Lombard posts record pre-tax profit

Lombard Bank has registered a record pre-tax profit of Lm1.41 million for the financial year ended 30 September, 2002, an increase of 26 per cent over the Lm1.12 million for the 2001 financial year.

The board of directors is proposing a gross dividend of 10c per share, an increase of 11 per cent over 2001's 9c.

The board hailed the bank's performance as "outstanding", achieved in spite of strong competitive pressures and its prudent provisioning and accounting policies.

"The bank has established a strong operating base and market positioning which continue to provide future opportunities for profit," the bank said in a news release.

Lombard's net interest income increased by 12 per cent to Lm2.86 million "despite tight lending conditions and generally declining interest rates".

Other income streams also registered strong improvement over 2001.

Fees and commissions increased by 22 per cent, while last year's negative dealing result of Lm74,000 was reversed to a profit of Lm0.5 million, in large part reflecting a 74 per cent increase in gains on foreign exchange business. Operating income was up by 28 per cent to Lm3.81 million.

Post-tax profit was up by 25 per cent, resulting in earnings per share of 23.1 cents, compared to 18.7 cents in 2001.

Customer loans and advances were up by 13 per cent, while investments were down two per cent.

Short-term liquidity, mainly in the form of government paper, is up significantly from Lm13 million to Lm50 million. This was commensurate with a 35 per cent increase in customer deposits, which have now reached Lm145 million, the bank said.

Total assets are similarly up by 32 per cent to Lm160 million. Shareholders' funds are up eight per cent to Lm10.2 million.

The bank said that for the first time, its results reflect the consolidated position of holdings - acquired during the 2002 financial year - in its two subsidiaries, namely Lombard Stockbrokers Limited (51 per cent) and Lombard Asset Managers Limited (75 per cent).

"While the addition of the subsidiaries on the bank's consolidated position has so far been slight, the board is confident of their potential to make a more meaningful contribution in the future, especially should sentiment in the investment markets be reversed."

As in previous years, the board is recommending that shareholders be given the option of receiving the dividend either in cash or by the issue of new shares.

The attribution price (at which the new shares to be issued will be determined) has been established as the trade weighted average price of the bank's shares for the three months up to and including the November 6.

The dividend will be paid to all registered shareholders as at November 29.