Lombard Bank registered a Profit before Tax of €6.2m, marginally higher than €6.1m for the same period last year. Economic conditions in Malta continued to be favourable as low interest rates persisted and the property market remained strong. The bank continued to be selective in its customer relationships and committed to service only high-quality business.
Tangible increases in activity in all significant lines of business were registered while activity at MaltaPost remained strong except for the ongoing decline of Letter Mail.
Loans and Advances to Customers in the period rose by 6% contributing towards an increase of 9% in interest income. Customer deposits increased by 2% while the resultant Group Net Interest Income for H1 2019 was up by 14% from €9.0m to €10.2m.
The bank relies on a diversified liquidity funding base, which over the years has proven to be relatively stable.
The impact of low-to-negative interest rates continues to be well managed and contained. While operating costs remain under control, however, compliance obligations present significant challenges both in terms of expense as well as human resources.
Group Employee Compensation and Benefits rose by 8% and are expected to continue to increase given the highly competitive labour market. Most of the decrease in Other Operating Costs at Group level was proportionate to the reduction in foreign mail revenue.
The change in 'Credit Impairment Losses' for H1 was €2.0m - an increase of €924k for the bank resulting from further alignment to the requirements of the International Financial Reporting Standard
Both Common Equity Tier 1 Ratio (CET1), at 14.3% and for which the Regulatory minimum is 4.5% in terms of EU Regulation No. 575/2013, as well as Total Capital Ratio, also at 14.3%, stood above the regulatory requirements.
Bank Advances to Deposits Liquidity Ratio was 67.2% (FYE 2018: 64.7%), indicative of a healthy liquidity buffer.
Investment in new business opportunities and the development of existing initiatives within the group are expected to ensure continued strong growth.
The directors are confident that the group will register a satisfactory full-year result within the context of the challenges being faced in both the banking and postal services sectors.