Izola Bank p.l.c.
Annual Report
and
Financial Statements
2024
Company Registration Number: C 16343
Izola Bank p.l.c.
Annual Report 2024
Contents
Directors’ and Other Statutory Reports
Financial Statements
Independent Auditor’s Report
Appendices
Izola Bank p.l.c.
Directors’ and
Other Statutory Reports
2024
Izola Bank p.l.c.
Page
Chairperson’s Statement i
Directors’ Report iv
Directors’ Statement of Compliance with the Code of Principles viii
of Good Corporate Governance
Report of the Remuneration and Nomination Committee xvii
Independent Auditors’ Report - Report required by Capital Markets Rule 5.98 113
issued by the Malta Financial Services Authority
Izola Bank p.l.c.
Chairperson’s Statement
For the Year Ended 31 December 2024
i
On behalf of the Board of Directors, I am pleased to present the Chairperson’s Statement for Izola Bank p.l.c.
for the financial year ended 31 December 2024.
Financial Performance Overview
2024 proved to be a testing period for the banking sector, and Izola Bank was not immune to the external
pressures stemming from heightened market volatility, record-high interest rates, and increased operational
costs across the industry.
The Bank incurred a loss before tax of €4.1 million for the year (2023: loss of €2 million). This performance
primarily reflected a significant rise in funding costs, coupled with a higher cost base driven mainly by
regulatory compliance obligations.
While the Bank succeeded in growing interest and similar income by 18% to €22.4 million (2023: €19.0
million), this was offset by the cost of funding. Net interest income decreased by 11.6% to €6.2 million
(2023: €7.0 million), largely attributable to the increase in interest expense, which rose to €16.2 million
(2023: €12.1 million). 2024 was characterised by historically high interest rates across the Eurozone, which
continued to exert upward pressure on the Bank’s cost of funding, particularly in the context of a
competitive deposit environment.
Fee and commission income increased to €0.23 million (2023: €0.16 million), reflecting a growing
contribution from the Bank’s diversified service offering. Operating expenses increased notably during the
year, reflecting the Bank’s continued investment in strengthening its operational capabilities and regulatory
framework. Employee compensation and benefits rose to €3.4 million (2023: €3.1 million), while other
administrative expenses amounted to €5.4 million (2023: €4.5 million). The increase in other costs was
primarily attributable to higher regulatory-related expenses, which rose to €1.75 million (2023: €1.16
million), increased IT support and maintenance costs of €1.24 million (2023: €1.11 million), and credit
servicing fees of €0.72 million (2023: €0.55 million), reflecting the Bank’s ongoing focus on regulatory
compliance, technological resilience, and credit operations. Amortisation and depreciation charges reached
€1.2 million, reflecting continued investment in technology and infrastructure.
After accounting for an income tax credit of €1.1 million (2023: €0.7 million), the Bank incurred a loss after
tax of €3 million (2023: loss of €1.2 million).
Importantly, total comprehensive income — after including other comprehensive income of €1.8 million
(2023: €1.8 million) — resulted in a reduced total comprehensive loss of €1.2 million (2023: profit of €0.5
million). The Bank's other comprehensive income was positively impacted by gains from property
revaluations and favourable movements in the fair value of financial instruments.
Izola Bank p.l.c.
Chairperson’s Statement
For the Year Ended 31 December 2024
ii
Balance Sheet Strength and Capital Position
Despite the challenges faced in 2024, Izola Bank maintained a robust balance sheet, with total assets
increasing marginally to €508.7 million (2023: €507.9 million).
Loans and advances to customers rose to €194.0 million (2023: €181.0 million), underlining the Bank’s
ongoing commitment to supporting businesses and individuals through tailored financing solutions.
Factored receivables remained stable at €138.2 million (2023: €140.0 million).
Customer deposits — the Bank’s principal source of funding — increased to €448.6 million (2023: €429.7
million), demonstrating sustained customer trust and loyalty.
During the year, the Bank strengthened its capital position through the successful issuance of €3 million in
perpetual capital notes, complemented by an additional €2 million capital contribution from its
shareholders. As a result, total equity increased to €35.6 million (2023: €31.9 million), as the Bank continues
to navigate a period of consolidation and transformation.
The Bank closed the year with a Tier 1 ratio of 14.20%, above the minimum requirement of 12.82%. This was
a marked improvement over the 11.24% recorded as of 30 June 2024.
Strategic Developments
During 2024, the Bank undertook several significant initiatives to strengthen its financial and operational
foundations, positioning the organisation for sustainable growth in the years ahead.
The Bank made substantial progress in its digital transformation journey, with the project now at an
advanced stage. The transformation initiative, which is expected to be concluded in the second half of 2025,
is focused on replacing the Bank’s core and internet banking platform and data warehouse enhancing
customer digital experience, and improving operational efficiency.
Furthermore, the Bank implemented a comprehensive capital action plan to improve its financial
performance and strengthen its regulatory capital position. The plan focuses on optimising existing
processes, improving cost efficiency, consolidating its balance sheet, and ensuring long-term sustainability
and competitiveness.
A key milestone this year was the successful relocation of the Bank’s Head Office to Castile Place in Valletta.
This move provides the Bank with a modern, collaborative, and client-focused working environment,
reflecting its commitment to operational excellence and future growth.
These strategic developments, together with the Bank’s continued investment in strengthening governance,
risk management, and talent development, reflect Izola Bank’s clear focus on building a resilient, agile, and
customer-centric financial institution capable of navigating an increasingly dynamic operating environment.
Izola Bank p.l.c.
Chairperson’s Statement
For the Year Ended 31 December 2024
iii
Outlook for 2025 and beyond
Looking ahead, the Bank remains firmly focused on improving its financial performance, enhancing
operational efficiency, and delivering sustainable long-term growth. The external environment is expected
to remain dynamic, with persistent macroeconomic uncertainty,
evolving regulatory expectations, and heightened competition continuing to shape the banking landscape.
The Bank enters 2025 with a clear and deliberate strategic roadmap centred around concluding discussions
with a potential new strategic partner. This prospective partnership is expected to strengthen the Bank’s
capital position further and support its future growth ambitions.
In parallel, the Bank’s senior management team remains fully committed to driving long-term value creation
for all stakeholders. This will be underpinned by a focus on cost discipline, prudent liquidity management,
and robust capital planning, ensuring that the Bank is well-positioned to navigate a changing operating
environment.
Moreover, the Bank will continue to prioritise prudent risk management, conclude its digital transformation
efforts, and foster deeper customer engagement — all while maintaining a disciplined and agile approach
to operational excellence.
The Board is confident that the strategic actions being undertaken will reinforce the Bank’s resilience and
lay a solid foundation for sustainable growth in 2025 and beyond.
Conclusion
On behalf of the Board of Directors, I would like to take this opportunity to express our sincere gratitude to
our customers for their ongoing trust, to our shareholders for their continued support, and to our employees
for their commitment, dedication, and resilience during a very challenging year.
I remain confident that Izola Bank is well-positioned to navigate future challenges and capitalise on new
opportunities continuing to deliver on its mission of providing innovative and client-focused financial
solutions.
Ms. Caroline Van Marcke
Chairperson/Director
Izola Bank p.l.c.
29 April 2025
Izola Bank p.l.c.
iv
Directors’ Report
For the Year Ended 31 December 2024
The directors have prepared this report for Izola Bank p.l.c. ("the Bank") in accordance with Article 177 of
the Companies Act 1995 (Chapter 386, Laws of Malta) ("the Act") including the further provisions as set out
in the sixth schedule of the Act, together with the financial statements of the Bank for the year ended 31
December 2024.
Board of directors
The directors who served throughout the year were as follows:
Members
Ms. Caroline Van Marcke (Chairperson)
Ms. Magdalena De Roeck
Mr. Simon Azzopardi
Mr. Francis Gouder (resigned 29 April 2025)
Mr. Alain Malschaert
Mr. Andrew Mifsud
Mr. Guido Mizzi
Mr. Patrick H. Van Leynseele
Company secretary
Mr. Calvin Bartolo
Principal activities
Izola Bank p.l.c. is registered in Malta as a public limited liability company under the Companies Act, 1995
(Chapter 386, Laws of Malta). The Bank is licensed by the Malta Financial Services Authority to carry out the
business of banking in terms of the Banking Act, 1994 (Chapter 371, Laws of Malta).
The Bank is principally engaged in providing corporate banking and factoring services to resident and non-
resident customers, including to related parties, with simple and easy to use savings products for both local
and foreign individuals and businesses.
Operational Review
A review of the business of the Bank for the year ended 31 December 2024 and an indication of future
developments are provided in the Chairperson’s Statement, which can be found in the front section of this
Annual Report.
Izola Bank p.l.c.
v
Directors’ Report – continued
For the Year Ended 31 December 2024
Principal risks and uncertainties
The main risks that the Bank has identified are credit risk arising from changes in credit quality and the
recoverability of loans and amounts due from Maltese and Belgian counterparties, concentration risk arising
from an uneven distribution of counterparties and liquidity and interest rate risks which are inherent in the
nature of the business of banking. Other risks which are closely monitored by management include foreign
exchange risk and investment price risk, reputational risk, operational risk as well as cyber-security and
business continuity risks.
Risk management policies have been established to identify and analyse the risks faced by the Bank, to set
out appropriate risk limits and controls, and to monitor risks and adherence to limits. A detailed overview
of these risks, together with the respective financial metrics are outlined in Note 4 of the Financial
Statements.
Directors' responsibilities for the financial statements
The Directors are required by the Companies Act, 1995 to prepare financial statements which give a true
and fair view of the state of affairs of the Bank as at the end of each reporting period and of the profit or
loss for that period. In preparing the financial statements, the Directors are responsible for:
• ensuring that the financial statements have been drawn up in accordance with International
Financial Reporting Standards as adopted by the EU;
• selecting and applying appropriate accounting policies;
• making accounting estimates that are reasonable in the circumstances; and
• ensuring that the financial statements are prepared on the going concern basis unless it is
inappropriate to presume that the Bank will continue in business as a going concern.
The Directors are also responsible for designing, implementing and maintaining such internal controls as
they deem necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and that comply with the Companies Act, 1995 and the
Banking Act, 1994. They are also responsible for safeguarding the assets of the Bank and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The financial statements of the Bank for the year ended 31 December 2024 are included in this Annual
Report and made available on the Bank’s website. The Directors are responsible for the maintenance and
integrity of the Annual Report on the website in view of their responsibility for the controls over, and the
security of, the website. Access to information published on the Bank’s website is available in other countries
and jurisdictions where legislation governing the preparation and dissemination of financial statements may
differ from requirements or practice in Malta.
Izola Bank p.l.c.
vi
Directors’ Report – continued
For the Year Ended 31 December 2024
Dividends and reserves
In the interest of preservation of capital and liquidity, the Directors have neither declared an interim
dividend nor proposed the payment of a final dividend for the financial year 31 December 2024.
Going concern pursuant to Capital Markets Rule 5.62
As required by the Capital Markets Rule 5.62, upon due consideration of the Bank’s performance, financial
position, capital adequacy and solvency, the Directors confirm that, at the time of approving these Financial
Statements, the Bank is capable of continuing to operate as a going concern for the foreseeable future.
Information pursuant to Capital Markets Rule 5.64
The Bank does not have any listed securities carrying voting rights.
Statement of the Directors pursuant to Capital Markets Rule 5.68
The Directors confirm that, to the best of their knowledge:
• the financial statements give a true and fair view of the financial position of the Bank as at 31
December 2024, and of its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the EU; and
• the Annual Report provides a fair review of the Bank’s business development and performance, as
well as its financial position, together with a description of the principal risks and uncertainties
faced during the year.
Information pursuant to Capital Markets Rule 5.70.1
The Bank provides a range of banking services to the Van Marcke Group, of which the Bank itself is a
member. Ms. Magdalena de Roeck, Ms. Caroline Van Marcke and Mr. Patrick Van Leynseele are indirectly
interested in this business relationship by virtue of their directorships of various companies within the Van
Marcke Group.
Further details can be found within Note 31 of the Financial Statements.
Izola Bank p.l.c.
vii
Directors’ Report – continued
For the Year Ended 31 December 2024
Information pursuant to Capital Markets Rule 5.68
Pursuant to Capital Markets Rule 5.68, we, the undersigned, declare that to the best of our knowledge the
financial statements included in the Annual Report, and prepared in accordance with the requirements of
International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Bank, and that the Directors’ Report includes a fair
review of the development and performance of the business and position of the Bank, together with a
description of the principal risks and uncertainties that it faces.
Auditors
BDO Malta have expressed their willingness to continue in office. A resolution proposing the re-
appointment of BDO Malta as auditors of the Bank will be submitted at the forthcoming Annual General
Meeting.
Signed on behalf of the Board of Directors on 29 April 2025 by Mr. Andrew Mifsud (Chief Executive
Officer/Director) and Mr. Guido Mizzi (Director) as per the Directors' Declaration on ESEF Annual Financial
Report submitted in conjunction with the Annual Financial Report.
Registered Address
4 Castille Place,
Valletta
VLT 1062
Malta
Tel: +356 27922040
Izola Bank p.l.c.
Directors’ Statement of Compliance
with the Code of Principles of Good Corporate
Governance
viii
Pursuant to Capital Markets Rule 5.97 as issued by the Malta Financial Services Authority, Izola Bank p.l.c.
(the ‘Bank’) hereby includes a Statement of Compliance reporting on the extent to which the Bank has
adopted the Code of Principles of Good Corporate Governance appended as Appendix 5.1 to the said
Capital Markets Rules (the ‘Principles’) and the effective measures that the Bank has taken to ensure
compliance with these Principles during the financial year under review.
Introduction
The adoption of the Principles is not mandatory, however the Board of Directors (the ‘Board’) of Izola Bank
p.l.c. believes that the adoption of these Principles is in the best interest of the Bank and its shareholders.
The Bank applies all the provisions of the Code of Principles of Good Corporate Governance (the
"Principles"), save where there exist circumstances that warrant non-adherence thereto, as outlined in Part
Two of this Statement. During the financial year under review, the Bank did not apply any corporate
governance practices beyond the provisions under national law.
PART ONE - Compliance with the Code
Principle 1: The Board
The Bank is headed by an effective Board and all directors exercise prudent controls which enable risk to be
assessed and managed. The Board is composed of members who are honest and competent, making them
fit and proper to conduct the business of the Bank. The directors are of the appropriate calibre, having the
necessary experience to provide leadership, integrity, and judgement in directing the Bank. All directors are
responsible for determining the Bank’s strategic aims and its organisational structure. The directors
regularly review management performance and ensure that the Bank has the appropriate mix of financial
and human resources to meet its objectives. Every director is conversant with the statutory and regulatory
requirements connected to the business of the Bank and regularly attends meetings of the Board. Directors
are appointed by the shareholders during the Bank’s Annual General Meeting for a period of one year.
The Board delegates specific responsibilities to the Audit and Risk Committee, the Remuneration and
Nomination Committee, the Credit Committee, the Strategy Committee and the Asset and Liability
Committee. Each Committee has its own terms of reference which are in turn approved by the Board.
Principle 2: Chairperson and Chief Executive Officer (‘CEO’)
The Bank’s current organisational structure incorporates the position of a CEO and that of a Chairperson,
both occupied by two different individuals. In line with the Board of Directors’ terms of reference, there is
a clear division of responsibilities between the running of the Board and the CEO’s responsibility in managing
the Bank’s business. The separation of the roles of the Chairperson and the CEO avoids the concentration
of authority and power in one individual.
The Chairperson is responsible for leading the Board and setting out the agenda, and ensuring that the
directors receive precise, timely and objective information so that they can take sound decisions and
effectively monitor the performance of the Bank. During the Board meeting, the Chairperson encourages
active engagement by all Board members and ensures that the opinions of all the directors are considered
in the discussion of complex or contentious issues.
Izola Bank p.l.c.
Directors’ Statement of Compliance
with the Code of Principles of Good Corporate
Governance
ix
Principle 2: Chairperson and Chief Executive Officer (‘CEO’) – continued
The CEO is responsible for driving and delivering performance within strategic goals and business plans
agreed by the Board. He actively leads the senior management in the day-to-day running of the Bank and
the execution of the agreed strategy. He makes decisions in all matters affecting the operations,
performance, and strategy of the business, except for those matters reserved for the Board or specifically
delegated by the Board to its Committees.
Principle 3: Composition of the Board
The Board considers that it is of sufficient size for the requirements of the business and its members possess
the required diversity of knowledge and experience to properly execute their duties as directors. Each of
the directors is skilful, competent, knowledgeable, and experienced to fulfil the role diligently. The CEO was
appointed to the Board of Directors in 2019 and provides the Board with all necessary management and
operational information.
During the year under review, the Board consisted of four independent Non-Executive Directors, three Non-
Independent, Non-Executive Directors including the Chairperson (as set out in the Directors’ Report) and
one Executive Director, being the CEO. In determining the independence of its directors, the Board has
referred to the principles relating to independence contained in the Code. Each independent non-executive
director has made a declaration in writing to that effect in line with the requirements emanating from Code
Provisions 3.4. All directors shall disclose their interests and external commitment, both ahead of their
appointment and, where significant changes arise, during their tenure as directors. This ensures that
directors’ business interests and commitments do not give rise to potential conflicts of interest and allow
them to devote the necessary time and attention to properly execute their duties on the Board.
Principle 4: Responsibilities of the Board
The Board’s role and responsibility is to execute the four basic roles of corporate governance namely:
accountability, monitoring, strategy formation and policy development.
The Board regularly reviews and evaluates corporate strategy, major operational and financial plans, risk
policy and performance objectives, and monitors implementation and corporate performance within the
parameters of all relevant laws, regulations, and codes of best business practice. The Board ensures that
policies and procedures are in place to maintain the highest standards of corporate conduct, including
compliance with laws, regulations, business and ethical standards by the Bank and its employees. Board
members are provided with regular training and information sessions on topical matters such as
developments in banking regulation and emerging trends in the business of banking.
The Board requires management to constantly monitor performance and report to its satisfaction, at least
on a quarterly basis, fully and accurately on the key performance indicators (‘KPIs’). Business risks and KPIs
are benchmarked against industry norms so that the Bank’s performance can be effectively evaluated.
Izola Bank p.l.c.
Directors’ Statement of Compliance
with the Code of Principles of Good Corporate
Governance
x
Principle 4: Responsibilities of the Board – continued
The Board delegates specific responsibilities to the following Committees:
Board Committees
Audit and Risk Committee
The Audit and Risk Committee’s Terms of Reference include the monitoring of the financial reporting
process, the effectiveness of the Bank’s internal control, internal audit and risk management systems, and
the statutory audit of the Bank’s annual financial statements. The vetting and approvals of related party
transactions, which remain consistent from year to year, are handled by the same Committee.
The Audit and Risk Committee protects the interests of the Bank’s shareholders and assists the directors in
conducting their role effectively so that the Bank’s decision-making capability and the accuracy of its
reporting and financial results are maintained at a high level at all times. It ensures that the Bank maintains
a robust finance function responsible for accounting and financial data. This Committee has non-executive
responsibility for oversight of, and advice to, the Board on matters relating to financial reporting. The
Committee monitors the integrity of the Bank’s financial statements, any formal announcements relating
to the Bank’s financial performance and reviews significant financial reporting judgements contained
therein.
The Committee approves the internal audit work plan, which will include an assessment of controls relating
to financial reporting and other risks as appropriate. The Audit and Risk Committee is also responsible for
providing recommendations to the Board regarding the appointment of the external auditors, reviewing
and monitoring their independence, and assessing the effectiveness of the statutory audit process.
In terms of Capital Markets Rules 5.117, 5.118 and 5.119, the Audit and Risk Committee is composed of
three non-executive directors. Mr. Guido Mizzi and Mr. Simon Azzopardi serve as non-executive directors
and are considered independent, as they are free from any business, family or other relationships with the
Bank or its management that may could give rise to a conflict of interest or impair their judgement. The
Chairman of the Audit and Risk Committee is appointed by the Board of Directors.
In terms of Capital Markets Rule 5.119, Mr. Guido Mizzi is the director whom the Board considers as
independent of the Bank and competent in accounting, given his extensive experience as a former managing
partner of a local accountancy firm. Mr. Van Leynseele is a partner in a Brussels law firm and a member of
the Bar in both Brussels and New York. Mr. Azzopardi has an extensive background in product development,
predominantly in the financial services sector and technology-focused businesses.
All three directors have experience serving on various other boards and are considered competent to fulfil
their responsibilities as members of the Audit and Risk Committee of the Bank. The Board thus considers
that the committee members have the competence relevant to the banking sector.
Meetings held: 6
Members Attended
Mr. Guido Mizzi (Chairperson) 6
Mr. Simon Azzopardi 6
Mr. Patrick H. Van Leynseele 6
Izola Bank p.l.c.
Directors’ Statement of Compliance
with the Code of Principles of Good Corporate
Governance
xi
Principle 4: Responsibilities of the Board – continued
Other Board members have a right to attend the meetings. The Audit and Risk Committee has direct access
to the Head of Finance and Treasury, who is responsible for the preparation and integrity of financial
statements, and a direct reporting line to the Head of Risk and Compliance, who is responsible for ensuring
proper execution of the risk management and control framework. The Head of IT, who is responsible for the
maintenance of internal controls in relation to Information and Communications Technology (‘ICT’), attends
meetings when ICT-related topics are discussed. Both the internal and external auditors are also invited to
attend meetings on an ad-hoc basis. The Company Secretary acts as Secretary to the Committee.
Remuneration and Nomination Committee
In its nomination function, the Committee is primarily tasked with identifying and nominating new Board
candidates for the approval of the Board. The Committee periodically assesses the structure, size,
composition, and performance of the Board and makes recommendations to the Board regarding any
changes. The Committee is also responsible to periodically assess the skills, knowledge, and experience of
individual directors, and of the Board collectively, and report on this to the Board. It is also tasked with
reviewing the remuneration structure for the Bank’s senior management and all staff, evaluating the
impacts of remuneration considerations on its overall risk profile and corporate culture.
The Remuneration and Nomination Committee is composed of three non-executive directors, two of whom
are independent and meets at least once a year. The Remuneration and Nomination Committee is tasked
with oversight of performance and remuneration practices, making proposals to the Board on the
remuneration policy for directors and leading the process for Board appointments. The Committee also
assesses the size, composition and performance of the Board and the individual and collective suitability of
directors. The terms of reference of this Committee are in line with Code Provisions of 8.A.2 - 8.A.6 and
8.B.2 - 8.B.8. Further information on the Bank’s remuneration practices is included within the Report of the
Remuneration and Nomination Committee immediately following the Directors’ Statement of Compliance
with the Code of Principles of Good Corporate Governance.
Meetings held: 1
Members Attended
Mr. Francis Gouder (Chairperson) 1
Ms. Caroline Van Marcke 1
Mr. Patrick H. Van Leynseele 1
The Company Secretary acts as Secretary to the Committee.
Credit Committee
The Credit Committee is composed of a minimum of three members, the majority of whom shall be
directors. In order to secure management representation, the Chief Executive Officer shall be a member of
the Credit Committee ex officio. The Head of Risk and Compliance shall be a non-voting member. The
Chairperson shall be an independent non-executive director. It operates within Board-approved credit
sanctioning limits. Proposals falling outside the Committee’s limits are referred, together with the
Committee’s recommendations, to the Board for consideration and determination.
Meetings held: 5
Izola Bank p.l.c.
Directors’ Statement of Compliance
with the Code of Principles of Good Corporate
Governance
xii
Principle 4: Responsibilities of the Board – continued
Members Attended
Mr. Alain Malschaert (Chairperson) 5
Mr. Francis Gouder 3
Mr. Andrew Mifsud 5
Mr. John Abdilla (appointed on 25 March 2024) 5
The Head of Credit regularly attends the meetings, whereas the Company Secretary acts as Secretary to the
Committee.
Strategy Committee
The Committee is responsible for making recommendations to the Board of Directors in respect of the
Bank’s business model and forward-looking strategy, taking into consideration the risks and opportunities
related to various strategies. The Committee is also responsible for analysing the implementation of the
business model and strategy or any changes thereto, including any potential ICT implications.
It is composed of three directors and meets at least once a year. The Bank’s Senior Management team and
other bank executives may be invited to attend meetings. The Company Secretary acts as Secretary to the
Committee.
Meetings held: 1
Members Attended
Mr. Simon Azzopardi (Chairperson) 1
Ms. Caroline Van Marcke 1
Mr. Andrew Mifsud 1
Asset and Liability Management Committee (ALCO)
The ALCO meets at least quarterly to monitor the Bank’s financial performance, and review and manage
financial risks in accordance with Bank policies, namely: interest rate, liquidity and funding risk, solvency,
market sector and country risk; and counterparty and foreign exchange risk. The ALCO reports to the Board
on a quarterly basis.
The ALCO is chaired by the CEO and is composed of the Head of Finance and Treasury, the Head of Strategy
and Value together with the Senior Finance and Treasury Manager. The Company Secretary acts as Secretary
to the Committee. The Assistant Treasury Manager also regularly attends the meetings.
Meetings held: 13
Members Attended
Mr. Andrew Mifsud (Chairperson) 13
Mr. Calvin Bartolo 13
Mr. Kurt Grima 13
Mr. Clarence Attard (resigned on 26 June 2024) 10
Izola Bank p.l.c.
Directors’ Statement of Compliance
with the Code of Principles of Good Corporate
Governance
xiii
Principle 5: Board Meetings
During the financial year ended 31 December 2024 the Board met seven times. Notice of the dates of
forthcoming meetings, together with all board papers, was circulated well in advance to the directors so
that they had ample opportunity to consider the information and prepare for each meeting. After each
Board meeting and before the next meeting, minutes that faithfully recorded attendance and decisions
were prepared and circulated to all directors.
Attendance of the Board members during the financial year ended 31 December 2024 was as follows:
Meetings Held: 7
Members Attended
Ms. Caroline Van Marcke (Chairperson) 7
Ms. Magdalena De Roeck 6
Mr. Simon Azzopardi 5
Mr. Francis Gouder 5
Mr. Alain Malschaert 6
Mr. Andrew Mifsud 7
Mr. Guido Mizzi 7
Mr. Patrick H. Van Leynseele 6
Company Secretary
Calvin Bartolo
Principle 6: Information and Professional Development
The CEO and Company Secretary brief all new directors on the Bank’s organisation and activities and their
responsibilities as directors.
When they judge it necessary, all directors can access independent professional advice at the Bank’s
expense to enable them to discharge their responsibilities as directors. All directors also have access to the
services of the Company Secretary for advice on all governance matters.
The Bank is committed to providing for the development and training of management and employees. The
Board is updated at least annually with the latest staff development programme. In accordance with Code
Provision 6, the Board is responsible for the appointment of the CEO whilst, in line with Code Provision 6.5,
the CEO is responsible for the recruitment and appointment of senior management. Training of
management and employees is a priority, and, in this respect, access to internal and external training is
provided by the Bank to management and employees. The Bank also has a system in place which monitors
management and staff engagement. As part of succession planning and talent management, the Board and
the CEO ensure that the Bank implements appropriate schemes to recruit, retain and motivate high-quality
staff members.
Principle 7: Evaluation of the Board’s Performance
The Board has set up the Remuneration and Nomination Committee to periodically review and monitor the
effectiveness of the Bank’s Board suitability policy and to guide the execution of suitability assessments of
directors. The Chairperson reports on the Committee’s activities and submits recommendations on areas
falling within its remit upon request of the Board of Directors. In line with its policies, the Bank performs a
suitability assessment every 2-3 years, with the most recent performed in September 2024.
Izola Bank p.l.c.
Directors’ Statement of Compliance
with the Code of Principles of Good Corporate
Governance
xiv
Principle 7: Evaluation of the Board’s Performance – continued
The Committee may request information or reports from internal departments to facilitate discussions and
decision-making. It may also provide guidance on how policies pertaining to performance, remuneration
and training are to be communicated internally.
Principle 8: Committees
The Board established a Remuneration and Nomination Committee to oversee matters of remuneration
and nomination in line with best practice. More detailed information regarding remuneration is presented
in the Report of the Remuneration and Nomination Committee following the Directors’ Statement of
Compliance with the Code of Principles of Good Corporate Governance.
Principles 9 and 10: Relations with Shareholders and with the Market and Institutional Shareholders
The Bank provides the market with regular, timely, accurate and detailed information in accordance with
the requirements of the Capital Markets Rules by way of company announcements.
The Bank communicates with its shareholders through the Bank’s Annual General Meeting as well as by way
of the Annual Report and Financial Statements.
The Bank has an Internal Code of Dealing Policy to give guidance to the Bank’s directors and employees on
procedures to be followed when dealing in the Bank’s securities and on the treatment of Inside Information
in line with the provisions of the Prevention of Financial Markets Act and any related subsidiary legislation
and regulations.
The Bank’s shareholders are not custodians, banks, financial institutions, fund managers, stockbrokers, or
investment managers and as a result, Principle 10 is not applicable.
Principle 11: Conflicts of Interest
The directors are always strongly aware of their responsibility to act in the interest of the Bank and its
shareholders and of their obligation to avoid conflicts of interest. The latter may and do arise on specific
matters. In such instances, the Bank ensures that such conflicts, actual or potential, are managed in the best
interest of the Bank. Each director is required to disclose in full any matter where there is a potential or
actual conflict of interest, whether such conflict arises from personal interests or the interests of the
companies in which such person is a director or officer. Directors do not participate in a discussion
concerning matters in which they have a conflict of interest unless the Board finds no objection to the
presence of such director. In any event, the director shall refrain from voting on the matter.
On joining the Board and regularly thereafter, the directors are informed of their obligations on dealing in
securities of the Bank within the parameters of the law, including the Capital Markets Rules, and the
directors follow the required procedures. Interests of directors are disclosed within Note 31 - Related Parties
- to the accompanying Financial Statements.
Principle 12: Corporate Social Responsibility
Over the past 30 years, the Bank has transformed itself to be in a better position to deliver on its purpose:
enabling purposeful growth. This value is at the heart of the Bank’s CSR initiatives, as it continues to provide
both tangible and immediate contributions to the community’s welfare. The Bank’s approach to CSR is
through investing in community-based organisations that directly address pressing issues within the country
– issues if left unattended would have dire consequences for people in need.
Izola Bank p.l.c.
Directors’ Statement of Compliance
with the Code of Principles of Good Corporate
Governance
xv
Principle 12: Corporate Social Responsibility - continued
Foodbank Lifeline Foundation
Since 2018, the Bank has proudly served as an official sponsor of Foodbank Lifeline Foundation Malta, an
esteemed NGO dedicated to providing essential food assistance to individuals in immediate need,
irrespective of their background. Over the years, the Bank’s collaboration with Foodbank Lifeline has
deepened, reflecting its unwavering commitment to addressing food insecurity in Malta. Beyond financial
contributions, Izola Bank has actively engaged in practical initiatives to bolster the Foundation's vital
services, extending support to thousands of beneficiaries annually. Demonstrating a hands-on approach,
one of our team members also serves on the NGO's Board of Directors, symbolising our shared vision for a
future without hunger in Malta.
Fostering Digital Empowerment for Foodbank Lifeline
As part of our comprehensive support, the Bank sponsors the design, development and maintenance of
Foodbank Lifeline's digital platforms, including its informative website and active social media channels. By
facilitating online referrals and disseminating valuable resources, we aim to enhance accessibility to
Foodbank Lifeline's services and amplify its outreach within the community. Additionally, our financial
backing has enabled the Foundation to cultivate a robust online presence, garnering significant engagement
and support from over 13,000 followers across various platforms. Through strategic campaigns and
promotions organised by Izola Bank, we strive to mobilise donations and elevate public awareness of
Foodbank Lifeline's mission.
Reverse Advent Calendar Campaign
An annual highlight during the festive season, the Reverse Advent Calendar Campaign is a hallmark initiative
co-led by Izola Bank and Foodbank Lifeline. Embraced eagerly by local stakeholders, including schools and
businesses, this campaign embodies the spirit of giving and solidarity within our community. As stewards of
this initiative, the Bank orchestrates the campaign's logistical aspects, from media coordination to social
media management, ensuring its seamless execution and widespread impact. Reflecting on the success of
the 2024 Christmas period, the Bank reaffirms its steadfast commitment to fostering compassion and
support for those in need through collaborative endeavours like the Reverse Advent Calendar Campaign.
Spare A Bag Campaign
In 2024, the Bank continued its collaboration with Foodbank Lifeline by joining the Foundation’s ‘Spare A
Bag’ campaign. This initiative aims to collect reusable bags for distributing essential food supplies to families
in need across Malta and Gozo. The campaign also provided a convenient solution for individuals working
in Valletta or shopping in the capital, allowing them to easily drop off extra bags at the Bank’s reception.
Supporting the Sporting Community
Izola Bank proudly sponsored the Ta’ Xbiex Futsal Team for the 2023 – 2024 season to promote an active
lifestyle and support the local sporting community. The partnership with the team underscores the Bank’s
commitment to fostering health and wellness initiatives in Malta. Moreover, Izola Bank took the initiative
to bring the Ta’ Xbiex Futsal Team and Foodbank Lifeline Foundation together through the organisation of
a 10-hour Football and Futsal Marathon, which was held in April 2024, aimed at raising vital funds for
Foodbank Lifeline. Under the ‘Goals for Good’ slogan, this event targeted companies, sporting associations
and the public to get involved in a good cause.
Izola Bank p.l.c.
Directors’ Statement of Compliance
with the Code of Principles of Good Corporate
Governance
xvi
PART TWO – Non-Compliance with the Code
Principle 2 – Code Provision 2.3
The Chairperson of the Bank cannot be considered independent in accordance with the principles relating
to independence contained in the Code.
Principle 4 – Code Provision 4.2.7
The Code Provision recommends that the Board develops a succession policy for the future composition of
the Board and particularly the executive component thereof, for which the Chairman should hold key
responsibility. The Board does not have a succession policy in place for the future composition of the Board
of Directors. This approach may be revised in the future in line with changes to the Bank’s size and/or
organisational structure.
Principle 6 – Code Provision 6.4.4
Code Provision 6.4.4 recommends that the CEO establishes a succession plan for senior management. The
Bank does not have a formal succession plan in place for senior management. This approach may be revised
in the future in line with changes to the Bank’s size and/or organisational structure.
Principle 7 – Code Provision 7.3
Code Provision 7.3 recommends that the non-executive directors be responsible for the evaluation of the
Chairperson, taking into account the views of the executive director. This evaluation has not been adopted
but may be revised with future policy changes.
Capital Markets Rule 5.97.4
The information required by this Capital Markets Rule is found in the Directors’ Report, within the Directors’
Responsibilities section.
The Directors’ Statement of Compliance with the Code of Principles of Good Corporate Governance was
approved by the Board of Directors on 29 April 2025.
Izola Bank p.l.c.
Report of the Remuneration and Nomination Committee
For the Year Ended 31 December 2024
xvii
Governance
The Bank’s Remuneration and Nomination Committee comprises three non-executive directors and is
tasked with overseeing the Bank’s remuneration and nomination practices. Information regarding the
Committee's functions, composition, and attendance at meetings is disclosed within the Directors’
Statement of Compliance with the Code of Principles of Good Corporate Governance.
The Remuneration and Nomination Committee's report was approved by the Board of Directors at its
meeting on 23 July 2024.
Remuneration Policy
The Bank’s Remuneration Policy aims to increase transparency in remuneration matters, to support the
business goals of the Bank through efficient remuneration structures, and to create common basic values
and guidelines for the Bank when offering remuneration and benefits to the senior management team and
Directors of the Bank.
Remuneration Statement
Executive Management
Reference to senior management shall mean the CEO, the Head of Finance & Treasury, the Head of
Operations, the Head of Credit, the Head of IT, the Head of Risk and Compliance, the Head of HR and the
Head of Strategy & Value. The Board is of the opinion that the remuneration packages for senior
management are in line with local market expectations and are at an appropriate level to attract and retain
executives with the appropriate skills, qualities, and experience to ensure the effective management of the
Bank.
The terms and conditions of senior management employment are set out in the respective indefinite
employment contracts. Senior management is not entitled to share options or profit sharing. There are no
supplementary pension or early retirement schemes in place, and notice periods are as established by law.
Senior management is eligible for an annual salary increase and discretionary performance bonus (not
exceeding fixed remuneration) in line with the Bank’s overall performance, individual performance and
general market remuneration trends.
Senior management is entitled to non-cash benefits, including the use of a company car or equivalent car
cash allowance. Other benefits afforded to all staff members, including senior management, are personal
accident, life, and health insurance coverage.
Loans amounting to €1,359,518 were advanced to key management personnel as disclosed in Note 31.3 to
the financial statements.
There have been no significant changes in the Bank’s remuneration policy for senior management during
the year under review. During 2024, the Bank continued offering all staff members, including senior
management, subsidies on home loan interest rates.
Izola Bank p.l.c.
Report of the Remuneration and Nomination Committee
For the Year Ended 31 December 2024
xviii
Remuneration Statement - continued
Executive Management - continued
Total emoluments of senior management for the year ended 31 December 2024 are as follows:
Fixed Remuneration
Variable Remuneration
Share Options
Others
€730,247
€103,028
None
Non-cash benefits
referred to
immediately above.
During the year under review, no special payments (sign-on and/or severance pay), payments exceeding €1
million or any payments subject to deferral were made to key management personnel.
Directors
As of 31 December 2024, the Board was composed of non-executive directors and one executive director.
The maximum annual aggregate emoluments that may be paid to the directors are approved by the
shareholders in a General Meeting. This amount was fixed at an aggregate sum of €175,000 at the Annual
General Meeting held on 28 March 2024.
None of the directors had service contracts with the Bank as at the end of the financial year.
Furthermore, none of the directors, in their capacity as directors of the Bank, are entitled to profit sharing,
share options, pension benefits or any other remuneration.
In line with the Bank’s Remuneration Policy, none of the Directors are eligible to receive variable
remuneration as Directors. In this respect, there is no formal provision for the reclamation of variable
remuneration.
Total emoluments received by directors relative to their directorship of the Bank in respect of the financial
year ended 31 December 2024 are disclosed in the table below:
Fixed Remuneration
Variable Remuneration
Share Options
Others
€140,000
None
None
None
Izola Bank p.l.c.
Financial Statements
2024
Izola Bank p.l.c.
Page
Financial Statements:
Statement of Profit or Loss and Other Comprehensive Income 1
Statement of Financial Position 2
Statement of Changes in Equity 3
Statement of Cash Flows 5
Notes to the Financial Statements 7
Independent Auditors’ Report 113
1
Izola Bank p.l.c.
Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 31 December
Notes
2024
2023
€
€
Interest and similar income
5
22,354,878
19,039,346
Interest expense
5
(16,177,770)
(12,052,370)
Net interest income
6,177,108
6,986,976
Fee and commission income
6
233,584
157,529
Fee and commission expense
6
(145,966)
(141,096)
Net fee and commission income
87,618
16,433
Net trading income
7
(186,045)
(37,800)
Other Operating Income
8
(124,213)
129,864
Total operating income
5,954,468
7,095,473
Depreciation of property and equipment
18
(301,862)
(181,399)
Amortisation of intangible assets
19
(848,309)
(872,615)
Changes in expected credit losses and other credit
impairment charges
9
(42,279)
(441,180)
Employee compensation and benefits
10
(3,397,525)
(3,054,488)
Other administrative expenses
10
(5,446,469)
(4,515,169)
Loss before tax
(4,081,976)
(1,969,378)
Income tax credit
11
1,112,204
727,010
Loss for the year
(2,969,772)
(1,242,368)
Other comprehensive income
Items that will not be reclassified to profit or loss
Gain on property revaluation
1,000,000
1,170,375
Income taxes
(228,112)
(180,305)
771,888
990,070
Items that may be reclassified subsequently to profit or loss
Debt instruments measured at fair value through
other comprehensive income:
Net movement in fair value, before tax
1,553,255
1,171,649
- Income taxes
(543,639)
(410,077)
Movement in expected credit losses, before tax
1,865
47,509
- Income taxes
(653)
(16,628)
1,010,828
792,453
Other comprehensive income for the year, net of tax
1,782,716
1,782,523
Total comprehensive income for the year, net of tax
(1,187,056)
540,155
Earnings per share
12
(5c12)
(2c14)
The accompanying notes on pages 7 to 112 are an integral part of these financial statements.
2
Izola Bank p.l.c.
Statement of Financial Position
As at 31 December
Notes
2024
2023
€
€
ASSETS
Balances with Central Bank of Malta and cash
13
57,483,508
56,242,720
Loans and advances to banks
14
4,168,921
6,757,337
Financial Investments
15
89,144,374
101,589,059
Factored receivables
16
138,236,733
140,049,872
Loans and advances to customers
17
194,013,127
180,964,061
Property and equipment
18
11,157,880
13,939,136
Investment Property held for sale
18
4,838,007
-
Intangible assets
19
4,155,696
3,630,203
Deferred tax asset
25
2,993,326
2,993,32574,2527
744
2,200,649
Current tax asset
74,252
183,341
Other assets
20
2,456,536
2,391,355
Total assets
508,722,360
507,947,733
LIABILITIES
Amounts owed to institutions
21
-
20,000,000
Amounts owed to banks
22
-
271,105
Amounts owed to customers
23
448,613,950
429,743,262
Debt securities in issue
24
16,773,480
16,861,501
Deferred tax liability
25
1,174,806
808,0578,393,356
6,558,062
808,057
Accruals and other liabilities
26
6,558,061
8,393,356
Total liabilities
473,120,297
476,077,281
EQUITY
Called up share capital
27
29,000,000
29,000,000
Capital contribution reserve
27
2,032,675
32,675
Perpetual capital notes
27
3,000,000
-
Property revaluation reserve
27
4,739,260
3,967,372
Fair value reserve
27
(697,493)
(1,708,321)
Depositor compensation scheme reserve
27
-
1,038,647
Reserve for general banking risk
27
-
55,025
Accumulated losses
27
(2,472,379)
(514,946)
Total equity
35,602,063
31,870,452
Total liabilities and equity
508,722,360
507,947,733
Memorandum items
Commitments
28
179,182,237
187,954,041
The accompanying notes on pages 7 to 112 are an integral part of these financial statements.
The financial statements on pages 7 to 112 were approved and authorised for issue by the Board of Directors
on 29 April 2025. The financial statements were signed on behalf of the Bank's Board of Directors by Mr.
Andrew Mifsud (Chief Executive Officer) and Mr. Guido Mizzi (Director) as per the Directors' Declaration on
ESEF Annual Financial Report submitted in conjunction with the Annual Report and Financial Statements
2024.
3
Izola Bank p.l.c.
Statement of Changes in Equity
For the Year Ended 31 December 2024
Property
Fair
Depositor
Capital
Perpetual
Reserve for
Share
revaluation
value
compensation
Contribution
Capital notes
general banking
Accumulated
Notes
Capital
reserve
reserve
scheme reserve
re
reserve
risks
losses
Total
€
€
€
€
€
€
€
€
€
Balance at 1 January 2024
29,000,000
3, 967,372
(1,708,321)
1,038,647
32,675
-
55,025
(514,946)
31,870,452
Total comprehensive income
Loss for the year
-
-
-
-
-
-
-
(2,969,772)
(2,969,772)
Other comprehensive income
Gain arising on property revaluation, net of tax
-
771,888
-
-
-
-
-
-
771,888
Financial investments measured at fair value through other
comprehensive income
- Net movement in fair value, net of tax
-
-
1,009,616
-
-
-
-
-
1,009,616
- Movement in expected credit losses, net of tax
-
-
1,212
-
-
-
-
-
1,212
-
Total other comprehensive income
-
771,888
1,010,828
-
-
-
-
-
1,782,716
Total comprehensive income for the year
-
771,888
1,010,828
-
-
-
-
(2,969,772)
(1,187,056)
Transfers within reserves
Other transfers
-
-
-
(1,038,647)
-
-
(55,025)
1,093,672
-
Total transfers within reserves
-
-
-
(1,038,647)
-
-
- (55,025)
1,093,672
-
Transactions with owners
Contributions by owners
-
-
-
-
2,000,000
-
-
-
2,000,000
Issue of perpetual capital notes
-
-
-
-
-
3,000,000
-
-
3,000,000
Distributions to owners
Interest paid on perpetual capital notes
-
-
-
-
-
-
-
(81,333)
(81,333)
Total transactions with owners recognised directly in equity
-
-
-
-
2,000,000
3,000,000
-
(81,333)
4,918,667
Balance at 31 December 2024
29,000,000
4,739,260
(697,493)
-
2,032,675
3,000,000
-
(2,472,379)
35,602,063
The accompanying notes on pages 7 to 112 are an integral part of these financial statements.
4
Izola Bank p.l.c.
Statement of Changes in Equity
For the Year Ended 31 December 2023
Property
Fair
Depositor
Capital
Reserve for
Share
revaluation
value
compensation
contribution
general banking
Accumulated
Notes
Capital
reserve
reserve
scheme reserve
reserve
risks
losses
Total
€
€
€
€
€
€
€
€
Balance at 1 January 2023
29,000,000
2,977,302
2,977,302
(2,500,774)
831,860
32,675
72,782
916,452
31,330,297
Total comprehensive income
Loss for the year
-
-
-
-
-
-
(1,242,368)
(1,242,368)
Other comprehensive income
Gain arising on property revaluation, net of tax
-
990,070
-
-
-
-
-
990,070
Financial investments measured at fair value through other
comprehensive income
- Net movement in fair value, net of tax
-
-
761,572
-
-
-
-
761,572
- Movement in expected credit losses, net of tax
-
-
30,881
-
-
-
-
30,881
- Net gains reclassified to profit or loss on disposal, net of tax
-
-
-
-
-
-
-
-
Total other comprehensive income
-
990,070
792,453
-
-
-
-
1,782,523
Total comprehensive income for the year
-
990,070
792,453
-
-
-
-
540,155
Transfers within reserves
Transfer of revaluation surplus on disposal of property, net of tax
-
-
-
-
-
-
-
-
Derecognition of deferred tax on fair value of property
-
-
-
-
-
-
-
-
Other transfers
27
-
-
-
206,787
-
(17,757)
(189,030)
-
Total transfers within reserves
-
-
-
206,787
-
(17,757)
(189,030)
-
-
Balance at 31 December 2023
29,000,000
3,967,372
(1,708,321)
1,038,647
32,675
55,025
(514,946)
31,870,452
The accompanying notes on pages 7 to 112 are an integral part of these financial statements.
5
Izola Bank p.l.c.
Statement of Cash Flows
For the Year Ended 31 December
Note
2024
2023
€
€
Cash used in/from operating activities
29
(17,121,158)
36,459,100
Income tax paid
-
(85,248)
Income tax refunds
109,089
533,219
Net cash flows (used in)/generated from operating activities
(17,012,069)
36,907,071
Cash flows from/used in investing activities
Payments to acquire property and equipment and
intangible assets
(2,900,137)
(3,765,160)
Payments to acquire investments
(399,300)
(100,000)
Proceeds from disposal of investment securities
13,247,605
1,302,167
Interest received from financial investments
2,037,701
2,152,107
Net cash flows generated from/(used in) investing activities
11,985,869
(410,886)
Cash flows from/used in financing activities
Redemption of debt securities
(129,200)
-
Interest paid on perpetual capital notes
(81,333)
-
Interest paid on debt securities in issue
(839,790)
(843,370)
Capital contributions
Issue of perpetual capital notes
2,000,000
-
Issue of perpetual capital notes
3,000,000
-
Net cash flows generated from/(used in) financing activities
3,949,677
(843,370)
Net (decrease)/increase in cash and cash equivalents
(1,076,523)
35,652,815
Cash and cash equivalents at beginning of year
61,208,388
25,555,573
Cash and cash equivalents at end of year
30
60,131,865
61,208,388
The accompanying notes on pages 7 to 112 are an integral part of these financial statements.
Izola Bank p.l.c.
Notes to the Financial Statements
For the Year Ended 31 December 2024
6
Page
Page
1
Reporting entity
7
18
Properties
95
2
Basis of preparation
7
19
Intangible assets
98
3
Material accounting policies
10
20
Other assets
98
4
Financial risk management and
review
31
21
Amounts owed to institutions
99
5
Net interest and similar income
87
22
Amounts owed to banks
99
6
Net fee and commission income
87
23
Amounts owed to customers
99
7
Net trading income
88
24
Debt securities in issue
99
8
Other operating income
88
25
Deferred tax assets and liabilities
100
9
Changes in expected credit losses
and other credit impairment
charges
89
26
Accruals and other liabilities
102
10
Loss before tax
89
27
Share capital and reserves
102
11
Income tax expense
90
28
Commitments
103
12
Earnings per share
91
29
Net cash absorbed by / from
operating activities
104
13
Balances with Central Bank of
Malta and cash
92
30
Cash and cash equivalents
105
14
Loans and advances to banks
92
31
Related parties
105
15
Financial investments
92
32
Operating segments
107
16
Factored receivables
94
33
Critical accounting estimates and
judgements
110
17
Loans and advances to customers
94
34
Subsequent events
112
Izola Bank p.l.c.
Notes to the Financial Statements
For the Year Ended 31 December 2024
7
1 Reporting entity
Izola Bank p.l.c. (the “Bank”) is a public limited liability company domiciled and incorporated in
Malta. The Bank is a credit institution licenced in Malta and is primarily involved in the provision of
lending and factoring services to corporate and retail customers, as well as the raising of deposits
from retail customers.
2 Basis of preparation
2.1 Statement of compliance with IFRSs as adopted by the European Union
These financial statements have been drawn up in accordance with International Financial
Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”),
including interpretations issued by the IFRS Interpretations Committee (“IFRIC”), and as adopted
by the European Union (“EU”).
These financial statements have also been prepared and presented in accordance with the
provisions of the Companies Act, 1995 (Chapter 386, Laws of Malta) and the Banking Act, 1994
(Chapter 371, Laws of Malta).
2.2 Basis of measurement
These financial statements have been prepared on a historical cost basis, except for:
• Financial investments measured at fair value through other comprehensive income
(“FVOCI”);
• Financial investments designated at FVOCI or at fair value through profit or loss (“FVTPL”);
and
• Property within ‘Property and equipment’ and ’Investment Property held for sale’
measured at revalued amount and fair value, respectively.
2.3 Standards, interpretations and amendments to published standards effective in 2024
The following new standards, amendments and interpretations are effective for the first time in
these financial statements, but none have had a material effect on the Bank’s accounting policies:
Issued on
Effective from
Amendments to IAS 1 Presentation of
Financial Statements: Classification of
liabilities as Current or Non-current
23/01/2020
01/01/2024
Amendments to IAS 1 Presentation of
Financial Statements: Classification of
liabilities as Current or Non-current –
deferral of effective date
15/07/2020
01/01/2024
Amendments to IAS 1 Presentation of
Financial Statements: Non-current liabilities
with covenants
31/10/2022
01/01/2024
Amendments to IFRS 16 Leases: Lease
Liability in a Sale and Leaseback
22/09/2022
01/01/2024
Amendments to IAS 7 Statement of Cash
flows and IFRS 7 Financial Instruments:
Disclosures: Supplier Finance Arrangements
25/05/2023
01/01/2024
Izola Bank p.l.c.
Notes to the Financial Statements
For the Year Ended 31 December 2024
8
2 Basis of preparation – continued
2.4 Standards, interpretations and amendments to published standards that are not yet effective
Certain new accounting standards and interpretations have been published, which are not
mandatory for 31 December 2024 reporting periods and have not been early adopted by the Bank.
The IASB has published a number of minor amendments to IFRSs that are effective from 1 January
2025, which have been endorsed by the EU, and other minor amendments to IFRSs that are
effective from 1 January 2025, which have not yet been endorsed by the EU.
New standards, interpretations and amendments as adopted by EU but not yet effective:
Issued on
Effective from
Amendments to IAS 21 The effects of
changes in foreign exchange rates: lack of
exchangeability
15/08/2023
01/01/2025
Amendments to IFRS 9 and IFRS 7,
Amendments to the Classification and
Measurement of Financial Instruments
30/05/2024
01/01/2026
Contracts Referencing Nature-dependent
Electricity – Amendments to IFRS 9 and
IFRS 7
18/12/2024
01/01/2026
Annual Improvements Volume 11
18/07/2024
01/01/2026
New standards, interpretations and amendments issued by IASB but not yet adopted by EU:
Issued on
Effective from
IFRS 18 Presentation and Disclosure in
Financial Statements
09/04/2024
01/01/2027
IFRS 19 Subsidiaries without Public
Accountability: Disclosures
09/05/2024
01/01/2027
The Bank has not early adopted all these revisions to the requirements of IFRSs and the Bank’s
management is of the opinion that there are no requirements that will have a possible significant
impact on the Bank’s financial statements in the period of initial application.
2.5 Functional and presentation currency
These financial statements are presented in Euro (€), which is the Bank’s functional and
presentation currency.
Izola Bank p.l.c.
Notes to the Financial Statements
For the Year Ended 31 December 2024
9
2 Basis of preparation – continued
2.6 Use of judgements and estimates
The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the
use of certain accounting estimates. In this respect, management is required to exercise their
judgement in the process of applying the Bank’s accounting policies. This requires assumptions to
estimate the carrying amount of assets and liabilities, as well as the recognition of income and
expenses. Due to the inherent uncertainty and high level of subjectivity involved in making such
judgements, actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates
are recognised prospectively.
Information about critical accounting judgements, assumptions and estimation uncertainties as at
31 December 2024 is disclosed within Note 33 – Critical accounting estimates and judgements in
applying the Bank’s accounting policies, as well as within the following notes to the financial
statements:
• Expected credit losses on factored receivables and loans and advances to customers: Note 4.3
• Valuation of financial instruments: Note 4.7
• Valuation of property within ‘Property and equipment’ and ‘Investment Property held for
sale’: Note 4.7 and Note 18.
2.7 Going Concern
The financial statements are prepared on a going concern basis, as the Directors are satisfied that
the Bank has the resources to continue in business for the foreseeable future. In making this
assessment, the Directors have considered a wide range of information relating to present and
future conditions, including future projections of profitability, cash flows, capital requirements and
capital resources. These considerations include the application of stressed scenarios that reflect
existing economic uncertainties triggered by the escalation of the military conflict between Russia
and Ukraine, as well as considering potential impacts from other top and emerging risks, including
exposure to interest rate hikes, drops in asset prices, and local jurisdiction risks, and the related
impact on profitability, capital and liquidity.
Izola Bank p.l.c.
Notes to the Financial Statements
For the Year Ended 31 December 2024
10
3 Material accounting policies
3.1 Financial assets
3.1.1 Recognition and initial measurement
The Bank recognises a financial asset in its statement of financial position when it becomes a party
to the contractual provisions of the instrument. Regular way purchases and sales of financial assets
are recognised on trade date, being the date on which the Bank commits to purchase or sell the
asset. Financial assets are derecognised when the rights to receive cash flows from the financial
assets have expired or have been transferred and the Bank has transferred substantially all the risks
and rewards of ownership. A financial asset or financial liability is measured initially at fair value
plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or
issue. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.
3.1.2 Classification and measurement
At initial recognition, the Bank classifies its financial assets in the following measurement
categories:
• Financial assets measured at FVTPL;
• Financial assets measured at FVOCI; and
• Financial assets measured at amortised cost.
The classification of investments in debt instruments depends on the Bank’s business model for
managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI.
For investments in equity instruments that are not held for trading, this will depend on whether
the Bank has made an irrevocable election at the time of initial recognition to account for the equity
investment at FVOCI.
The Bank reclassifies debt instruments when and only when its business model for managing those
assets changes.
Debt instruments
Subsequent measurement of debt instruments depends on the Bank’s business model for
managing the asset and the cash flow characteristics of the asset.
Business model assessment
The Bank performs an assessment of the objective of a business model in which an asset is held at
a portfolio level and in specific circumstances at an instrument level since this is deemed to best
reflect the way the business is managed and the monitoring of financial information by
management.
Izola Bank p.l.c.
Notes to the Financial Statements
For the Year Ended 31 December 2024
11
3 Material accounting policies – continued
3.1 Financial assets – continued
3.1.2 Classification and measurement – continued
The information considered in the performance of this assessment includes:
• the stated policies and objectives for the portfolio and the operation of those policies in
practice. In particular, management considers whether the strategy focuses on earning
contractual interest revenue, maintaining a particular interest rate profile, matching the
duration of the financial assets to the duration of the liabilities that are funding those
assets, or realising cash flows through the sale of assets;
• the manner in which the performance of the portfolio is evaluated and reported to the
Bank's management;
• the risks that affect the performance of the business model (and the financial assets held
within that business model) and its strategy for how those risks are managed;
• how managers of the business are compensated for business performance (e.g. whether
compensation is based on the fair value of the assets managed or the contractual cash
flows collected); and
• the frequency, volume, and timing of sales transacted in prior periods, the reasons for
such sales and management’s expectations in respect of future sales activity. Information
about sales activity is not considered in isolation but as part of an overall assessment of
how the Bank's stated objective for managing the financial assets is achieved and how
cash flows are realised.
Financial assets that are held for trading or financial assets that are managed and whose
performance is evaluated on a fair value basis are measured at FVTPL since such assets are neither
held with the objective to collect contractual cash flows nor held with the objective to collect
contractual cash flows and sell financial assets.
Assessment of whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on
initial recognition. 'Interest' is defined as consideration for the time value of money and for the
credit risk associated with the principal amount outstanding during a particular period of time and
for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit
margin that is consistent with a basic lending arrangement.
In assessing whether the contractual cash flows are solely payments of principal and interest
(“SPPI”), the Bank considers the contractual terms of the instrument. This includes assessing
whether the financial asset contains a contractual term that could change the timing or amount of
contractual cash flows such that it would not meet this condition. In making the assessment, the
Bank considers:
• contingent events that would change the amount and timing of cash flows;
• leverage features;
• prepayment and extension terms;
• terms that limit the Bank's claim to cash flows from specified assets; and
• variable interest rates and features that modify con