The Lombard Bank Group said on Wednesday that it made a profit before tax of €5.4m in the first half of this year, up from €17.2m in the same period last year, which had 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.
In a company statement, the group said it 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.
It said that demand for general banking services, including commercial and retail credit, remained consistently strong.
"However, to continue to progress on delivering the bank’s planned strategic initiatives, details of a forthcoming increase in the capital base, as authorised by the shareholders earlier this year, will be announced shortly."
Loans and Advances to Customers rose to €719.9m in the first half of this year, contributing to a 22% increase in gross interest revenues of €16.3m.
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%.
The 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.
The group said its 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," it said.
Expected Credit Losses (ECL) as defined and determined by International Financial Reporting Standard 9 (IFRS9) resulted in a charge of €1.9 million in the first half of this year compared to a release of €12.1m taken in the corresponding previous year period.
The bank said the outlook for the rest of the year is positive, as it expects to benefit from increased economic activity and customer demand as well as continued cost controls.
New ordinary shares
The bank also confirmed that it will access the capital markets through the issue of new ordinary shares to be admitted to listing and trading on the Official List of the Malta Stock Exchange. The shares shall form part of the same class, have equal rights as the bank’s existing shares.
The bank will seek to increase its capital by some €50 million.
"This will, apart from further strengthening the bank’s capital base in regulatory terms, allow the bank to significantly grow its activities, not least by satisfying the demand for credit as well as other banking services and enable the continued implementation of the bank’s strategy," it said.