The Lombard Bank Group (the Group) registered a Profit before Tax of €17.2m, in H1 2022, up from €5.4m for the same period last year, while the Bank’s Profit before Tax was €18.3m, up from €4.0m in H1 2021.

These results include a significant recovery on a long outstanding non-performing loan net of the accrual for higher regulatory contributions to the Depositor Compensation Scheme, as well as lower profits at MaltaPost p.l.c. for the first half of its financial year.

As the impact of the COVID19 pandemic subsided in the first six months of the year, business momentum picked up satisfactorily, the bank said in its report.

Loans and Advances to Customers rose to €704.8m leading to an increase in interest receivable of 3%, while deposits also rose by 3%. This resulted in an improved Net Interest Income of €10.1m.

Fee and Commission Income followed the trend rising by 19% as a result of higher activity in most of the business lines.

Group Employee Compensation and Benefits rose by 1% in a continued difficult labour market compounded by tight competition or talent and pressure to remunerate and retain a suitably qualified staff complement. Group operating costs remained under control though those associated with obligations to satisfy regulatory requirements and to further strengthen internal control functions, continued to increase. A higher accrual was charged in compliance with the Depositor Compensation Scheme legislation, which was enacted in the first half of this financial year.

Expected Credit Losses (ECL) as defined and determined by International Financial Reporting Standard 9 (IFRS9) resulted in a release of €12.1m in the first half of this year compared to a charge of €0.9m taken in the corresponding previous year period. This was mainly attributable to a significant recovery on a commercial non-performing loan which had been largely provided for in previous years. The Bank will continue to closely monitor its exposures also taking into consideration the global uncertainty not least the geopolitical crisis, economic conditions and increasing inflationary pressures.

The increase in market interest rates during Q2 impacted the Bank’s investment holdings resulting in a decline in book value of €16.1m. It is however to be noted that the related decline is unrealised as these investments are intended to be held to maturity.

With capital and liquidity ratios standing within regulatory requirements, our Advances to Deposits Ratio was 69.7% (FYE 2021: 65.7%), indicative of a healthy liquidity buffer, as the Bank continues to rely on a diversified funding base, which over the years has proven to be stable.

“During this half-year we continued to experience consistent demand for general banking services. In commercial and retail credit, such demand remains strong, as we receive proposals for the financing of bankable projects. This encourages us to consider initiatives to increase capacity so as to pursue our strategic priorities. Such initiatives shall also include accessing the capital markets. Further announcements in this regard will follow in due course,” the bank said.

“While we continue to invest in providing services through digital channels, we equally believe that the Maltese public at large still much values the physical presence and proximity of a bank in its community. In this regard our plans remain to selectively and gradually continue expanding our branch network to a level that facilitates physical access throughout the Islands. As an indigenous credit institution firmly committed to support the local community and economy, we believe that the Malta market will benefit from our wider physical presence.”

“In more than 60 years of its operations in Malta, Lombard Bank has acquired a deep and thorough appreciation for and knowledge of the local market. We have well-established relationships across most sectors of the Maltese economy which we are determined to continue servicing and, indeed, extend. The Bank is confident that ample opportunities for growth in the traditional banking sector remain, provided that the drivers of such growth stay aligned to the needs of the local economy,” the bank added.

“The Lombard approach to business is one of solid, steady, though unrushed growth, while remaining sensitive to the local business needs and social realities. Effectively this should give rise to the expansion of our activities across the board while also strengthening the Lombard brand, which generally stands for a reputable provider of personalised banking services.”

“Going forward, therefore we are confident that given our strong fundamentals, timetested straightforward business model and a fine team of staff members, we shall accomplish our objectives effectively and this to the benefit of all stakeholders.”