Lombard Bank CEO lauds ‘positive’ 2022 performance in terms of results and strategy

Lombard Bank CEO Joseph Said has lauded the group’s performance over 2022, during which time it recorded a pre-tax profit of €28.8 million, while that of the group stood at €27.7 million.

This came after the Board of Directors met on Thursday when the bank’s Annual Report and the group’s audited financial statements for the year ending 31st December 2022 were approved.

The main drivers for the bank’s performance were improved interest income streams and the recovery of a non-performing commercial loan.

Net interest income rose by 14 per cent to €22.3 million when compared to the previous year, mainly driven by loans and advances to customers rising by 11 per cent to reach €711.6 million.

Net fee and commission income also improved by four per cent to reach €5.4 million, supported by a positive trend registered in the bank’s various business lines.

Group operating costs fell by 15 per cent to €20.9 million, with the bank’s Cost Efficiency Ratio easing to 57.4 per cent (2021: 60.8 per cent), a reflection of effective cost management.

In respect of expected credit losses (ECLs), a write-back of €16.2 million was accounted for, compared to €1.5 million in the previous year. This resulted from the full recovery of the bank’s single largest non-performing loan and the reversal of COVID-19 pandemic-related management overlays set in previous years, reflecting the then prevailing economic circumstances.

Loans and advances to customers reached €711.6 million, while amounts owed to customers stood at over €1 billion.

A strong liquidity position was maintained with Advances to Deposits Ratio at 70.6 per cent, compared to 65.8 per cent at the end of the previous year.

Net Asset Value (NAV) per share stood at €1.50 (2021: €1.53), while Post-tax Return on Equity (ROE) was 12.8 per cent (2021: 5.7 per cent).

By way of update in respect of its strategy, the bank states that it remains committed to grow prudently while stepping up investment in its distribution network, human resources and information technology. In this regard, it continues to expand its physical retail presence in response to rising customer demand and to further grow the bank’s support functions. Lombard Bank will remain close to the Maltese community, both at a commercial, as well as at a retail level.

In this regard, the bank is currently reviewing its core transaction processing systems, digital channels and card devices, and plans further investment in the prevention of AML/CFT and regulatory reporting systems.

In terms of its ESG programme, the group considers itself to be well placed to meet regulatory expectations, as well as to contribute towards reducing the impact of its operations on the environment.

In view of the outcome of the November 2022 Extraordinary General Meeting, when the bank’s plans to expand its capital base by the issue of new shares were blocked by the qualifying shareholder, the conservation of capital must therefore take precedence. Consequently, the Board cannot recommend the payment of a dividend. However, it proposes to issue one bonus share for every 45 shares held, so that the bank’s capital will not in any way be reduced.

Mr Said noted that “the bank’s performance in 2022 was a positive one both in terms of financial results, as well as progress registered in the implementation of its strategic priorities”.

“Our approach to business remains consistent in that we continue to embrace the norm of ‘safety first’. We are proud of our uncomplicated, straightforward, and transparent business model, which continues to serve us consistently well also to the benefit of all stakeholders,” he added.

In respect of the capital raise and the blocking of the related plans by the qualifying shareholder, Mr Said remarked: “We look forward to having this issue resolved, sooner rather than later, thereby allowing the bank to proceed with its plans for growth.”