Lombard Bank closes H1 2023 with €5.4m in profits before tax

Lombard looks to end 2023 positively on increased activity and customer demand


The Lombard Bank Group ended the first half of 2023 with a profit before tax of €5.4m, down from €17.2m for the same period in 2022, which had however included a one-off significant recovery on a long outstanding non-performing loan. When adjusted for this special factor the profit before tax in 2022 would have been €5m.

The group achieved a profit after tax of €3.4m with the main drivers being higher net interest income and improved operational efficiency, reflected in earnings per share of 4 cents for this period.

The bank maintained an adequate capital and liquidity position, with ratios above the regulatory requirements. 

The demand for general banking services, including commercial and retail credit, remained consistently strong. 

Loans and advances to customers rose to €719.9m contributing to a 22% increase in gross interest revenues of €16.3m. Treasury activity was also a significant contributor to the rise in interest income, in line with increased market interest rates. 

Customer deposits remained stable, just above one billion euro while interest payable rose by 10% to €3.6m. These movements resulted in improved net interest income of €12.7m, an increase of 25%. advances to deposits ratio at 71.3% (FYE 2022: 70.6%), provided a healthy liquidity buffer, as the bank continued to rely on a diversified funding base, which over the years has proven to be stable.

Fee and commission income at €2.8m decreased by 8%, indicative of a more customer-oriented tariff.

Group employee compensation and benefits rose by 2% in what continued to be a tight labour market compounded by inflationary pressures. Group operating costs generally remained under control. These included a significant increase in expenses incurred by MaltaPost relating to postal delivery services, without a compensatory increase in tariffs. 

The need for the Malta Communications Authority, as the postal regulator, to react in a timely manner to MaltaPost’s requests for fair and reasonable revisions of tariffs, remains critical.

Expected credit losses (ECL) as defined and determined by International Financial Reporting Standard 9 (IFRS9) resulted in a charge of €1.9m in the first half of this year compared to a release of €12.1m taken in the corresponding previous year period. 

The reversal in 2022 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 outlook for rest of the year is positive, as the Bank expects to benefit from increased economic activity and customer demand as well as continued cost controls.

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