well as growth in net fee and commission income and trading profits.

On the expenditure side, operating costs remained relatively unchanged at €27.5 million as the increases in employee compensation and technology related expenses were offset by a number of efficiency measures.

Lombard’s financial performance was also positively impacted by a net impairment reversal of €1.65 million in contrast to the net impairment charge of €1.88 million in the first half of 2023. The release resulted from lower charges taken on customer loans and advances across the Bank’s lending portfolio.

As a result, the Group’s operating profit doubled to €11.4 million compared to €5.5 million in the same period last year. After accounting for a tax charge of €4.1 million and non-controlling interests of €0.5 million, the net profit for the period attributable to shareholders amounted to €6.71 million (H1 2023: €3.25 million), which translates into an annualised return on average equity of 6.9% (H1 2023: 4.7%).

The Statement of Financial Position as at 30 June 2024, when compared to the corresponding figures as at 31 December 2023, shows that total assets grew by 4.5% (or €56.9 million) to €1.32 billion with customer loans increasing by 6.0% (or €45.7 million) to €804 million. Total liabilities also climbed by 4.6% to €1.12 billion, principally composed of €1.05 billion in customer deposits. The loans-to-deposits ratio improved to 76.5% compared to 74.4% as at the end of 2023. Shareholders’ funds increased by 3.9% (or €7.45 million) to €198 million which translates into a net asset value per share of €1.280. The total capital ratio stood at 20.1% (31 December 2023: 21.0%) exceeding the minimum regulatory requirements.

Outlook

In their commentary, the Directors of Lombard explained that following the successful November 2023 Rights Issue, the Bank started the current financial year with a stronger regulatory base allowing it to continue expanding its activities and meeting the growing demand for banking services. Furthermore, the Bank continued to explore avenues to enhance the digitalisation of its systems and increase its physical presence in line with its strategic priorities. Moreover, significant progress was made in reaching ESG-related obligations.

The Board noted that although the level of results in H1 2024 may not be repeated in the second half, the outlook for the rest of the year remains encouragingly positive as the bank continues to maximise opportunities arising from the growing local economy.