Last Updated on Thursday, 21 September, 2023 at 10:55 am by Andre Camilleri
Lombard Bank aims to grow its loan book by €280 million to reach €1 billion over the next three years as it seeks to exploit synergies made possible through its majority shareholding in MaltaPost and capitalise on other banks’ closure of retail branches.
In an announcement on the Malta Stock Exchange, the bank said it had met licensed financial intermediaries for an information session about its impending two-for-three rights issue.
Existing shareholders eligible to subscribe to the new shares will be invited to attend a separate session in due course, the bank said.
The bank said it believes its “target market is attractive and offers substantial growth opportunities with relatively low risk,” adding that it is seeking to improve its market penetration through a wider geographic presence.
The growth in its loan book will primarily come from an increase in commercial and home loans. Lombard Bank says that it has registered “consistent demand” for commercial loans, while its home loan offering generates “strong interest with high conversion rates”. In fact, home loans now account for close to a quarter of all its outstanding loans, up from under 14 per cent just four years ago.
The targeted mix by 2026 is 65 per cent commercial and 35 per cent home loans.
Lombard Bank also sought to position itself in contrast to other banks, some of which have closed down branches in recent years: “While others choose to retreat, we prefer to selectively expand our branch network,” it said.
Lombard Bank is the ultimate owner of MaltaPost, and offers a number of financial services through the postal operator’s branch network, including home loans. Through MaltaPost, it also has a 25 per cent stake in IVALife Insurance Limited and a 49 per cent stake in PostaInsure Insurance Agency. It said that it intends to transfer knowledge from the bank to the postal operator to continue evolving its service offering.
Lombard Bank has generated a return on equity over the last four years of between 5.4 per cent (2020) and 12.8 per cent (2022). Meanwhile, its total capital ratio, leverage ratio, liquidity cover ratio and all other regulatory requirements are above the regulatory minimums.
Since it announced that it would be proceeding with the rights issue last week, Lombard Bank’s share price has jumped by over 10 per cent.