In contrast to the decline in profitability registered by its larger banking competitors, on August 26 Lombard Bank Malta plc announced a surge in its 2008 interim profits to a record €7.76 million. This was largely a result of the consolidation of the MaltaPost accounts for the first time since the postal services operator became a subsidiary of the bank last September. Notwithstanding the strong contribution from postal services, Lombard Bank recorded a 10 per cent growth from financial services. Lombard was not impacted in any way by the financial market turmoil, and registered a growth in interest income coupled with an improved margin. Moreover, the loss in foreign exchange income did not impact Lombard's profitability in a substantial way since this income component only accounted for a small percentage of total income.
The key highlights of Lombard's 2008 half-year results are:
• Net interest income up 9.8 per cent to €6.7 million;
• Net fee and commission income climbs 27.4 per cent to €0.8 million;
• Income from postal services amounts to €10.4 million;
• Pre-tax profit of €7.7 million; and
• Loans and advances up 9.35 per cent to €285 million.
During the six months ended on June 30, net interest income generated by the Lombard Group increased by 9.8 per cent to €6.76 million mainly driven by a strong rise in loans as well as from effective Treasury management, which according to the directors remains a top priority of the bank. The net interest margin edged marginally higher to 48.5 per cent. Moreover, the group's non-interest income surged to €12.1 million from €1.02 million in the comparative period last year mainly as a result of the inclusion of €10.4 million attributable to income from postal services which was not accounted for in the first half of 2007.
Net fee and commission income increased by 27.4 per cent to €0.8 million with other income of €0.7 million (2007: €24,000). This also includes income contributions from the consolidation of Maltapost. Trading profits including foreign exchange income dropped by 58.5 per cent to €0.1 million mainly as a result of the loss of income following Malta's adoption of the euro on January 1. Total operating income generated by the Lombard Group climbed significantly higher to €18.9 million (June 2007: €7.2 million) with postal services accounting for 58.6 per cent of total income. It is worth highlighting that total income at the bank increased by 8.1 per cent to €7.7 million.
Non-interest expenses, comprising administrative costs and depreciation, increased to €11.8 million from €2.9 million in the first six months of this year. The strong increase in expenses also reflects the inclusion of Maltapost's costs which did not show up in last year's interim financial results. The group cost to income ratio thus increased from 39.7 per cent in 2007 to 62.5 per cent. However, the bank's cost to income ratio remained unchanged at a very healthy level of 40.9 per cent, reflecting the directors' continued strong emphasis on cost containment.
The group's operating profit before impairment allowances and other provisions amounted to €7.1 million, 67 per cent higher than the same period last year. The group registered a net release in impairment allowances of €0.56 million (June 2007: €0.4 million), which also left a positive impact on Lombard's profitability. Group pre-tax profit for the six months ended June 2008 amounted to a record figure of €7.76 million, 60 per cent higher than in the first half of last year. The tax charge for the period under review amounted to €2.7 million while share of profits attributable to minority interests totalled €0.7 million. This relates to the 40 per cent shareholding in Maltapost not held by Lombard Bank. The Lombard Group generated a profit of €4.35 million (June 2007: €3.21 million) during the first half of this year.
Total assets as at June 30 amounted to €493 million with loans and advances to customers rising by €24 million (9.3 per cent) since the start of the year to €285 million.
On the other hand, customers' deposits edged 1.5 per cent lower to €404 million resulting in an improvement in the loans to deposits ratio to 70 per cent. Shareholders' funds climbed 23 per cent to €58 million with a pre-tax return on equity at an all-time high of 29.5 per cent.
In the half-year report, the Lombard directors explained that the bank stands to gain from Marfin Popular Bank as the new single-largest shareholder. According to the company, cooperation between the two entities ought to present Lombard with new business opportunities and future growth potential. Moreover, the directors stated that the Lombard Group will continue to register further growth during 2008.
• Mr Rizzo is director of Rizzo, Farrugia & Co. (Stockbrokers) Limited.
The key highlights of Lombard's 2008 half-year results are:
• Net interest income up 9.8 per cent to €6.7 million;
• Net fee and commission income climbs 27.4 per cent to €0.8 million;
• Income from postal services amounts to €10.4 million;
• Pre-tax profit of €7.7 million; and
• Loans and advances up 9.35 per cent to €285 million.
During the six months ended on June 30, net interest income generated by the Lombard Group increased by 9.8 per cent to €6.76 million mainly driven by a strong rise in loans as well as from effective Treasury management, which according to the directors remains a top priority of the bank. The net interest margin edged marginally higher to 48.5 per cent. Moreover, the group's non-interest income surged to €12.1 million from €1.02 million in the comparative period last year mainly as a result of the inclusion of €10.4 million attributable to income from postal services which was not accounted for in the first half of 2007.
Net fee and commission income increased by 27.4 per cent to €0.8 million with other income of €0.7 million (2007: €24,000). This also includes income contributions from the consolidation of Maltapost. Trading profits including foreign exchange income dropped by 58.5 per cent to €0.1 million mainly as a result of the loss of income following Malta's adoption of the euro on January 1. Total operating income generated by the Lombard Group climbed significantly higher to €18.9 million (June 2007: €7.2 million) with postal services accounting for 58.6 per cent of total income. It is worth highlighting that total income at the bank increased by 8.1 per cent to €7.7 million.
Non-interest expenses, comprising administrative costs and depreciation, increased to €11.8 million from €2.9 million in the first six months of this year. The strong increase in expenses also reflects the inclusion of Maltapost's costs which did not show up in last year's interim financial results. The group cost to income ratio thus increased from 39.7 per cent in 2007 to 62.5 per cent. However, the bank's cost to income ratio remained unchanged at a very healthy level of 40.9 per cent, reflecting the directors' continued strong emphasis on cost containment.
The group's operating profit before impairment allowances and other provisions amounted to €7.1 million, 67 per cent higher than the same period last year. The group registered a net release in impairment allowances of €0.56 million (June 2007: €0.4 million), which also left a positive impact on Lombard's profitability. Group pre-tax profit for the six months ended June 2008 amounted to a record figure of €7.76 million, 60 per cent higher than in the first half of last year. The tax charge for the period under review amounted to €2.7 million while share of profits attributable to minority interests totalled €0.7 million. This relates to the 40 per cent shareholding in Maltapost not held by Lombard Bank. The Lombard Group generated a profit of €4.35 million (June 2007: €3.21 million) during the first half of this year.
Total assets as at June 30 amounted to €493 million with loans and advances to customers rising by €24 million (9.3 per cent) since the start of the year to €285 million.
On the other hand, customers' deposits edged 1.5 per cent lower to €404 million resulting in an improvement in the loans to deposits ratio to 70 per cent. Shareholders' funds climbed 23 per cent to €58 million with a pre-tax return on equity at an all-time high of 29.5 per cent.
In the half-year report, the Lombard directors explained that the bank stands to gain from Marfin Popular Bank as the new single-largest shareholder. According to the company, cooperation between the two entities ought to present Lombard with new business opportunities and future growth potential. Moreover, the directors stated that the Lombard Group will continue to register further growth during 2008.
• Mr Rizzo is director of Rizzo, Farrugia & Co. (Stockbrokers) Limited.