Independent auditor’s report
To the Shareholders of Multitude Bank plc
Report on the audit of the financial statements
Our opinion
In our opinion:
● The financial statements give a true and fair view of the financial position of Multitude Bank plc (the Bank) as at 31 December 2023, and of the Bank’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU; and
● The financial statements have been prepared in accordance with the requirements of the Maltese Banking Act (Cap. 371) and the Maltese Companies Act (Cap. 386).
Multitude Bank plc’s financial statements comprise:
● the statement of financial position as at 31 December 2023;
● the statement of comprehensive income for the year then ended;
● the statement of changes in equity for the year then ended;
● the statement of cash flows for the year then ended; and
● the notes to the financial statements, comprising material accounting policy information and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion
We are independent of the Bank in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) together with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to our audit of the financial statements in Malta. We have fulfilled our other ethical responsibilities in accordance with these Codes.
To the best of our knowledge and belief, we declare that non-audit services that we have provided to the Bank are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).
The non-audit services that we have provided to the Bank, in the period from 1 January 2023 to 31 December 2023, are disclosed in note 26 to the financial statements.
Our audit approach
Materiality |
● Overall materiality: €830,000, which represents approximately 5% of the three-year average profit before tax |
Key audit matters |
● Credit loss allowances in respect of loans and advances to customers and investments of the Bank |
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Bank, the accounting processes and controls, and the industry in which the Bank operates.
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Overall materiality |
€830,000 |
How we determined it |
Approximately 5% of the 3-year average profit before tax |
Rationale for the materiality benchmark applied |
We chose profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the Bank is most commonly measured by users and is a generally accepted benchmark. We have applied the 3-year average to reflect the fluctuations in results in recent years. We chose 5% which is within the range of quantitative materiality thresholds that we consider acceptable. |
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €41,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter |
How our audit addressed the Key audit matter |
Credit loss allowances in respect of loans and advances to customers and investments of the Bank 1. Loans and advances to customers Credit loss allowances in respect of loans and advances to customers and investments represent management’s best estimate of expected credit losses (‘ECLs’) within the loan portfolios at the reporting date. The development of the models designed to estimate ECLs on loans and advances to customers and investments in accordance with the requirements of IFRS 9 requires a considerable level of judgement since the determination of ECLs is subject to a high degree of estimation uncertainty. The global macroeconomic uncertainties driven by the ongoing geo-political conflicts, inflationary pressures, turbulence in financial markets and interest rate hikes which could continue to adversely impact consumers’ disposable income, which represent the customers of the Bank. These realities have exacerbated the level of uncertainty around the calculation of ECLs, giving rise to heightened subjectivity in the determination of model assumptions used to estimate key model risk parameters and hence necessitating a higher level of expert judgement. In general, the Bank calculates ECLs by using the following key inputs: probability of default (PD), loss given default (LGD) and exposure at default (EAD). The maximum period considered when measuring ECLs is the maximum period over which the Bank is exposed to credit risk. Credit loss allowances relating to loans and advances to customers in the Bank’s consumer lending portfolio (Stages 1-3) are determined on a collective portfolio basis. The Bank uses an ECL model that relies on risk parameters, specifically PDs determined at a country/product level to capture similar credit risk characteristics of portfolios. These assumptions are based on internally developed statistical models and historical development data derived from the Bank’s own experience as available at the reporting date. The output PD is then adjusted using a linear scalar approach to reflect macroeconomic conditions in the Bank’s territories of operation. The LGD used for the Bank’s consumer-lending portfolio is driven by estimates of loss rates and loss severities (e.g., the valuation of recoveries from loan portfolio sales), taking into consideration other assumptions, including the impact of discounting of recoveries from the date of realisation back to the date of default. The loss severities for the consumer-lending portfolios also take into account the Bank’s recovery history from internal debt collection activities and customer repayments. The LGD modelling methodology utilises historical experience, which might result in limitations in its reliability to appropriately estimate ECLs especially during periods characterised by unprecedented economic conditions such as those currently experienced as a result of the global inflationary pressures and turbulence in financial markets due to geopolitical tensions. The Bank applies a significant level of judgement in determining whether particular cohorts within its consumer lending portfolio exhibit indications of significant increase in credit risk (‘SICR’) (Stage 2) or demonstrate any Unlikeliness-to-Pay (‘UTP’) criteria (Stage 3). In particular, the Bank applies judgment in determining whether certain modifications to existing loan contracts, give rise to SICR. In addition, the Bank also considers that specifications induced by customers and/or developments at the debtor level indicate the existence of SICR or exhibit the existence of a UTP criteria. The impact of supply chain disruptions and the resultant inflation pressures being experienced in the economies of the territories in which the Bank offers its credit products has increased the level of uncertainty around judgements made in determining the timing of defaults and in respect of staging of its consumer lending portfolio. In this respect, these inflationary pressures might be reasonably expected to impact the affordability of repayments within the portfolio due to the rapid rise in the cost of living being experienced locally together with the potential resultant impact on market interest rates. Such inflationary pressures are deemed to be partially mitigated by government support measures, including subsidies on energy prices and foodstuffs. Under IFRS 9, the Bank is required to formulate and incorporate multiple forward-looking economic conditions, reflecting management’s view of potential future economic developments, into the ECL estimates. A number of macro-economic scenarios based on the selected macro-economic variables are considered to capture non-linearity across the Bank’s consumer-lending portfolios. The complexity attributable to this factor requires management to develop multiple macro-economic scenarios involving the use of significant judgements. The Bank utilises a statistical methodology to generate the economic inputs applied within the ECL models. The prevalent macroeconomic uncertainty has significantly impacted macro-economic factors such as unemployment, Gross Domestic Product (‘GDP’) and Personal Disposable income (‘PDI’) increasing the uncertainty around judgements made in determining the severity and likelihood of macroeconomic forecasts across the different economic scenarios used in ECL models. Overly sensitive ECL modelled outcomes can be observed when current conditions fall outside the range of historical experience. Data used in the impairment calculation is sourced from a number of systems, including systems that are not necessarily used for the preparation of the accounting records. This increases risk around completeness and accuracy of certain data used to create assumptions and operate the models. In some cases, data is unavailable and reasonable alternatives have been applied to allow calculations to be performed.
2. Investment in securitisation portfolio The investment in securitisation portfolio comprises of notes in a company incorporated as an unlisted and unregulated securitisation company. The principal activity of this company consists of the purchase and acquisition of receivables to entities which fall part of the Small and Medium Entities (SME) industry classification. The Bank is the holder of Class A notes, which are senior notes and have a higher credit quality and rank first in the priority of payment amongst the other creditors. The Bank actively assesses the credit risk on the securitisation portfolio, through the consideration of recoverability of the underlying portfolio of receivables on a collective basis, in line with the principles of IFRS 9, consistent with the manner in which ECL is calculated for loans and advances to customers of the Bank, as described previously. The Bank assesses on a forward-looking basis, whether after considering the ECL associated with underlying loan portfolio and other creditors which rank prior to the Bank, the net assets of securitisation company, are in excess of the value of the Class A notes investment of the Bank into the same company, and hence indicative of whether ECL should be accounted at the level its investment in the securitisation portfolio. The Bank also considers whether all investments covenants have been adhered to and if any events indicative of SICR and/or conditions which exhibit any UTP criteria existed during the year.
3. Investment in debt instruments The investment in debt instruments reflects the Bank’s acquisition of unlisted bonds. Such bonds are principally secured through financial instruments, namely loan portfolios, bonds and cash deposits, which are pledged in favour of the Bank, and are subject to a number of covenants. The Bank assesses the credit risk of the investment counterparties by calculating ECLs by using the following key inputs: probability of default (PD), loss given default (LGD) and exposure at default (EAD). The PD is determined at a borrower level, based on quantitative and qualitative assessments with reference to PDs published by reputable rating agencies and following the consideration of peers with similar credit risk characteristics and which operate in the same industry. PDs are then adjusted to reflect current and projected macroeconomic conditions. The maximum period considered when measuring ECL is the maximum period over which the Bank is exposed to credit risk, in line with the contractual terms underlying the investment arrangements entered into. The LGD is estimated on the basis of the collateral, which principally comprises financial assets, which are pledged in the favour of the Bank. In instances when the collateral consists of a portfolio of loans and advances to customers, the valuation considers the ECL in a manner consistent to the process applied for determining ECL for loans and advances to customers of the Bank, as described previously. Since the estimation of ECLs is subjective in nature and inherently judgemental, the Bank’s application of the IFRS 9 impairment requirements is deemed to be an area of focus, especially in the context of the unprecedented macroeconomic conditions being experienced, which have significantly increased the level of estimation uncertainty around the calculation of credit loss allowances. Accordingly, summarising the key areas relevant to the Bank’s measurement of expected credit losses (ECLs) would include: · Allocation of assets to stage 1, 2, or 3 using criteria in accordance with IFRS 9, including the determination of what constitutes SICR and UTP, including the definition of default for the different consumer credit products; · Accounting interpretations and modelling assumptions used to build the models that calculate the ECL, including the determination of assumed future debt sale recovery prices which are considered in the LGD parameter; · Completeness and accuracy of data used to calculate the ECL; and · Inputs and assumptions used to estimate the impact of multiple macro-economic scenarios. Since the estimation of ECLs is subjective in nature and inherently judgemental, the Bank’s application of the IFRS 9 impairment requirements is deemed to be an area of focus. We focused on credit loss allowances due to the subjective nature of specific data inputs into the calculation and the subjective judgements involved in both timing of recognition of impairment and the estimation of the size of any such impairment. Relevant references in the Annual Report and Financial Statements: · Accounting policies: Note 1.3 and Note 1.4; · Credit risk management: Note 2.2.2(a), Note 2.2.2(c), and Note 2.2.2(d); · Credit risk measurement: Note 2.2.3(a), Note 2.2.3(b), and Note 2.2.3(c); · Critical accounting estimates and judgements in applying accounting policies: Note 3; and · Note on Loans and advances to customers and Credit loss allowances: Note 6. · Note on Investments: Note 8
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Loans and advances to customers During our audit of the financial statements for the year ended 31 December 2023, we continued to focus on the key drivers of the estimation of ECL. Apart from assessing the continuing appropriateness of management assumptions, updates to key parameters and new assumptions and enhancements were evaluated and tested. Discussions with the Audit Committee and Management included: · assumptions around inputs and adjustments to ECLs, in particular changes to risk factors and other inputs within the Bank’s models, in respect of which we provided updates on the results of our testing procedures; · the application of forward economic guidance, particularly in the context of the estimated impact of the macroeconomic challenges driven by the global inflationary pressures and the ensuing elevated interest rate environment, together with geopolitical uncertainties driven by the ongoing military conflict between Russia and Ukraine and the escalation of the Middle East conflict; · considerations around significant assumptions used by the management in determining specific LGD parameters; and · the judgements applied in determining whether certain modifications to existing loan contracts give rise to SICR as well as the qualitative considerations applied with respect to the customer’s performance which may indicate SICR or demonstrate a UTP event. With respect to the ECL models utilised by the Bank, the continued appropriateness of the modelling policies and methodologies used was independently assessed by reference to the requirements of IFRS 9. We understood and critically assessed the models used for ECL estimation in the Bank’s consumer lending portfolios. Since modelling assumptions and parameters are based on historic data, we assessed the impact that the unprecedent circumstances brought the further aggravation of geopolitical risk from the conflict in the Middle East and Russia’s continuing war against Ukraine, which have resulted in significant inflationary pressures and turbulence in financial markets, have on the adequacy of key model parameters since the latter are based on historical experience that is not necessarily reflective of the current level of credit risk within the portfolios. The appropriateness of management’s judgements was also independently considered in respect of calculation methodologies, calibration of PDs and LGDs, segmentation, and selection of macroeconomic variables. Model calculations were also tested independently. Substantive procedures were performed as follows: · We performed an overall assessment of the ECL provision levels by stage to determine if they were reasonable considering the Bank’s portfolio, risk profile, credit risk management practices and the macroeconomic environment. · We reviewed and challenged the staging criteria adopted by management (including the determination of SICR, UTP and the definition of default) on the basis of the specific nature and contractual characteristics of the Bank’s consumer lending products. · We tested the completeness and accuracy of the critical data, extracted from the underlying systems, utilised within the models for the purpose of the year-end ECL calculation. · Risk based testing of models including independent re-build of certain assumptions, such as, the estimation of PDs for each sub-portfolio (at a territory and product level) and the re-estimation of ageing buckets on the basis of borrower days past due information at the reporting date. · We tested the mathematical accuracy of the model. · We tested the multiple macro-economic scenarios and variables using our economic experts to assess their reasonableness. We assessed the base case and alternative economic scenarios, including challenging probability weights. We assessed whether the severity of the forecasted macroeconomic variables was appropriate in view of the high level of uncertainty surrounding the economic conditions. We challenged the correlation and impact of the macroeconomic factors on the ECL. · We reviewed and challenged the assumptions adopted by the Bank in respect of loan portfolio sales which impact the LGD assumptions under both scenarios which the Bank is party to a contractual forward-flow agreement and in instances where the Bank assumes it could enter into a one-off det sale. With respect to lending arrangements which during 2023 were not subject to a contractual forward-flow agreement, and accordingly subject to a higher risk of estimation uncertainty, we challenged management’s recovery assumptions, developed stress scenarios and considered the sensitivity of the ECL to such assumptions.
Investments in securitisation portfolio and debt instruments We have discussed with the Audit Committee and management the internal control procedures in place to monitor, on an ongoing basis, the credit risk emanating from the Bank’s investments and the key assumptions underlying the consideration and calculation of ECL. We also focused on the protocols applied by the Bank to the review the adherence of the respective investment covenants. Substantive procedures were performed as follows: · We tested the completeness and accuracy of the critical data that is utilised within the model for the purposes of the year-end ECL calculation, including the reasonableness of the credit risk assessment on the counterparty, particularly the level and adequacy of the PD applied. · Moreover, we also performed procedures on the existence and valuation of the collateral which is pledged in favour of the Bank. In the instances where the pledged assets (or in the case of the investment in securitisation portfolio, the underlying assets) consist of a portfolio of loans and advances to customers, the assessment included specific procedures applied to the EAD, PD and LGD, in line with the principles adopted for the testing of expected credit losses of the loans and advances to customers of the Bank. · We performed procedures to ascertain the reasonableness of the staging, in terms of IFRS 9, of the investments as determined by the Bank. The tests included the consideration of whether interest and/or capital repayments, as applicable, were in arrears and whether all investment covenants are being met. · We performed procedures to assess, on the basis of the information available, the financial condition of the counterparties and the implications this could have on the credit risk of the investment. · We developed a number of scenarios and applied sensitivity to the key inputs into the ECL model and established the conditions in which the value of the pledged or underlying collateral would be lower than value of the investment, and accordingly the accounting of ECL would be warranted. · In the case of the investment in securitisation portfolio, we also considered the scenarios in the context of the contractual priority of payments, where the net asset value of the securitisation vehicle would not be in excess of the value of the note purchased by the Bank, and accordingly the accounting of ECL would apply.
Based on the evidence obtained, we found the assumptions, calculations and data used within the model to be reasonable. In the case of some impairment provisions, we formed a different view from that of management, but in our view the differences were within a reasonable range of outcomes.
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Other information
The directors are responsible for the other information. The other information comprises the Directors’ Report, the Statement of Compliance with the Code of Principles of Good Corporate Governance, the Remuneration Statement, the Five Year Summary, the Shareholder Register Information and the Additional Regulatory Disclosures (but does not include the financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon except as explicitly stated within the Report on other legal and regulatory requirements.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs as adopted by the EU and the requirements of the Maltese Banking Act (Cap. 371) and the Maltese Companies Act (Cap. 386), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Bank or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Bank’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control.
● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
● Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Bank to cease to continue as a going concern.
● Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (“the ESEF Directive 6”) on the Annual Financial Report of Multitude Bank plc for the year ended 31 December 2023, entirely prepared in a single electronic reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the Annual Financial Report, including the financial statements, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.
Our responsibilities
Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including the financial statements, complies in all material respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.
Our procedures included:
● Obtaining an understanding of the entity's financial reporting process, including the preparation of the Annual Financial Report in XHTML format.
● Examining whether the Annual Financial Report has been prepared in XHTML format.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the Annual Financial Report for the year ended 31 December 2023 has been prepared in XHTML format in all material respects.
Other reporting requirements
The Annual Financial Report and Financial Statements 2023 contains other areas required by legislation or regulation on which we are required to report. The Directors are responsible for these other areas.
The table below sets out these areas presented within the Annual Financial Report, our related responsibilities and reporting, in addition to our responsibilities and reporting reflected in the Other information section of our report. Except as outlined in the table, we have not provided an audit opinion or any form of assurance.
Area of the Annual Financial Report and Financial Statements 2023 and the related Directors’ responsibilities |
Our responsibilities |
Our reporting |
Directors’ report The Maltese Companies Act (Cap. 386) requires the directors to prepare a Directors’ report, which includes the contents required by Article 177 of the Act and the Sixth Schedule to the Act. |
We are required to consider whether the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.
We are also required to express an opinion as to whether the Directors’ report has been prepared in accordance with the applicable legal requirements.
In addition, we are required to state whether, in the light of the knowledge and understanding of the Bank and its environment obtained in the course of our audit, we have identified any material misstatements in the Directors’ report, and if so to give an indication of the nature of any such misstatements. |
In our opinion: ● the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and ● the Directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386).
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.
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Statement of Compliance with the Code of Principles of Good Corporate Governance The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare and include in the Annual Financial Report a Statement of Compliance with the Code of Principles of Good Corporate Governance within Appendix 5.1 to Chapter 5 of the Capital Markets Rules. The Statement’s required minimum contents are determined by reference to Capital Markets Rule 5.97. The Statement provides explanations as to how the Bank has complied with the provisions of the Code, presenting the extent to which the Bank has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles.
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We are required to report on the Statement of Compliance by expressing an opinion as to whether, in light of the knowledge and understanding of the Bank and its environment obtained in the course of the audit, we have identified any material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatements.
We are also required to assess whether the Statement of Compliance includes all the other information required to be presented as per Capital Markets Rule 5.97.
We are not required to, and we do not, consider whether the Board’s statements on internal control included in the Statement of Compliance cover all risks and controls, or form an opinion on the effectiveness of the Bank’s corporate governance procedures or its risk and control procedures. |
In our opinion, the Statement of Compliance has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section. |
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Other matters prescribed by the Maltese Banking Act (Cap. 371) In terms of the requirements of the Maltese Banking Act (Cap. 371), we are also required to report whether: · we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; · proper books of account have been kept by the bank, so far as appears from our examination of those books; · the bank’s financial statements are in agreement with the books of account; · in our opinion, and to the best of our knowledge and according to the explanations given to us, the financial statements give the information required by any law which may from time to time be in force in the manner so required. |
In our opinion: ● we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; ● proper books of account have been kept by the bank, so far as appears from our examination of those books; ● the bank’s financial statements are in agreement with the books of account; and ● to the best of our knowledge and according to the explanations given to us, the financial statements give the information required by any law in force in the manner so required.
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Other matters on which we are required to report by exception We also have responsibilities under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion, adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us.
We also have responsibilities under the Capital Markets Rules to review the statement made by the directors that the business is a going concern together with supporting assumptions or qualifications as necessary. |
We have nothing to report to you in respect of these responsibilities. |
Other matter – use of this report
Our report, including the opinions, has been prepared for and only for the Bank’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.
Appointment
We were first appointed as auditors of the Bank on 9 May 2012. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 12 years.
Stephen Mamo
Principal
For and on behalf of
PricewaterhouseCoopers
78, Mill Street
Zone 5, Central Business District
Qormi
Malta
27 March 2024