A rigorous examination of the output, expenditure, and income approaches reveals the precise catalysts underpinning this economic momentum.

From the output perspective, Gross Value Added (GVA) expanded robustly by 5% in volume terms in Q2 2026. Service activities served as the primary engine of this expansion, contributing a commanding 4.3 to 4.7 percentage points to overall volume GVA growth.

Leading the sectoral performance was the financial and insurance activities sector, which registered a stellar volume growth rate of 12.2%. This was closely complemented by the information and communication sector, recording double-digit momentum with a 9.2% volume expansion driven by ongoing digitalisation and the scaling of digital services. Professional, scientific, and technical activities also maintained solid upward momentum, registering a 7.5% volume growth rate that reflects robust legal, engineering, and business consultancy operations. Conversely, industry (NACE Sections B to F) contributed a modest 0.3 percentage points to volume growth, while agriculture and fishing maintained a neutral impact.

An expenditure-side analysis underscores that domestic demand was the central pillar of economic growth, contributing 5.3 percentage points to the year-on-year volume GDP expansion. Final consumption expenditure witnessed an impressive overall increase of 6.7% in volume terms.

While private household consumption contributed a steady 1.7 percentage points (reflecting a 3.5% volume increase), general government final consumption expenditure emerged as the preeminent catalyst for domestic expansion. Government consumption surged by an extraordinary 14.7% in volume terms, contributing 2.5 percentage points to overall volume GDP growth. This intense public sector expenditure effectively counterbalanced external headwinds, offsetting a negative contribution of -0.7 percentage points from net external demand where import growth outpaced exports. Gross fixed capital formation added a further 5.1% increase in volume terms, providing balanced support to domestic formation.

The €417.1 million nominal increase in Q2 2026 GDP was distributed across factor incomes in a manner that highlights a distinctly labour-driven and wage-led trajectory. Compensation of employees (wages) rose by €253.8 million, moving from €2,628.5 million to reach €2,882.3 million, thereby capturing 60.84% of total nominal growth and contributing 4.1 percentage points.

Meanwhile, gross operating surplus and mixed income (corporate profits) rose by €136.6 million, increasing from €3,059.8 million to €3,196.4 million, which captured 32.75% of growth and contributing 2.2 percentage points. Net taxes on production and imports accounted for the remaining €26.7 million increase, contributing 0.4 percentage points. Aggregating these dynamics across the first half (H1) of 2026, cumulative nominal GDP reached €12.72 billion – a 6.88% increase over H1 2025 – with employees capturing over 63% of total nominal income growth.

While Malta’s macroeconomic indicators reflect undeniable headline resilience and healthy nominal expansion, a deeper strategic appraisal reveals significant structural vulnerabilities and long-term sustainability risks.

The primary issue lies in the economy’s heavy reliance on public sector stimulus. With general government consumption surging by 14.7% in volume terms and driving domestic demand, the public sector is currently acting as the main economic anchor. Building upon the expansionary fiscal habits observed in prior years, debt-financed or expenditure-driven public stimuli introduce acute fiscal risks if recurrent public spending persistently outpaces structural productivity gains.

Furthermore, the distinctly wage-led nature of the expansion – where over 63% of total nominal income growth during H1 was channeled into employee compensation – creates a delicate balancing act. Although tight labour markets are successfully rewarding workers, nominal wage increases risk fueling persistent pressures which unless matched by commensurate gains in labour productivity and advanced technological automation, will erode Malta’s competitiveness. For Malta’s growth trajectory to remain viable over the long-term, future expansion must pivot from being predominantly public-expenditure and wage-reliant toward sustainable, productivity-driven private sector innovation.

To put Malta’s economic trajectory into proper perspective, the economy can be viewed as an interconnected chain where every component is linked – from public spending and labour compensation to infrastructure and private enterprise. Because these elements are interdependent, the current reliance on debt-financed public consumption and wage-led growth without matching productivity gains places undue stress on Malta’s physical infrastructure and long-term fiscal stability. Moving forward, sustainable growth requires a structural shift where investments are purposefully diverted toward total factor productivity gains and technological advancement, ensuring that economic expansion reinforces infrastructure resilience rather than overstraining it.

The post What is fuelling Malta’s economic growth? first appeared on The Malta Business Weekly.

Anticipating certain market dynamics

This week, I intended to focus specifically on the housing market and its affordability, as well as the strain on our infrastructure derived from the expansion of sectors requiring additional labour and higher volumes of people to host as a small island state. In my current post-election campaigning, even though the next general election is five years away, it is evident that markets are constantly evolving and that people feel the changes in how these dynamics play out in daily life. Economists, upon observing market patterns, are guided by the principle of intervening and regulating when necessary. When market failures arise and adversely affect society, prompt regulation is required. Nevertheless, markets should ideally operate within the framework of government policies designed to ensure optimal performance when left to function independently.

Before implementing government policy and regulation, it is essential to assess market failures and ensure that regulations across sectors, beyond EU directives and legislation, are effective and timely in stabilising markets. My recent interactions with the public highlighted that affordable housing and infrastructure strain are the most pressing concerns. Although I am no longer engaged in research and lack the resources, not least time, to construct detailed econometric modelling, my current focus on climate and environmental risks underscores the need to examine how markets are failing some segments of society. Economic intuition is guided by a strong background in economic theory and by what people feel on the ground.

The housing market, prices, and rent subsidies

Let’s start with affordable housing. Certainly, rent subsidies and market affordability do not reflect what is happening on the ground, and clearly there is a gap between statistics and reality. Surely, we need to address such a gap as quickly as possible. While I was writing this article, some followers coincidentally texted me to say they cannot afford the rent. I am not suggesting we encourage dependency. Rather, we should help those who have faced difficulties in life to improve their situation. For example, single persons, divorced or separated individuals, and those working in retail are struggling to keep up with rent and housing prices. I understand that some policymakers tell you that the key to success is education. However, we still need to be aware of people who cannot make it, for reasons such as social backgrounds and vulnerabilities.

We need a system that promotes social justice. It is fine to own 10 apartments if you can afford them and to live off the market. However, policy must be adjusted to promote social justice. I am glad to see people earning money, but there must be a limit on speculation to give others a chance; otherwise, inequality will grow. Current Minister Owen Bonnici is doing a great job in social housing, and the ministry’s personnel are efficient in responding to queries. Certainly, the government’s policy aims to promote the development of additional affordable housing units to support these groups. However, we need not just purchases but also units providing affordable rent.

The introduction of tapered subsidies represents progress. However, it remains unclear why eligibility for rent subsidies is assessed based on gross rather than net income. While banks use gross income to assess mortgage credit risk and maintain financial stability with respect to the debt-to-income ratio, this approach is not suitable for government rent subsidies. Net income should be considered to reflect individuals’ financial realities better. Many individuals struggle to afford basic expenses after paying rent, even with subsidies, while also fulfilling separation income obligations and paying taxes on gross income. After all deductions from gross income, some are left in relative poverty with net income. The rental market has also undergone significant changes since reaching a tipping point some years ago.

The tapering of the rent subsidy benefit and the supply of apartments

The government is attempting to address these market dynamics by also implementing a tapering system for individuals whose incomes increase and who no longer qualify for the full rent subsidy. However, if an individual’s income rises slightly above the threshold, the system begins tapering the rent subsidy. In a context of labour shortages, this can discourage individuals from working additional hours, including overtime, as the extra income results in the loss of benefits. Fewer hours of work would result in more people being imported to fill the gap, unless automation gradually fills part of the gap. Perhaps an alternative approach is to introduce a percentage buffer rather than a fixed income threshold. For instance, if an individual earns an additional €500 per year and exceeds the entitlement threshold, the subsidy will taper gradually. Establishing a 10% or 15% buffer on annual income before disentitlement, and then tapering it, would enhance transparency and incentivise greater participation in work. People could easily plan the hours of work, and so will employers. Ultimately, perceptions of taxes and benefits are shaped by considerations of fairness.

Moreover, it is becoming increasingly difficult for Maltese people to rent out apartments. I even saw messages exchanged by property owners and agents stating that the property is to be rented to foreigners, meaning that, in addition to the price, the supply is also excluding locals. Hence, there are two problems here: rent prices and supply. There are two options available to authorities. Either taxing more in areas where locals are excluded or providing additional units. I mean, providing additional units means the government must supply them. We do have a situation that requires urgent attention to revise regulations and policy to manage and support such cohorts. And we need to accelerate the affordability process, building on the work already underway.

The marginal benefits and costs of additional economic growth

Surely, beyond rent subsidies, I have advocated for a comprehensive assessment of current GDP growth, particularly from sectors that place additional strain on infrastructure. For example, if certain sectors contribute an extra two percentage points of growth but require the importation of labour and increased activity, this must be balanced by investments in infrastructure upgrades, the allocation of agricultural land for sewage treatment facilities as well as road upgrades, and measures to address noise pollution, emissions, and rising rents and property prices. It is essential to consider the multiplier effects of economic growth, but we must also measure the costs to our infrastructure. When natural capital is depleted, the resulting pressure on limited resources can lead to economic overheating and destabilisation of our social fabric. This necessitates a revaluation of policy priorities and our collective responsibilities. And the Opposition must express which sectors they refer to when they speak of planning, as hitherto, they did not mention any.

Ultimately, we must reconsider what we, as human beings, owe to nature, and certainly what we all owe to each other, if we are to live in peace, sharing progress and prosperity.

The post Zooming in on certain markets is a necessity first appeared on The Malta Business Weekly.

The latest developments illustrate the problem. On Monday, a tanker was reportedly struck by three unknown projectiles while travelling eastbound through the Strait, while Iran’s Revolutionary Guard reported intercepting a US MQ-9 drone. Renewed US strikes on Iranian positions have pushed Brent crude back above $90 a barrel, after prices had fallen below $80 earlier in August. This market reaction is significant, but perhaps more important is what lies behind it: uncertainty.

According to UN Trade and Development (UNCTAD), before the military escalation began on February 28, Hormuz carried around 38% of global crude oil trade, 29% of LPG, 19% of LNG and 19% of refined oil products. The waterway is also important for chemicals including fertilisers, while its disruption has repercussions for wider maritime transport and supply chains.

By late August, however, traffic had reportedly fallen by approximately 95%. Between July 15 and August 23, an average of only around five vessels a day passed through the Strait. Much of the remaining traffic has involved tankers operating under naval escort or with tracking systems switched off.

The International Energy Agency’s (IEA) latest assessment, published on August 31, points to mounting pressure. Global oil supply is now forecast to decline by 4.3 million barrels per day in 2026, with increased production elsewhere only partly compensating for losses from the Middle East and Russia. At the same time, global oil demand is now expected to fall by 1.6 million barrels per day, a dramatic reversal from the 850,000-barrel-per-day increase forecast before the war.

Refined products are already feeling the strain. Tight supplies and declining inventories have pushed diesel, gasoline and jet-fuel refining margins to record levels. Although global inventories remain an important buffer, the IEA warns that they are being drawn down rapidly. The longer the disruption persists, therefore, the less comfortable that buffer becomes.

The economic consequences of the crisis cannot be measured simply by today’s oil price. They extend well beyond the energy sector. Higher fuel prices increase transportation and production costs, while higher freight rates, bunker fuel costs and war-risk insurance feed into the price of moving goods. Fertiliser is another critical concern. Higher costs or reduced availability can eventually translate into more expensive food, particularly in countries already vulnerable to food insecurity and high debt.

Moreover, the UN recently warned that disruptions to the Strait of Hormuz, the Bab al-Mandeb Strait, and the Black Sea are effectively choking important arteries of global trade. The result of these crises is higher prices, weaker harvests and greater suffering for vulnerable populations.

Findings from the World Economic Forum highlight that industrial supply chains are also exposed to disruptions involving commodities such as methanol, aluminium, sulphur and graphite. These materials feed into manufacturing, chemicals and clean-energy industries, demonstrating that the Hormuz crisis is not merely an “oil shock” but (yet again) a broader test of the resilience of globalisation.

According to a European Commission Joint Research Centre scenario published in May, Europe appears particularly exposed, as it illustrates how severe a prolonged disruption could be. Assuming Hormuz traffic remains severely restricted through the end of 2026, oil prices could reach around $180 per barrel and gas prices €80 per megawatt-hour in the fourth quarter. Under that scenario, EU GDP growth would fall to 0.7% in both 2026 and 2027, compared with baseline forecasts of 1.1% and 1.4%. Inflation could rise to 3.5% in 2027, compared with 2.4% in the baseline.

These figures are scenario estimates, not forecasts of what will necessarily happen. Yet their importance lies precisely in demonstrating the economic price of prolonged uncertainty. This is where the growing call for a stronger UN role at the centre of mediation and for examining an international maritime mission to monitor shipping, facilitate civilian passage, establish de-escalation mechanisms and protect seafarers becomes economically significant.

Currently framed as part of a solution is the UN task force established in March to protect maritime transit for humanitarian purposes through the Strait of Hormuz, with an initial focus on commercial fertilisers and related raw materials. Such a mechanism would not, by itself, resolve the underlying US-Iran confrontation. Nor would it remove the need for diplomacy between the parties. But it could be a practical first step toward restoring predictability, which markets desperately need.

In a global economy built on interconnected supply chains, certainty has become an economic commodity in its own right. And the longer Hormuz remains uncertain, the more expensive that commodity becomes.

The post The uncertainty crisis of the Strait of Hormuz first appeared on The Malta Business Weekly.

The Malta Chamber of Commerce, Enterprise and Industry, the Malta Employers’ Association (MEA) and the Malta Hotels and Restaurants Association (MHRA) all opposed the proposal, although there was greater openness among the three organisations to another element of Camilleri’s argument: whether the basket used to calculate COLA still accurately reflects what households spend money on today.

Camilleri had proposed in an interview with The Malta Independent that COLA should be adjusted every six months rather than annually, arguing that the mechanism needed to respond more quickly to rising living costs and the financial pressures facing workers. He also questioned whether the basket underpinning the calculation adequately captures modern household expenses, pointing to sharply higher rental costs and the growing importance of services such as mobile phones and internet subscriptions.

The employer organisations, however, said the annual system provides businesses with an important degree of certainty.

MEA Director General Kevin Borg said the association was not in favour of an interim COLA payment because it would introduce additional uncertainty into companies’ annual budgeting.

He also pointed to practical difficulties in operating a system in which the adjustment could change during the year.

If COLA for the first six months were based on the previous September’s Retail Price Index, while the second payment was calculated using March data, higher inflation would automatically result in a larger second payment.

But a fall in inflation could create a different problem, Borg said.

A lower COLA for the second semester could require a downward adjustment to salaries in which the COLA had already been incorporated, something he described as “not ideal”.

The Chamber took an even stronger position, arguing that while the GWU proposal was intended to provide workers with more immediate relief during periods of high inflation, doubling the frequency of adjustments would be “economically counterproductive”.

It said employers plan their budgets, pricing and financial forecasts over a 12-month cycle, particularly SMEs operating on relatively narrow margins.

Moving to twice-yearly adjustments, it argued, would create unpredictable mid-year increases in labour costs.

The Chamber also warned that without corresponding increases in productivity, higher mandatory wage costs could feed directly into prices.

Businesses in retail, services and hospitality could be forced to raise prices to absorb increased labour costs, creating what the Chamber described as a wage-price spiral that could ultimately erode the purchasing power gains COLA was intended to provide.

It stressed that COLA was designed as a statutory macro-economic stabilisation mechanism rather than a real-time inflation tracker or a replacement for wage growth resulting from improved skills and productivity.

MHRA President Tony Zahra similarly defended the annual system, arguing that one of its major strengths was the certainty it provided businesses.

COLA had allowed companies to enter into contracts lasting more than a year knowing that wages would not fluctuate every few months, he said.

A move to twice-yearly adjustments would undermine that advantage by making it more difficult for businesses to project their costs.

For Zahra, the predictability offered by the current system has been an important part of Malta’s economic model.

There is, however, more common ground between the employer organisations when it comes to the composition of the COLA basket.

Borg said the MEA supported maintaining an updated list of goods and services representing the spending patterns of a typical household.

Consumer habits change over time, he said, and this should be reflected in the statistical weightings used to measure inflation.

The association nevertheless stressed that mobile phone services and internet subscriptions already form part of the current basket.

Zahra was also open to revisiting the basket, saying the issue had been discussed over the years and that it might now be time to examine whether changes were warranted.

Any changes, however, should be agreed upon by government and all the social partners, he said.

The Chamber was more cautious, stressing that the Retail Price Index basket is based on empirical data collected through the National Statistics Office’s Household Budgetary Survey and reflects average spending patterns across the economy.

It specifically opposed the idea of incorporating private residential rental prices into a universal mandatory wage index.

Rental inflation, it argued, affects particular sections of the population differently and linking national wage increases to housing costs could create distortions without addressing the underlying problems in the property market.

The Chamber also warned that changing the weighting mechanism without rigorous statistical justification and agreement at the Malta Council for Economic and Social Development could undermine the tripartite consensus behind the current system.

The debate ultimately comes down to competing pressures.

For workers, the argument for more frequent COLA payments is straightforward: when prices rise rapidly, an annual adjustment can leave wages trailing behind the cost of living for months.

For employers, however, more frequent mandatory increases mean less certainty over labour costs and potentially greater difficulty in setting prices, signing contracts and competing internationally.

Borg stressed that COLA is ultimately paid by employers, rather than government, and that salary increases generated by COLA are not necessarily matched by productivity gains.

He warned that particularly large adjustments could prove extremely difficult for major employers serving export markets, where margins can be tight and businesses have limited control over the prices they charge.

The Chamber raised similar concerns for manufacturing, maritime and technology companies competing internationally. Unlike businesses operating solely in the domestic market, exporters cannot simply pass higher wage costs on to overseas customers.

It also warned that more frequent statutory increases could reduce the scope employers have to reward workers through performance-related salary increases, bonuses and career development.

The MEA has proposed a different way of reforming COLA. Rather than moving to twice-yearly payments, it has previously suggested introducing minimum and maximum annual increases.

One possible model would set the annual adjustment within a range of between €2 and €6 per week. Every five years, the total COLA that should have been paid would then be compared with the amount actually paid, with any difference settled subsequently.

The proposal is intended to smooth out sharp fluctuations while ensuring that employees ultimately receive their full entitlement.

The Chamber believes, however, that the bigger issue facing Malta is not the mechanics of COLA but weak productivity growth.

It cited Eurostat figures showing that real labour productivity per person rose to 225.8 in Ireland and 130 in Denmark in 2025, compared with 103.6 in Malta. Malta’s figure had peaked at 109.6 in 2019 before falling during the pandemic.

The Chamber argued that wages cannot continue to rise sustainably without corresponding improvements in productivity and called for greater investment in digital transformation, automation and artificial intelligence, alongside worker upskilling.

The post Employers push back on twice-yearly COLA, agree basket may need review first appeared on The Malta Business Weekly.

The company received the funding through the European Regional Development Fund (ERDF)-backed Business Enhance grant scheme, using the support to invest in professional catering equipment and modern refrigeration systems for its new operation.

The visit by Minister for European Funds, Social Dialogue and Consumer Protection Keith Azzopardi Tanti formed part of the government’s efforts to showcase projects supported through EU funds.

According to the ministry, the government has committed more than €39 million through over 680 grant agreements under various ERDF schemes designed to support small and medium-sized enterprises (SMEs). The funding covers investments including machinery and equipment, digitalisation, marketing consultancy, internationalisation, certification standards and business studies intended to strengthen competitiveness.

Speaking during the visit, Azzopardi Tanti described SMEs as the backbone of Malta’s economy, saying they play a vital role in creating jobs and driving economic activity. He said European funds provide businesses with an opportunity to expand operations, improve productivity and achieve long-term growth.

Rodrick Zerafa, chief executive of Servizzi Ewropej f’Malta, said KG Catering’s investment demonstrated how European funding can translate into tangible business improvements. He noted that the agency provides free support to businesses in Malta and Gozo by identifying suitable funding opportunities and assisting with the application process.

KG Catering representative Giuseppe Gravina said the company invested around €250,000 in modern kitchen and specialised equipment, with European funding helping make the project possible. He said the investment enabled the company to establish the restaurant with modern, efficient facilities.

The minister also highlighted the launch of the second call under the Digitalise your SME scheme, backed by a €15 million allocation. The programme includes increased funding thresholds for artificial intelligence projects, support for personnel costs through Simplified Cost Options and measures promoting the responsible adoption of AI.

Eligible projects may receive grants of up to €235,400, covering up to 50% of eligible investment costs in Malta and 60% in Gozo. Projects aligned with Malta’s Strategic Roadmap for the Digital Decade 2023-2030 may also qualify for an additional 10% top-up from the Malta Digital Innovation Authority, subject to available funds.

Concluding the visit, Azzopardi Tanti encouraged more businesses to apply for available funding, saying continued investment by local enterprises would contribute to strengthening Malta’s economy.

The post EU funding helps KG Catering expand as government highlights €39 million SME investment first appeared on The Malta Business Weekly.

In a statement on Facebook, Camilleri said the evaluation process for these submissions will commence in the coming days and weeks.

This charter arrangement serves as an interim measure until two new permanent vessels are purchased to join the existing fleet, aligning with the long-term strategy for the future of the Gozo crossing service.

The new fourth vessel will be replacing the Nikolaus, which has been chartered by Gozo Channel for several years but which has limited operations and has been the subject of so much criticism by passengers.

The post Two companies bid to charter fourth ferry for Gozo Channel first appeared on The Malta Business Weekly.

The appointment reflects RSM Malta’s continued investment in services that help organisations respond to a rapidly changing business environment. As businesses increasingly look to technology and AI to improve efficiency, strengthen decision-making, and support long-term growth, RSM Malta’s Digital service line is focused on providing practical support that connects technology with real business outcomes.

Ludwig brings nearly two decades of experience in technology, transformation, software engineering, project delivery, and business management across both the public and private sectors. Since beginning his career in software engineering back in 2007, he has progressed through a number of senior leadership roles, leading multidisciplinary teams and supporting organisations with technology strategy, digital transformation, automation, and AI-enabled solutions.

In his new role, Ludwig is leading the continued growth of RSM Malta’s Digital Transformation and AI practice, advising boards and executive teams on technology-enabled business transformation. He is also supporting the development of the firm’s digital transformation strategy, leading complex client engagements, expanding technology and AI-related service offerings, and working closely with the wider RSM international network to strengthen the firm’s capabilities.

Commenting on his appointment, Ludwig Micallef said: “Digital transformation is no longer about implementing technology for its own sake. Organisations today are looking for trusted advisors who can help them translate emerging technologies into measurable business outcomes. That starts with understanding the organisation itself; its priorities, challenges, people, and ambitions. Technology is most effective when it is aligned with real business needs and implemented in a way that creates meaningful and lasting value. My ambition is to further strengthen RSM Malta’s position as a strategic partner that helps organisations improve the way they operate, strengthen decision-making, and create value through technology.

“AI presents one of the greatest opportunities businesses have faced in decades, but success will depend on adopting it responsibly and with a clear business purpose. At RSM Malta, our priority is to help organisations embrace AI as part of their wider digital transformation journey, combining expertise in technology, data, governance, and change management to deliver practical and sustainable business outcomes,” he added.

Karen Spiteri Bailey, Managing Principal at RSM Malta, said: “We are pleased to welcome Ludwig to RSM Malta at a time when digital transformation and AI are becoming central to how organisations plan, operate, and compete. His experience in leading complex transformation programmes, together with his understanding of both technology and business strategy, adds significant depth to our Digital service line.

“At RSM Malta, our focus is on helping clients respond to change with confidence in a way that is practical, responsible, and aligned with their long-term objectives. Ludwig’s appointment strengthens our ability to support business leaders as they consider how technology and AI can create value, improve resilience, and support sustainable growth,” she concluded.

The appointment forms part of RSM Malta’s broader strategy to continue investing in specialist capabilities that help organisations respond to the evolving needs of the market. 

To discuss how digital transformation and AI can support your organisation’s next stage of growth, contact RSM Malta’s Digital Transformation and AI team.

The post RSM Malta appoints Ludwig Micallef as Director for Digital Transformation & AI first appeared on The Malta Business Weekly.

The Group also continued to expand its third-party hotel management business through the signing of new agreements for future Corinthia-branded properties, supporting the roll-out of its asset-light strategy which is expected to underpin accelerated growth over the coming decade.

Total Group revenues exceeded the €150 million mark for the first half of 2026, with like-for-like revenue increasing by six per cent year-on-year, after excluding the Lisbon hotel following its partial sale in April 2026, as well as the ramp-up phase for the Rome Hotel which was launched midway through the period under review.

On the same basis, excluding the impact of the Lisbon sale and Rome operations, EBITDA increased by 18 per cent to €19 million, compared to the €16 million generated in the first half of 2025. This reflects the strength of the Group’s underlying operations.

Year-end forecasts indicate EBITDA to stabilise at the same level to 2025 notwithstanding lower contributions from the Lisbon asset sold in 2026. Furthermore, mid-year reported losses after tax do not include property revaluations as will be reported at the year’s end financial statements.

The period under review included some significant milestones, including

• the opening of the flagship Corinthia Rome;
• the signing of a new management agreement to operate a luxury property to be developed in Puglia, Italy; and
• the disposal of a majority interest in the Corinthia Lisbon.

The Lisbon transaction was an integral part of the Group’s strategy to monetise its real estate investments over time, with the scheduling of individual asset sales carefully managed to maximise value and returns.

The proceeds from the sale of the majority stake in the Lisbon hotel enabled the Group to allocate over €100 million towards the repayment of bank and other borrowings and to fund an €18 million interim dividend, whilst retaining the Lisbon hotel’s management agreement and a 28 per cent interest in the property.

Group Chairman Alfred Pisani said: “Our focus is increasingly on expanding the Corinthia brand internationally through development and management agreements, generating recurring fee income while relying predominantly on third-party capital for new hotel developments. This asset-light model enables the Group to leverage its development and management capabilities without committing significant capital to property ownership.

“The opening of Corinthia Rome and the addition of Puglia to the Group’s management portfolio mark further progress in the execution of this strategy. These developments build on the recent openings of Corinthia-branded hotels in New York and Bucharest, both owned by third parties and managed by the Group, as well as the Group-owned hotel in Brussels, all of which are now beginning to contribute to earnings.”

Hotel development projects are also progressing in Beverly Hills, Turks & Caicos, Dubai, Doha, Riyadh, Tuscany, Lake Como, the Maldives and Chengdu. Group companies are involved in these projects as hotel operators, development partners or providers of technical services. Virtually all of the capital required for these developments is being provided by third-party partners, underscoring both Corinthia’s strong track record as an operator and developer and the asset-light nature of the Group’s growth strategy.

The Group continues to evaluate strategic options for its other owned assets, including a potential sale of its Prague property, with a view to allocating any proceeds towards debt reduction, further dividends, and strategic capital expenditure and investments. Amendments to the Prague Metropolitan Plan, approved by the Prague City Council and due to come into effect in September, will permit residential development alongside hospitality uses on the Group’s site. These amendments are expected to enhance the property’s development potential and underlying value.

The first half of 2026 demonstrates the resilience of the Corinthia Group’s underlying business model and progress in the strategic evolution of the Group towards a development and management company.

The post IHI reports growth in its core operations as asset-light strategy gathers pace first appeared on The Malta Business Weekly.

Economic activity in Malta remained broadly in line with its long-term average, with business conditions showing a modest improvement in July, according to the Central Bank of Malta’s latest Economic Update.

The Bank’s Business Conditions Index pointed to a strengthening in conditions during July, although the indicator remained slightly below its historical average.

The latest data presents a mixed picture across different sectors of the economy. Retail activity continued to grow in June, but at a more moderate pace, while services production also recorded slower growth in May. Industrial production, meanwhile, declined in annual terms and continued to display a volatile pattern.

Tourism remained one of the stronger performers, maintaining its momentum in June.

Consumer confidence weakened in July, although sentiment remained well above its historical average. At the same time, unemployment expectations continued to point towards relatively low unemployment over the coming year.

The labour market also showed some improvement. Malta’s unemployment rate fell slightly to 3.5% in June from May, although it remained higher than the rate recorded a year earlier.

Property market remains strong

Conditions in Malta’s property market remained robust, with both supply and demand continuing to show strength.

The number of residential and commercial development permits approved in July was lower than a year earlier, but increased compared with June. Similar movements were recorded in final deeds and promise-of-sale agreements, reflecting continued activity on the demand side of the market.

Inflation remains below euro area level

Inflation increased marginally in July but remained significantly below the rate recorded across the euro area.

The Harmonised Index of Consumer Prices (HICP) rose to an annual rate of 2.1% in July, up from 2.0% in June. Core HICP inflation, which excludes food and energy, stood at 2.3%.

The Central Bank noted that both headline and core HICP inflation across the euro area were higher than Malta’s, largely because of higher energy inflation.

According to Malta’s Retail Price Index, inflation increased to 2.7% in July.

Government deficit narrows

The government’s fiscal position also improved in June, with the Consolidated Fund recording a smaller deficit than a year earlier.

The Central Bank attributed the improvement primarily to stronger growth in government revenue.

Meanwhile, the annual rate of growth in deposits and credit held by Maltese residents increased compared with May, indicating stronger growth in both areas.

Overall, the August Economic Update points to an economy that continues to expand at a relatively steady pace, supported by strong tourism and property-market activity, while inflation remains comparatively contained. At the same time, slower growth in retail and services and continued volatility in industrial production highlight some of the uneven trends across the economy.

The post Malta economy remains resilient as business conditions strengthen first appeared on The Malta Business Weekly.

During the first half of this year the financial performance of the Group reflected higher core Bank Operating Income and improved operational efficiency, the bank said in a statement on the Stock Exchange.

MaltaPost p.l.c., the Bank’s main subsidiary, also contributed to this positive result with a 12% increase in Profit Before Tax, reaching €3.6 million (H1 2025: €3.2 million).

During this period a one-off share of profit recorded in 2025 from the disposal of assets by an associate company was not repeated. Earnings per Share for the period, now stand at €0.04. Gross Interest Revenues rose by 11% to €21.8 million (H1 2025: €19.7 million), primarily driven by growth in customer lending, the bank said.

Treasury activities also contributed to the increase in interest income through continued optimisation of the Bank’s balance sheet with excess liquidity being employed in Treasury Bills and higher-yielding investment-grade debt securities. Interest Expense increased by 16% to €7.7 million (H1 2025: €6.6 million), driven by both higher volumes of customer deposits and higher interest rates paid on longer-term deposits.

Net Interest Income increased by 8% to €14.2 million (H1 2025: €13.1 million). Net Fee and Commission Income rose by 31% to €3.7 million (H1 2025: €2.8 million), supported by higher business volumes, particularly across commercial and retail lending and wealth management activities. Postal Sales and other Revenues were up by 8% to €23.1 million (H1 2025: €21.4 million), driven by a steady performance across key business areas, particularly parcel and logistics-related activities.

The continued shift from traditional Letter Mail to digital communication channels persisted during the reporting period, while e-commerce and parcel-related services continued as important contributors to revenue growth, the bank said.

Operating Income improved by 9% to €41.5 million from €38.1 million in H1 2025. Employee Compensation and Benefits increased by 7% to €15.2 million (H1 2025: €14.2 million), reflecting a tight and competitive labour market.

Other Operating Costs rose by 3% to €12.9 million (H1 2025: €12.6 million), reflecting continued investment in the business, while remaining well contained through ongoing operational improvements and cost management. Cost Efficiency Ratio of the Bank improved to 49.1% (H1 2025: 54.4%), reflecting stronger income growth and continued cost discipline. At Group level, the cost efficiency ratio also improved to 72.1% (H1 2025: 74.9%).

The higher ratio, when compared with that of the Bank reflects the nature of the postal services industry, which is typically characterised by high volumes, low margins and a labourintensive operating model. Expected Credit Losses (ECL), as set by International Financial Reporting Standard 9 (IFRS 9), resulted in a lower net release of €0.04 million during the first half of the year, compared with a release of €1.0 million in H1 2025.

Financial Position and Capital Loans and Advances to Customers rose by 8% to €1,002.7 million from €929.1 million at FYE 2025. Amounts Owed to Customers increased by 3% to €1,242.4 million from €1,207.3 million at FYE 2025, the bank said.

Bank Loan-to-Deposit ratio increased to 82.9% (FYE 2025: 79.6%). The Bank continued to rely on a diversified funding base, which over the years has proven to be stable. The Bank’s liquidity ratios remained well in excess of minimum regulatory requirements. Group Total Assets rose to €1,555.0 million (FYE 2025: €1,497.6 million).

Equity Attributable to Equity Holders of the Bank increased by 2% to €227.7 million (FYE 2025: €223.7 million). Group Net Asset Value (NAV) per share stood at €1.47 (FYE 2025: €1.45). Group Earnings per Share (EPS) stood at €0.04 (H1 2025: €0.06). Group Return on Assets (ROA) was 1.0% (H1 2025: 1.1%) while Group Post Tax Return on Average Equity (ROAE) was 5.9% (H1 2025: 6.9%). Total Capital Ratio at 18.0% (FYE 2025: 19.9%) exceeded the minimum regulatory requirements. During the first half of 2026, the Group continued to focus on its strategic priorities, including investment in digital transformation, operational efficiency and customer service, the bank said.

The Bank’s planned replacement of legacy systems with a modern core banking platform and enhanced digital channels forms part of a wider programme aimed at improving service delivery, strengthening operational capacity in the areas of regulatory compliance and wealth management services, and enhancing the overall customer experience.

The Bank continued to strengthen its physical distribution channels, complemented by sustained investment in human resources and compliance. These initiatives are expected to contribute to the Bank’s long-term competitiveness while preserving the prudent and conservative business model that has historically underpinned its performance. At MaltaPost p.l.c., the traditional postal environment is expected to remain challenging, while the potential impact of Customs tariff measures on cross-border postal and logistics activities continues to unfold.

That said, MaltaPost remains on the lookout for new and diverse business opportunities. Looking ahead, the Group will continue to pursue measured growth, supported by a strong capital base, sound liquidity, and ongoing investment in technology, operational resilience and customer-facing capabilities. It anticipates sustained stability throughout the latter half of 2026, driven primarily by the continuation of its cautious business strategy, the bank said.

The post Lombard Bank Group registers €11.5 million in pre-tax profit in first half of 2026 first appeared on The Malta Business Weekly.