Last Updated on Friday, 30 August, 2024 at 8:33 am by Andre Camilleri
During a meeting held on Wednesday, the Board of Directors of Lombard Bank Malta p.l.c. approved the Group and Bank interim condensed financial statements for the six-month period 1 January 2024 to 30 June 2024, the bank said in a statement.
2024 Interim Results – Highlights & Financial Performance
The Lombard Bank Group registered a solid performance in H1 2024 with Profit before Tax reaching €11.4 million, up from €5.4 million in the same period last year. Profit before Tax of the Bank at €10.5 million was up from €6.3 million in H1 2023, setting a new high.
The global economy expanded moderately in the first half of 2024, owing to solid consumer spending and robust service sector developments, while inflation remained high in several economies. To combat inflation, central banks maintained tight monetary policies, affecting investment and borrowing rates. Malta’s economy grew steadily, with real GDP increasing by 4.6% year-on-year in the first quarter. This expansion was fuelled by a rise in private consumption, exports and a slight increase in government spending. The outlook for the rest of 2024 remains positive and better than that for other
EU countries, with GDP predicted to expand by just over 4%.
Income Statement
The key drivers of the increase in this year’s Group’s financial performance were higher Net Interest Income, increased non-interest revenues, enhanced operational efficiency and a release in Expected Credit Losses. The Bank’s subsidiary, MaltaPost p.l.c., also posted a higher Profit before Tax of €2.5 million, representing a 254% advance over the previous year. The Group performance is reflected in an increase of €0.02 in Earnings per Share for the period, which now stands at €0.04. Gross interest revenues increased by 13% to reach €18.4 million (H1 2023: €16.3 million).
This was driven by growth in customer lending. Treasury activities also contributed significantly to the rise in interest income, reflecting higher market interest rates. Interest expense increased by 42% to €5.1 million (H1 2023: €3.6 million), mainly due to improved interest rates paid on longer-term fixed deposits. Net interest income increased by 5% to reach €13.3 million (H1 2023: €12.7 million).
Net fee and commission income rose to €2.8 million (H1 2023: €2.6 million), an increase of 8% driven by higher activity across most business lines. Postal sales and other revenues at €20.3 million increased by 3% compared with €19.8 million in the same period in 2023. MaltaPost revenues performed well in a challenging macroeconomic environment and despite increasing inflationary pressures. Focus on furthering total last-mile parcel volume deliveries remained, as significant Letter Mail declines year-on-year continued to be experienced.
Operating income increased by 6% to €37.3 million from €35.3 million in the same period in 2023. Employee compensation and benefits rose by 8% to €13.2 million (H1 2023: €12.2 million), amid a tight labour market and inflationary pressures.
Other operating costs amounted to €12.8 million compared to €14.0 million in the same period in 2023, reflecting the implementation of efficiency measures. These costs include those directly related to increased Postal Sales and Other Revenues, as well as higher technology-related expenses.
Cost efficiency ratio of the Bank was 51.5% (H1 2023: 51.3%). For the Group, the ratio was 73.8% (H1 2023: 78.9%), reflecting the nature of the postal services industry, which is characterised by high volume, low margins, and significant human resource requirements. Expected Credit Losses (ECL) as defined and determined by International Financial Reporting Standard 9 (IFRS 9) resulted in a release of €1.6 million in the first half of this year, compared to a net charge of €1.9 million in the corresponding period of the previous year. This release mainly resulted from lower charges taken on customer loans and advances classified in Stages 1 and 2 and was spread across the Bank’s lending portfolio.
Financial Position and Capital
Loans and advances to customers increased by 6% to €804.0 million from €758.3 million in FYE 2023. The Bank continued to expand its business by addressing the needs of the local business community.
Amounts owed to customers increased by €31.9 million to €1,051.0 million from €1,019.1 million in FYE 2023.
Group Loan-to-Deposit ratio at 76.5% (FYE 2023: 74.4%), 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 Bank’s liquidity ratios remained well in excess of minimum regulatory requirements. Group Total assets rose to €1,322.1 million (FYE 2023: €1,265.1 million). Equity attributable to equity holders of the Bank grew by an additional 4% to €197.8 million (FYE 2023: €190.4 million). Group Net Asset Value (NAV) per share stood at €1.28 (FYE 2023: €1.23). Group Earnings per Share (EPS) increased to 4 cents (H1 2023: 2 cents). Group Return on Assets (ROA) rose to 1.1% (H1 2023: 0.6%) while Group post tax Return on Average Equity (ROAE) was 7.1% (H1 2023: 4.6%). Total Capital Ratio at 20.1% (FYE 2023: 21.0%) exceeded the minimum regulatory requirements.
Following the successful November 2023 Rights Issue, the bank said it started 2024 with a stronger regulatory capital base. This allowed it to continue expanding its activities, meeting the growing demand for commercial and retail credit, as well as other banking services, always in line with its growth strategy. The bank continued to explore further avenues to enhance digitisation of its systems as well as increasing physical presence in line with its strategic priorities.
Significant progress was also made by the Bank’s dedicated ESG working group which focused on meeting the related obligations. Although the level of the results for H1 2024 may not be repeated in the second half, the outlook for the rest of the year remains encouragingly positive as the Bank continues to maximise opportunities arising from the growing local economy. Its proven business model remains sound and capable of producing sustainable growth and consistently generating shareholder value, while preserving its prudent risk appetite.
