Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
1
CONTENTS
Chairman’s Statement to the Members 2
Chief Executive Officer’s Review 4
Directors’ Report 9
Statement of Compliance with the Principles of Good Corporate Governance 45
Remuneration Report 56
Company Information 61
Financial Statements:
Statements of Financial Position 63
Income Statements 65
Statements of Comprehensive Income 66
Statements of Changes in Equity 67
Statements of Cash Flows 71
Notes to the Financial Statements 72
Additional Regulatory Disclosures 197
Five Year Summaries 227
Independent Auditor’s Report to the Shareholders of Lombard Bank Malta p.l.c.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
2
Chairman’s Statement to the Members
The Lombard Bank Group’s financial position strengthened further in 2023 in the context of a sustained economic
recovery, registering a pre-tax profit of €14.5 million. Both components of the Group, Lombard Bank Malta p.l.c
(‘the Bank’) and MaltaPost p.l.c, contributed to this satisfactory outcome. While the Bank operated with a reduced
lending, and therefore earnings, capacity for most of the year for reasons that will be explained later, its income
stream benefitted from the higher prevailing market interest rates. At MaltaPost p.l.c, meanwhile, improved
profitability was driven mainly by growth in the parcel and e-commerce business, but also by increased efficiency
in the delivery of postal services and minor revisions to some postal tariffs.
The Bank’s main revenue source in 2023 was again net interest income, accounting for almost four-fifths of the
total. Two factors in the main were responsible for the increase, namely the Bank’s money market operations and
its credit activity. In the case of the former, the higher inflows reflected the pronounced move of the ECB’s
benchmark rates from negative to positive territory. With regard to the Bank’s lending activity, which nevertheless
remained the single largest source of interest income, the pace of credit creation was influenced for most of the
year by the need to remain compliant with regulatory capital requirements. This, combined with the fact that
average lending rates did not increase, had a calming effect on income flows from this source. Net fees and
commission income as well as dividends also contributed. As a result of all these movements, the Bank’s total
operating income reached a new high of €32.9 million.
The Bank’s running costs grew at a slower rate than in 2022 and totalled €17.7 million. Employee compensation
and benefits again accounted for just above half of the total. Though the staff complement increased only
marginally, the attraction and retention of qualified expertise in a tight labour market necessarily implied higher
outlays. For this same reason, as well as the need to ensure compliance with the ever-growing body of regulation,
staff training was allocated more time and resources. The Bank’s other major cost items, notably related to
information systems, card services and regulation and compliance, did not experience significant variations.
As a result of a judicious management of costs, which grew considerably less than the Bank’s income, and the
setting aside of a precautionary amount for potential credit losses as required by regulation, the cost to income
ratio improved further in 2023. The outcome of these movements resulted in the Bank’s total equity rising to €186
million.
The Bank’s time-tested, business model meanwhile continued to produce sound financial fundamentals, reflective
of a risk-averse management culture. At the end of the year the Total Capital Ratio and the Liquidity Coverage
Ratio were well above the minimum regulatory requirements at 21.0% and 301.8%, respectively, as was the
Leverage Ratio which was almost five times the required regulatory level. Other financial soundness indicators,
notably the ratio of Loans to Deposits and the ratio of facilities technically termed as Non-Performing Loans stood
at prudent levels of 74.3% and 3.7%, respectively. Equally significant is the fact that the average Loan-to-Value
Ratio of these facilities was only around 50%.
Another noteworthy aspect of the Bank’s risk management was the process of credit diversification. Continuing
an established trend, the share of retail lending increased to almost a third of the total, mainly reflecting strong
growth in the home loan portfolio. In this field the Bank employs an automated loan management system and the
entire process is supported by a team of qualified home loan officers. The quality of the Bank’s loan book is also
reflected in our relatively high levels of collateral, on average equivalent to almost three times the amount of total
lending.
On the liabilities side of the balance sheet, the Bank continued to attract a steady inflow of customer deposits.
Significantly, however, most of the growth last year took the shape of longer-term fixed deposits in response to
the attractive rates offered.
During the year the Bank continued to implement the strategic priorities spelled out in the Business Plan 2023-
2025, notably the expansion of its physical presence in the country and the replacement of the core banking
system, including digital channels and payments systems. Our automated customer onboarding platform, which
also includes anti-money laundering monitoring, is now fully operational. Important progress has also been
registered in meeting the Bank’s ESG obligations, where a working group is implementing the Action Plan, and in
strengthening our cyber security defences.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
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Chairman’s Statement to the Members (continued)
As I remarked earlier, the Bank’s subsidiary, MaltaPost p.l.c. also contributed to the Group’s positive performance,
registering a pre-tax profit of €2.3 million. Reflecting success in the ongoing process of diversification, the parcel
and e-commerce business produced higher revenues. This factor largely offset the losses incurred due to the
continuing decline in Letter Mail volumes and in fulfilling the company’s Universal Postal Service Obligation. In this
regard, although some minor tariff revisions were approved by the regulator, domestic postal service tariffs in
Malta remain the lowest in Europe. Increased efficiency in mail delivery was also achieved, including through
investment in more electric vehicles. In terms of new revenue sources, positive returns are expected to accrue
from the company’s insurance and financial services business.
The past year was not without its challenges for the Bank either. Two in particular deserve mention. The first was
the one-year delay in launching the share Rights Issue. The Bank’s Qualifying Shareholder only supported a
resolution for this purpose in 2023 so that we were obliged to forego several bankable lending opportunities. The
second, and long standing, challenge has been the ever-increasing burden of regulation, which is absorbing
considerable human and financial resources. For a small bank such as Lombard, this factor is exacerbated by the
insufficient application of the principle of proportionality to take account of the Bank’s small size and conservative
business model.
As I have noted, the Rights Issue was successfully implemented, though late in the year so that the Bank could only
earn a fraction of the income which would have been derived from the increase in lending that the new capital
would have permitted in a full year. As a result of this brake on profitability, as well as the expectation that
regulatory minimum capital requirements will rise further in the near future, the Board of Directors considered it
prudent to recommend a gross dividend of 1.63 cent per share. The full benefit of the capital raise will only be
taken during the current year, on the basis of which we expect to be in a position to propose a distribution of
about one-third of annual profits, subject to regulatory approval and business requirements.
Going forward, the Board believes that following the capital increase the conditions now exist for the opportunities
for growth which have been identified to be exploited. This will be done without making any fundamental changes
to the Bank’s business model, which has consistently created shareholder value without weakening our
commitment to maintain a prudent risk appetite. The main focus will be on growing the Bank’s loan book, which
is the primary source of income, while seeking a greater balance between commercial and retail lending,
particularly home loans. At the same time, however, we also plan to grow our non-interest income, including
through the funds business, wealth management services and the offering of pension products. Further
investment will be undertaken in the areas of human and information technology resources, in the Bank’s
distribution channels and in seeking synergies with our postal subsidiary.
Last but not least the Board will continue in its endeavours to ensure that the Bank’s Qualifying Shareholder meets
its 2018 commitment to dispose of its shareholding. Settlement of this long-outstanding matter stands to benefit
all stakeholders, not least our correspondent banking relationships, as well as provide visibility to prospective
investors.
In conclusion, Lombard Bank is well equipped to build on last year’s satisfactory performance and on behalf of the
Board I would like to thank the staff and management team, ably led by the Chief Executive Officer, Joseph Said,
whose expertise and commitment made these encouraging results possible. I would also like to thank my fellow
directors and all our stakeholders for their loyalty and support.
Signed on behalf of the Bank's Board of Directors on 26 April 2024 by Michael C. Bonello (Chairman) as per the
Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and
Financial Statements 2023.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
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Chief Executive Officer’s Review
The results of the Lombard Bank Group for the financial year ended 31 December 2023 include the financial
performance of Lombard Bank Malta p.l.c. and Redbox Limited which is the company holding the Bank’s shares in
MaltaPost p.l.c.
Summary Overview - 2023
Though geopolitical tensions, high inflation and rising interest rates prevailed, lower energy prices and the easing
of supply chain pressures resulted in 2023 being defined as the global economy’s ‘year of transition’.
Closer to home, while the EU narrowly avoided a recession, Malta performed well, despite being exposed to the
performance of overseas economies. Domestic demand, bolstered by subsidies on energy prices, a growing
population and low unemployment, together with a strong tourism industry contributed to the growth in Malta’s
service-oriented economy.
Our own activities remained firmly anchored to the Maltese economy, and despite the external threats and
uncertainties, the local economy had a positive influence on our operations.
When allowing for the one-time impact of a 2022 write-back in our Provisions, our FYE 2023 results exceeded
those of the previous year. We consider this to be confirmation of the validity of our straightforward business
model and of the team that plans, manages, and implements that model.
We proceeded with the execution of our strategic priorities, chiefly related to the raising of our capital, increasing
physical representation, the loan portfolio diversification, and the updating of our digital capabilities. Progress was
made on all priorities, as shown in our figures. We registered a satisfactory increase in our loan book, deriving
mostly from home loans. This was reflective of our drive to direct Credit activity to those loans which consume
less regulatory capital. We are reasonably satisfied that despite our limited advertising and promotion spend, we
continue making progress in growing our loan book and establishing new relationships.
Interest rates on our lending were generally held at the levels prior to the interest rates hikes experienced during
the year. We considered this to be a prudent measure so as to avoid possible shocks to borrower repayment
capability, particularly in the case of home loans. That said, as the expected gradual reduction in benchmark rates
settles at target levels, a realignment of interest rates charged may be made on a case-by-case basis, while not
losing sight of market realities. We also continued with our longer-term Xtra deposit accounts, with above-market
average interest rates. Our net interest margin improved, mostly driven by improved income from higher rates on
our Treasury activities.
In Fund Management we are reassessing our options to launch our proprietary funds, always with a view to
minimise the related regulatory and reputational risks. Meanwhile our Wealth Management and Investment
Services functions continue providing execution-only and advisory services. We also registered measured growth
in our discretionary Portfolio Management Services.
Much effort was directed towards the November 2023 Rights Issue. This was perhaps the most significant
corporate event for the Bank, since over twenty years. Though not all shareholders exercised their Rights, the
remaining shares were swiftly subscribed in the Excess Share Offer period. We consider this to be an investor show
of trust in the Bank, particularly so in a market with a strong preference for fixed income paper. The Bank’s key
ratios, namely the Total Capital Ratio and the Liquidity Ratio closed and remain well above the minimum of those
required by the regulator.
At MaltaPost we maintained our involvement in the strategic aspects of the subsidiary, within the context of ever
decreasing Letter Mail volumes. Increased revenue resulted from tariff revisions to some of the services covered
by the Universal Service Obligation (USO) and from higher volumes in inbound parcels. Discussions with the
Regulator continued particularly with respect to the establishment of an automatic tariff revision mechanism to
ensure timely review of USO tariffs. Meanwhile the initiatives in life and general insurance proceeded, and we also
continued to support our subsidiary’s financial services activities.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
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Chief Executive Officer’s Review (continued)
Review of Financial Performance
Group Profit before Tax (GPT) for the FYE 2023 stood at €14.53 million, a decrease of 48% - though when excluding
the one-off items included in the figures of the previous year, the GPT for FYE 2023 rose by 17%.
Loans and Advances to Customers rose to €758.30 million contributing to a 16% increase in gross interest revenues
of €33.70 million. Higher interest rates on money market deposits were also a significant contributor to the rise in
interest income. Interest Expense was up by 16% reflecting a higher volume of Amounts Owed to Customers,
which stood at €1,019.08 million as well as higher interest rates paid resulting from repricing of customer deposits.
Net Interest Income rose by 16% to €25.86 million when compared to the previous year.
Net Fee and Commission Income decreased by 4% to reach €5.18 million, resulting mainly from lower Commercial
Credit activity during the year.
Group Employee Compensation and Benefits increased by 2% to €24.38 million, while Group operating costs rose
by 30% to €27.18 million. These included those MaltaPost expenses associated with higher international postal
tariffs as set by the Universal Postal Union, which were offset by an even higher percentage increase in revenue
from the same source. The Bank’s Cost Efficiency Ratio was contained at 53.9% (FYE 2022: 57.4%), a reflection of
effective cost management.
Impairment Allowances, as determined by International Financial Reporting Standard 9 (IFRS 9), stood at €12.11
million. The change in ‘expected credit losses’ (ECL) resulted in a net impairment charge of €1.26 million compared
to a reversal of €16.24 million in the previous year. The reversal in 2022 was mainly attributable to the resolution
of a non-performing loan which had been largely provided for in previous years, as well as the reversal of 2021
pandemic-related management overlays, in line with changed economic circumstances. We remained vigilant to
ensure that, as far as practically possible, loan repayments were punctual. Our Non-Performing Loan ratio stood
at 3.7%, well below that required by regulation.
Liquidity and Own Funds
The Bank relies on a diversified liquidity funding base which has proven to be relatively stable, largely from local
retail deposits with emphasis placed on long-term tenors, as the benefits of such tenors outweigh the higher
interest rate that they command.
The Bank Loan-to-Deposit Ratio reached 74.3% compared to 70.4% same period last year.
Total Assets stood at €1,265.13 million (2022: €1,203.42 million), while Equity Attributable to the Shareholders of
the Bank stood at €190.38 million. Net Asset Value (NAV) per share stood at €1.23 (2022: €1.50). Group Earnings
Treasury Management
While also conscious of our role in providing finance for economic growth, we still maintained ample liquidity
levels throughout the year. Liquidity not applied in Credit was in the main employed in money market deposits,
with reputable counterparties and local government. Our main objective remained that of protecting funds, while
also seeking to benefit from the high interest rate environment. Though we hold a modest portfolio of foreign
assets, the bulk of these consist of euro balances. Our policy remains that of placing funds exclusively in
investment-grade securities, issued by sovereigns, government-related entities and international financial
institutions.
Healthy counterparty relationships were maintained, always ensuring that the profile of our risk appetite did not
clash with that of our foreign counterparties. These relationships remain an important aspect of our Treasury
operations, thereby assuring continued access to international markets.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
6
Chief Executive Officer’s Review (continued)
Risk Management
Managing our multi-faceted business risks is the key objective of our risk management processes. Safeguarding
the Bank’s assets, while protecting depositors’ funds and maintaining public confidence remains the top priority.
In this regard, we have in place an enterprise-wide Risk Management Framework having a structured approach to
identify, monitor, and measure potential risks and mitigating them, as necessary, in terms of our Risk Appetite.
Our independent Risk Management function forms part of the Second Line in our Three Lines of Defence model.
It reports directly to the Audit & Risk Committee and Board of Directors, and reports periodically on various risk
areas, by exercising oversight of several key metrics in respect of the tolerance limits as set in our Risk Appetite
Statement. This Statement is a live document which is regularly reviewed and updated as necessary, to take into
consideration the changing policy environment and to reflect current macroeconomic developments. Hence, the
limits within the Statement ensure that the Bank may carry on with its business while safeguarding its assets and
protecting depositors’ funds, invariably in compliance with all statutory obligations.
Following the November 2023 Rights Issue, the Bank’s Total Capital Ratio (‘TCR’) stood at 21.0% as at the end of
2023, well above regulatory requirements. Besides allowing the Bank to pursue its growth strategy, these capital
buffers cater for possible increases in regulatory capital requirements.
The Leverage Ratio, which is also monitored and reported to the Board regularly, highlights the Bank’s exposure
to the risk of excessive leverage. While invariably remaining sufficient, this was further strengthened by the Rights
Issue and at the end 2023 stood at 14.2%, significantly higher than the minimum regulatory requirement of 3%.
Internal policy requires the Bank to remain sufficiently liquid at all times so as to meet requirements when these
fall due. Monitoring of key liquidity metrics ensures this and, in this respect, the Liquidity Coverage Ratio (‘LCR’),
the Net Stable Funding Ratio (‘NSFR’) at end of 2023 stood at 301.8% and 155.7% respectively and well above
minimum regulatory requirements and within our Risk Appetite. Also, our Bank Loan-to-Deposit Ratio at the end
of 2023 stood at 74.3%, highlighting the Bank’s prudent approach re liquidity management.
Our Internal Capital and Liquidity Adequacy Assessment Processes (ICAAP/ILAAP) are essential elements of the
Capital and Liquidity planning process. These are reviewed annually to ensure that our Capital and Liquidity needs
are in line with the scale, nature and complexity of our operations. Also, in line with our stress-testing framework,
Capital and Liquidity positions are stressed to ensure that the Bank remains resilient to extreme, though plausible,
shocks.
Human Resources
In a scenario where the Maltese economy continued to perform well, attracting the right candidates to meet our
human resources needs remained a challenge. Competition for talent was strong, with new joiners to the labour
market having several options both within and outside the industry. Similarly, those with work experience in
financial services and looking for a career change or for better work-life balance continued to have various options.
Nevertheless, we continued to meet the demand for new recruits, filling various roles across the Group. The
number of persons employed with the Group stood at 918; Bank - 210, MaltaPost – 708.
We continued to invest in human resources by providing improved remuneration and benefits to all staff. Besides
a performance-driven reward structure, the wellbeing of staff is also supported by advantageous interest rates on
lending, health, and life insurance cover. Improved working hours were maintained so as to allow staff more time
away from the office, though also remaining sensitive to customer service expectations. We believe that such
initiatives improve staff engagement and maintain a collaborative work environment.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
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Chief Executive Officer’s Review (continued)
The focus on supporting staff to grow within the Bank was ongoing by way of personal development opportunities,
improving skills and abilities. Here we provided various training and development programmes, while on-the-job
training was also constantly provided. Development programmes also facilitate the identification of staff members
who may in future fit in leadership roles. This strengthens our succession planning processes and has proven to
deliver results. In fact, during the year various Chief Officer and other senior management appointments were
made internally, also in view of incumbents having reached retirement age.
Our staff continues to play a pivotal role in the successful achievement of business objectives and the success of
the Group. Indeed, I am proud and grateful to be leading a staff team that is professional at all levels and grades.
Projects
Cards are an important part of our service offerings. For several years we offered cards by both Visa and
MasterCard. However, with the advent of many different payment solutions, also offered by non-bank entities,
and the ever-increasing related costs, we considered it prudent to limit our offering to just VISA cards. While our
customers would still benefit from the full suite of debit and credit cards, related costs will be reduced. The
migration of the card portfolio to one brand is an on-going project which we aim to complete by H1 2024.
We opened a further two branches during 2023 so that we now have 11 branches. Our subsidiary, MaltaPost also
continued with its investment in its network. As is our policy, we seek outright purchase of properties that are
needed for running our business. MaltaPost also continued with its investment in zero emissions last-mile delivery,
now totalling more than 160 all-electric vehicles. These allow for the combined delivery of postal mail and parcels
and packages, thereby also reducing emissions by other vehicles as well as contributing to the reduction in traffic
congestion.
As to technology projects, we have in progress several digitalisation projects, some related to the infrastructure
and others to customer engagement.
Continuing the success of previous years, we participated in a gold bullion coin issue in collaboration with the
Central Bank of Malta. The Melita gold coin was struck in four denominations and the issue sold out, having
generated strong interest from collectors and which has now become an annual issue.
Corporate Social Responsibility
The Group is tangibly committed to actively, though discreetly, support socially meaningful initiatives, including
those aimed at preserving and enhancing heritage, philanthropic and charitable causes. We also encourage those
staff members who on their own initiative assist in worthy causes.
Outlook
We started this year on the back of a satisfactory 2023 financial performance and a successful capital raise
programme shoring up our regulatory capital buffers. These pave the way for execution of our strategic priorities,
seeking measured growth. In fulfilling this strategy, we shall not carry out radical changes to our business model,
nor shall we be assuming a higher risk appetite than that as at present. We remain very much committed to Malta
and to the accomplishment of our main mission which remains that of assisting businesses and individuals in their
financing requirements. No doubt during 2024 we shall realise the full benefit of the November 2023 capital
increase and it therefore rests with us to employ this capital judiciously and, of course, profitably.
We strongly believe that the prospects for MaltaPost are bright, and we shall remain steadfast in our commitment
to this subsidiary, which apart from generating a significant income stream also adds value to the Group. We shall
assist our colleagues there as necessary, both in matters relating to its core activities, as also in those concerning
financial services and its new ventures.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
8
Chief Executive Officer’s Review (continued)
The positive economic outlook for Malta supports our commitment to deliver on our promises and more
importantly to remain a truly Maltese bank having a vocation to focus exclusively on servicing the needs of the
Maltese community at large.
Signed on behalf of the Bank's Board of Directors on 26 April 2024 by Joseph Said (Chief Executive Officer) as per
the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and
Financial Statements 2023.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
9
Directors’ Report
The Group
The Lombard Bank Group (‘the Group’) consists of Lombard Bank Malta p.l.c.
Capital Asset Management Limited, Lombard Select SICAV p.l.c. and the MaltaPost p.l.c. Group.
Review of Performance
An overview of the development in the Bank’s business and that of its subsidiaries during the year under review
together with an indication of likely future developments may be found in the ‘Chief Executive Officer’s Review’
of this Annual Report.
Group profit before tax for the financial year ended 31 December 2023 amounted to €14.5 million (2022: €27.7
million). Profit attributable to equity holders of the Bank was €9.1 million (2022: €17.5 million).
Net interest income at €25.9 million was 16.1% higher than the previous year. Growth in the lending portfolio
contributed to this increase, while the main driver for the increased interest income was higher interest earned
on money market deposits. Net fee and commission income decreased by 4.3% mainly from lower commercial
credit activity during the year.
Net loans and advances to customers increased by 6.6% to €758.3 million. Customer deposits increased by 1.1%
to €1,019.1 million. Group post tax return on equity for 2023 was 5.6% (2022: 12.8%). Group total assets increased
to €1,265.1 million (2022: €1,203.4 million). Total capital ratio at 21.0% (2022: 15.4%) exceeded the minimum
regulatory requirements.
Bank cost efficiency ratio was contained at 53.9% (2022: 57.4%) affected by increases in human resources costs
and other operating costs well offset by increased interest revenues.
1
Following a scrip dividend issued in March 2024, the Bank’s shareholding in MaltaPost p.l.c. amounts to
72.65%, with the remaining 27.35% being held by the general public.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
10
Directors’ Report (continued)
Expected credit losses (‘ECL’) as determined by International Financial Reporting Standard 9 (IFRS 9) resulted in a
charge of €1.3 million compared to a reversal of €16.2 million taken in the previous year. The reversal in 2022 was
mainly attributable to the full recovery of a commercial non-performing loan which had been largely provided for
in previous years as well as the reversal of 2021 pandemic-related management overlays in line with changed
economic circumstances.
For MaltaPost p.l.c., FY 2023 was a year of business transformation and adjustment to industry challenges and
realities including changes in consumer and business behaviour. Investment to render the last mile delivery more
agile and efficient continued while managing respective costs. The cross-border parcel delivery business and its
international activity, both outside the Universal Service Obligation (‘USO’), were strengthened. It is these and
other non-postal services that continued to provide reasonable profit margins. Following the loss incurred during
FY2022 to deliver the Universal Postal Service Obligation, select tariff revisions were approved by the MCA which
left a positive impact on the financials of the Universal Service. Although no longer loss making, MaltaPost still
does not make a just and fair return as the provider of the USO in Malta. Despite the tariff adjustments
implemented during FY 2023, the domestic postal service tariffs in Malta remain the lowest in Europe.
Equity attributable to equity holders of the Bank stood at €190.4 million (2022: €136.2 million). Group net asset
value (NAV) per share stood at €1.23 (2022: €1.50). Group earnings per share (EPS) decreased to €0.09.
Profits after taxation of €9.6 million and €8.8 million for the Group and the Bank, respectively were registered for
the twelve months ended 31 December 2023.
Board of Directors and Senior Management
The composition of the Bank’s Board of Directors and Senior Management is shown in the section on ‘Company
Information’ on page 61 of this Annual Report and further information is given in the ‘Statement of Compliance
with the Principles of Good Corporate Governance’.
Risk Management
The Financial Risk Management note to the Financial Statements (note 2), illustrates the process of how the Group
identifies and manages its risks and uncertainties. The main categories of risk described in this note are credit risk,
market risk, liquidity risk and operational risk. The same note includes extensive detail of the processes undertaken
by the Bank to manage these risks.
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 Group and the parent company as at the end of each reporting period and of the
profit or loss for that period.
Statement of Directors’ Responsibilities for the Financial Statements
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 Group and the parent company will continue in business as a going concern.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
11
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 Group and the parent company 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 2023 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.
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 2023,
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 includes a fair review of the development and performance of the business and the position
of the Bank, together with a description of the principal risks and uncertainties that they faced.
Investment Services Rules for Investment Service Providers
In accordance with R1-2.2.3 of the Investment Services Rules for Investment Service Providers regulated by the
Malta Financial Services Authority, licence holders are required to disclose any regulatory breaches of the Rules
or other regulatory requirements in this Annual Report. The Directors confirm that during the reporting period,
there were no breaches of the Investment Services Rules or other regulatory requirements, which were subject to
an administrative penalty or other regulatory sanction other than those in the public domain.
Information provided in accordance with Capital Markets Rule 5.70.1
There were no material contracts to which the Bank, or any of its subsidiaries were a party, and in which any one
of the Bank’s Directors was directly or indirectly interested, except for transactions disclosed in the notes to the
financial statements.
Capital Markets Rules – Disclosures
In terms of Capital Markets Rule 5.64, the Directors are required to disclose the following information.
As at the Annual General Meeting held on 22 June 2023, the authorised share capital of the Bank was €37,500,000
divided into 300,000,000 Ordinary Shares of a nominal value of €0.125 each. As at that date the issued and fully
paid-up share capital of the Bank was €11,340,966.75 divided into 90,727,734 ordinary shares of a nominal value
of €0.125 each, all of one class.
Following the approval by the Bank’s shareholders at the above-mentioned 2023 Annual General Meeting, the
amount of €252,024.63 from the Bank’s Retained Earnings Account was capitalised for the purpose of issuing
2,016,197 fully paid ordinary shares of a nominal value of €0.125 cent per share representing 1 bonus share for
every 45 shares held allotted to the eligible members appearing on the Bank’s Register of Members as at close of
trading on the Malta Stock Exchange on 19 July 2023. Following this allotment, the Issued and fully paid-up Share
Capital of the Bank increased to €11,592,991.38 divided into 92,743,931 ordinary shares of a nominal value of
€0.125 each, all of one class.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
12
Directors’ Report (continued)
During 2023, the Bank resumed its efforts to raise its capital as commenced in November 2022. Following approval
of the necessary resolution during the 2023 Annual General Meeting, the Bank sought regulatory approval from
the Malta Financial Services Authority of an Application for Authorisation for Admissibility to Listing as set out in
a prospectus in relation to a 2-for-3 rights issue of new ordinary shares to be admitted to listing and trading on the
Official List of the Malta Stock Exchange and which were to form part of the same class, have equal rights as, and
rank pari passu with, the Bank’s existing shares (the ‘Rights Issue’).
On 20 September 2023, regulatory approval was received for the prospectus dated 20 September 2023 relative to
a Rights Issue (the ‘Prospectus’), and for the admissibility to listing on the Official List of the Malta Stock Exchange
of up to 61,828,332 new ordinary shares in the Bank having a nominal value of €0.125 each offered, pursuant to
the Rights Issue, to the shareholders appearing on the Bank’s Register of Members as at the Record Date. Any
rights to subscribe for new ordinary shares not accepted, assigned or paid by such eligible shareholders were to
constitute lapsed rights, and the amount of new ordinary shares equivalent to the number of lapsed rights (the
‘Excess Shares’) were to be made available as detailed in the Prospectus.
The Rights Issue Offer Period in respect of the Rights Issue closed on 26 October 2023 at 10:00 hours in accordance
with the timetable set out in the Prospectus. Not all the rights to subscribe for New Ordinary Shares were accepted
or validly assigned by Existing Shareholders by the close of the Rights Issue Offer Period and there remained a
balance of New Ordinary Shares equivalent to the number of lapsed rights resulting from the Rights Issue,
amounting to 13,916,357 New Ordinary Shares (the ‘Excess Shares’). The Excess Shares Offer Period opened on 1
November 2023 and was set to close on 27 November 2023. The Excess Shares Offer was over-subscribed and the
Bank exercised its right to close the Excess Shares Offer Period earlier on 3 November 2023.
On 16 November 2023, 61,828,332 New Ordinary Shares having a nominal value of €0.125 each were admitted to
listing on the Official List of the Malta Stock Exchange, with trading expected to commence on 17 November 2023.
The Bank’s issued share capital thereby increased from €11,592,991.38 divided into 92,743,931 Ordinary Shares
having a nominal value of €0.125 each to €19,321,532.88 divided into 154,572,263 Ordinary Shares of €0.125 each,
fully paid-up.
Full details on the Rights Issue and Excess Shares Offer are included in the Prospectus, available on the Bank’s
website at https://www.lombardmalta.com/en/rights-issue-2023 and in the relative Company Announcements
issued by the Bank in this regard at https://www.lombardmalta.com/en/company-announcements.
The total gross proceeds from the Rights Issue and Excess Shares Offer amounted to €46.4 million.
Amendments to the Memorandum and Articles of Association of the Bank are effected in conformity with the
provisions in the Companies Act, 1995. Furthermore, in terms of the Articles of Association:
•
Directors may be authorised by the Bank to issue shares subject to the provisions of the Memorandum and
Articles of Association and the Companies Act;
•
Directors may decline to register the transfer of a share (not being a fully paid share) to a person of whom they
do not approve;
•
Directors may decline to recognise any instrument of transfer, unless accompanied by the necessary evidence;
•
no registration of transfers of shares shall be made and no new particulars shall be entered in the register of
members when the register is closed for inspection; and
•
the Bank may, from time to time, by extraordinary resolution reduce the share capital, any Capital Reserve
Fund, or any Share Premium Account in any manner.
Currently there are no matters that require disclosures in relation to:
•
holders of any securities with special rights;
•
employee share schemes;
•
restrictions on voting rights or relevant agreements thereto; or
•
significant agreements to which the Bank is a party, and which take effect, alter or terminate upon a change of
control of the Bank.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
13
Directors’ Report (continued)
The Remuneration Report on page 56 refers to the financial contributions towards retirement gratuities that the
Board of Directors approves from time to time. The same Board had previously resolved that a retirement gratuity
be eventually paid on an ex-gratia basis to the Chief Executive Officer on his retirement.
The rules governing the changes in Board membership are contained in the ‘Statement of Compliance with the
Principles of Good Corporate Governance’.
Shareholders holding five per cent (5%) or more of the share capital of the Bank:
Shares in Lombard Bank Malta p.l.c.
31 December 2023
31 March 2024
National Development & Social Fund (NDSF)
49.01%
49.01%
Virtu Holdings Ltd
9.89%
9.89%
First Gemini p.l.c.
5.31%
5.31%
Directors’ Interest in Group Companies
Joseph Said, who is a Director of the Bank, is also a Director of the following companies that have a shareholding
in the Group as follows:
Shares in Lombard
Bank Malta p.l.c.
at 31 December 2023
Shares in MaltaPost p.l.c.
at 31 December 2023*
Safaco Ltd
147,611
92,774
First Gemini p.l.c.
8,201,836
75,350
Shares in Lombard
Bank Malta p.l.c.
at 31 March 2024
Shares in MaltaPost p.l.c.
at 31 March 2024*
Safaco Ltd
147,611
96,991
First Gemini p.l.c.
8,201,836
78,775
* The increase in the shareholding of Safaco Ltd and First Gemini p.l.c. in MaltaPost p.l.c. between 31
December 2023 and 31 March 2024 is attributed to a Scrip Dividend.
In addition, Joseph Said holds preference shares in Safaco Ltd.
Audit & Risk Committee
The Audit & Risk Committee is composed of non-executive Directors and is intended to ensure effective internal
controls, compliance and accountability. The Committee also acts to ensure that high ethical standards are
maintained, as explained in the ‘Statement of Compliance with the Principles of Good Corporate Governance’ in
another section of this Annual Report.
Auditors
PricewaterhouseCoopers have expressed their willingness to continue in office as auditors of the Bank and a
resolution proposing their reappointment will be put at the forthcoming Annual General Meeting.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
14
Directors’ Report (continued)
Events occurring after the end of the accounting period
There were no significant events affecting the Bank or any of its subsidiary undertakings which have occurred after
31 December 2023.
Other Information
During 2023, the Bank’s Qualifying Shareholder, the National Development and Social Fund (the ‘NDSF’) appointed
two directors on the Bank’s Board of Directors, subject to regulatory approval. The relative suitability assessments
for Dr John Bonello and Mr Paul Abela were carried out by the Bank’s Suitability & Evaluations Committee and
submitted to the Regulator. Regulatory approval for the appointment of Dr John Bonello as a non-executive
director on the Bank’s Board was received on 23 October 2023, whereas the Bank was informed that Mr Paul
Abela was unable to take up his position on the Board. In January 2024, the NDSF appointed Mr Richard Dimech
as a director on the Board of Directors. Furthermore, with effect from 13 March 2024, Graham A. Fairclough
resigned from his position as non-executive director subsequent to which the Board of Directors co-opted Aldo-
Joseph Giordano as non-executive director. As at the date of publication of this Annual Report, these
appointments are subject to regulatory approval.
Non-Financial Statement
The Companies Act requires that a non-financial statement be included in this report containing information on
the Group’s development, performance, position and impact of its activity, relating to, as a minimum,
environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters and
this in the form of particular disclosures on certain aspects.
1.
Business Model
The Bank is a Malta-based bank and for financial stability purposes is considered by the Central Bank of Malta
as a core domestic bank, catering mostly for the local economy, and therefore actively supporting economic
sectors in their activities. The lending activity of the Bank consists mainly of Commercial and Retail Lending.
Commercial Lending is largely characterised by loan facilities to the commercial sector with short to medium
term maturities. Retail Lending consists mainly of home loan facilities with medium to long term maturities.
Asset diversification strategy is intended to increase the resilience of the Bank’s loan book and its lending
capacity. The Bank is a Tied Insurance Intermediary for long term insurance business and can therefore provide
its Home Loan customers a comprehensive service offering. Lending is funded by a diversified deposit base and
underpinned by solid financial fundamentals and stakeholder value. The Bank has never relied, and does not
intend to rely, on the interbank market for its funding requirements, and retains ample liquidity from its
operations. As per current strategic plan, the Bank seeks prudent growth, while continuing to adhere to the
highest standards of professional conduct, as evidenced by the quality of its assets and relationships. The Bank
follows risk review processes to ensure that business is in line with its risk appetite frameworks and its
compliance standards, which themselves are also reviewed periodically in light of regulatory developments and
emerging risks. The Bank continues seeking to expand its product and services portfolio into the retail market.
It firmly believes that in the Maltese market physical presence remains an important element, more so in
respect of customers who demand a personalised service, being the service delivery ethos of the Bank. The Bank
seeks to foster new relationships across a wider demographic spectrum, and for this reason widened its
physical presence. Presently the Bank has 11 branches, with a further 2 Bank owned properties earmarked for
this purpose.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
15
Directors’ Report (continued)
The Bank’s business model seeks to build stakeholder value by delivering financial services and solutions in a
prudent manner and by setting the highest standards in professional behaviour and implementing the highest
standards of compliance. The Bank’s competitive strengths are in its unique business operating model, its
conservative outlook towards risk and its robust fundamentals. The characteristics of its business model give
the Bank a competitive advantage, enabling it to continue to deliver value to all its stakeholders in a challenging
environment which remains highly competitive and increasingly regulated. The Bank’s brand, which stands for
the provision of personalised and tailored financial services, remains strong.
The Bank’s subsidiary, MaltaPost p.l.c. (‘MaltaPost’) is Malta’s leading postal services company, being the sole
licensed Universal Service Provider of postal services on the Maltese Islands in terms of the Postal Services Act
(Chapter 254 Laws of Malta) and under the terms of the Universal Postal Union Convention and Constitution
on behalf of the Government of Malta. The Company operates a network of 6 Postal Hubs, 41 Post Offices and
25 Sub-Post Offices around Malta and Gozo.
Postal services remain characterised by a decline in Letter Mail volumes and in the corresponding income, and
on an opposing trajectory, increasing costs. MaltaPost continues to pursue its diversification into logistics,
document management, insurance and financial services. In insurance, MaltaPost has a 25% shareholding in
IVALIFE Insurance Limited, a company licensed to conduct long-term business of insurance and a 49%
shareholding in PostaInsure Agency Limited, an insurance agency for MAPFRE Middlesea p.l.c.
Document management services are offered through a fully owned subsidiary, Tanseana Limited. While
MaltaPost remains committed to be the trusted postal and logistics operator offering a comprehensive product
portfolio, these investments in non-postal sectors are intended to supplement income streams from the core
activity. MaltaPost continues with its engagement with the Regulator with a view of ensuring that regulated
postal tariffs are at a level which enable the Company sustain the Universal Service Obligation.
As evident from the above disclosures, there were no notable changes to the core business strategies and
business models of Group entities.
2.
Anti-Corruption and Bribery Matters
The Group remains committed to a zero-tolerance policy to bribery and corruption, financial crime and
breaches of the relative laws and regulations. The Group developed and maintains robust policies designed to
prevent and detect potential bribery and corruption in the form of an Anti-Bribery and Corruption (‘ABC’) Policy
and Whistleblowing Policy.
The implementation of these policies is by means of processes, procedures and respective controls, which are
embedded in the Group’s structures and manuals in order to ensure that staff members act responsibly within
the workplace and outside. Guidelines and instructions regarding ABC and Whistleblowing are applicable and
available to all staff members. All staff members, including Directors and, where relevant, associated persons
are required to comply with the principles outlined. The Group supports a ‘speak-up attitude’ to encourage
reporting of concerns relating to what might appear to be suspected illegal, unethical or otherwise improper
acts or their concealment. The same standards are expected from any third parties providing services for or on
behalf of the Group. Staff members who fail to comply with the Group’s policies and standards may face
disciplinary action, up to and including dismissal or termination of employment. Training sessions keep staff
members abreast of their respective obligations at all times.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
16
Directors’ Report (continued)
The Risk Management and Compliance functions exercise oversight over the implementation of respective
Policies, the former by including ABC in risk assessments and the latter by ensuring constant standards of
compliance. The Risk and Compliance functions also work together to ensure the proper functioning of these
policies, while the Internal Audit reviews results. Matters arising, if any, out of the adoption of these policies
are reported by the Compliance function in its reports to the Audit & Risk Committee and Board of Directors.
Policies are reviewed annually, or more often as required, by the relative business and internal control
functions with suitable recommendations, as is necessary, made to the Board of Directors. During the year
under review, there were no reported cases on the basis of the abovementioned policies and therefore no
necessary investigations.
3.
Social and employee-related matters
Social and employee matters are given full attention by the Group. The Group’s human capital is a key resource
for the carrying out of business. The ability to attract and retain human resources of the right skill-mix and
experience condition to a large extent the Group’s performance. The risk of not attracting or retaining the
appropriate quality staff in line with the Group’s business needs is mitigated generally by the approach to
managing this resource and specifically through a number of measures. Further information on employees may
be found in the Chief Executive Officer’s Review, Human Resources on page 6 and Note 31 to the Financial
Statements.
Collective Agreements are in place at the Bank and MaltaPost p.l.c., setting the conditions of work and
generally regulating the employer/employee relationship. The prevailing Agreements contain a number of
measures of assistance to staff members including days of special paid leave additional to those stipulated at
law, such as Study Leave, and extended Bereavement Leave. The Group enjoys harmonious industrial relations
with the full co-operation of respective trade unions, staff members and their representatives.
Oversight of key indicators, by which human resource performance is evaluated is maintained by the Head of
the Human Resources function and reported to senior management and the Risk Management function as
appropriate for suitable action if and as required. Performance management takes into consideration
leadership and other competencies required by particular positions as well as the Group’s corporate values.
The Group does not place quotas on the number of staff members whose personal circumstances require them
to work on reduced hours or need to absent themselves from work for an extended period of time on Child
Care Leave or other absences related to immediate family matters. In this regard, the Group is committed to
supporting and developing work-life balance measures further.
The Bank also extends a number of products and services to Group staff members on favourable terms
including, among others, advantageous terms on home loans and other personal borrowing. The Group keeps
an active line of communication with staff members through circulars, branch / department staff meetings and
one-to-one meetings among others and is committed to maintaining a working environment where staff is
valued, respected and supported to fulfil potential.
All members of staff are treated on equal terms with regard to career development and appointments and the
Group supports and practices gender equality and diversity. The Group, however, does not set specific targets
in this regard, as it firmly believes that progress is dependent largely on skill, competencies, attributes and
performance, rather than gender and / or other diversity factors. Being the largest employer in the Group,
MaltaPost p.l.c. holds the Equality Certification Mark following certification by local authorities in recognition
of its non-discriminatory values and as a provider of equal opportunities to its staff.
The Group abides by all applicable laws, rules and regulations relating to employment. While conscious of the
fact that the legal obligations are the minimum acceptable standard, the Group strives to surpass standards in
this area and continues to increase awareness among staff. The Group, for example, with circa 7%, well exceeds
the obligation to have 2% of the total staff complement composed of persons with disabilities. This reaffirms
the Group’s social outlook and its commitment to create a positive impact in society. Remuneration levels are
regularly reviewed to ensure that they are in line with the Group’s Remuneration Policy.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
17
Directors’ Report (continued)
Investment in human capital was and still remains a fundamental pillar of sustainability for the company and
to this effect the Group has committed to invest in developing the skills of its workforce through both internal
and external training.
As in previous years, during 2023, Group staff members participated in several training sessions and on-the-
job training programmes. Training is driven by the requirement to meet identified training needs rather than
by the pursuit of specific numerical targets, which are therefore not set.
The Group remains committed towards extending its support to a number of charitable, social and cultural
organisations.
Regarding consumer relations and protection, the Group adheres to all respective regulatory requirements
such as, inter alia, those arising from Markets in Financial Instruments Directive II (MiFID II), as also reflected
in the MFSA Conduct of Business Rulebook, the Cross Border Payments Regulation II (CBPR II), Payment
Services Directive II (PSD II), Payment Accounts Directive (PAD) and Banking Rule BR/22 Complaints Handling
Procedures for Credit Institutions Authorised Under the Banking Act, 1994.
The Group Complaints Management policies and relevant details on respective web sites provide the
information required for a consumer to submit complaints. During 2023 the Bank had no complaints brought
in front of the Arbiter for Financial Services for hearing and adjudication. In the case of MaltaPost p.l.c.,
customer complaints accounted for 0.006% of all mail items handled.
The Group does not actively push customers away from physical delivery channels. Maintaining a presence in
core community areas is given importance so as to facilitate accessibility and delivery of important services to
the community.
Please also refer to the Chief Executive Officer’s Review, Corporate Social Responsibility on page 7 and to
Principle 12 ‘Corporate Social Responsibility’ on page 52 for further information concerning social matters.
4.
Health and safety
Maintaining the highest levels of health and safety and physical security of staff is of paramount importance.
As a minimum, the Group meets with all the statutory obligations set out in the Occupational Health and Safety
Authority Act, 2000. Further measures for the management of health and safety are adopted by way of
standards in Collective Agreements, appointment of Health & Safety Officers and appointment of local first
aiders and fire wardens. Regular checks of related processes and systems are carried out with outcomes
reported to the Health & Safety Officers, who will take action as and if required. Furthermore, health and safety
risk assessments are carried out to ensure that situations that may pose risks to the health and safety of staff
and others on Group premises are identified and mitigated. Occupational health awareness training is also
provided. No Health and Safety incidents were reported at the Bank, while MaltaPost Group registered a
decrease in the number of such incidents when compared to previous years. Some Group staff benefit from
personal accident insurance cover and others benefit from private health care insurance, as well as death in
service cover.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
18
Directors’ Report (continued)
5.
Human rights
The Group is aware of the importance of ensuring that human rights are upheld across its operations. In this
respect the Group carries out its business without discrimination, respecting the standards set by national law
or higher standards as applicable, such as effective information and consultation processes, particularly where
these affect the place and conditions of work. Business conduct policies are in place to support this stance,
which extend also to counterparties. The Group avoids business with counterparties operating in economic
sectors that may be linked to or present a significant risk to violation of human rights or to social vices.
Additionally, the Bank’s AML/CFT processes, inter alia, assist in the identification of the proceeds of potential
human rights abuses. Any suspicions resulting from these processes are reported to law enforcement as per
current legislative requirements. Services that promote financial inclusion have been introduced also by way
of the PostaPay&Save account which serves as a basic payment account. This account was introduced to
encourage financial inclusion well before this was required by regulation. The account allows persons who may
have been unable to open bank accounts to enjoy the facilities of basic payment accounts with relative services.
PostaPay&Save accounts have now been opened for more than 16,000 individuals, though about 13,000
remain active.
The Group did not encounter any issues, claims or reports on any human rights related matters and / or
violations. A grievance procedure is in place to provide effective remedy as and when needed. The Group is
committed to investigate any reports of human rights violations. As previously stated, the Bank has in place a
Whistleblowing Policy which covers among others, related issues. In accordance with this Policy reports are
submitted to the Heads of Risk Management and Internal Audit. During the year ending 2023, no reports in
accordance with this Policy were submitted.
Premises, including self service areas and ATMs, meet all accessibility regulations, apart from where physical
restrictions make this impossible, in which case discussions with the relevant regulatory bodies are held.
6.
Environmental Matters
The Group does not execute a formal policy relating to environmental matters given its size, scale and nature
of operations. Nonetheless, the Group is mindful of the important role it has to play to contribute towards
safeguarding the environment as much as is possible, thereby minimising the environmental impact of its
operations. Besides assisting in the reduction of costs, being environmentally friendly and taking measures to
reduce its carbon footprint fits within the overall corporate social responsibility initiatives of the Group. The
Group continues with its programme of investment aimed at reducing reliance on fossil fuel power and demand
on the national power grid, as far as practical and opportune.
Relative initiatives included installation of PV panels. The Group has 426 PV panels on its buildings generating
circa 116kWp. Investment is aimed at reducing emissions from purchased electricity through investment in
renewable sources and energy efficient systems, such as installations of modern Heating Ventilation Air
Conditioning (HVAC) systems and Light Emitting Diodes (LED) light fittings. Waste separation facilities and
recycling processes are in place and are ongoing throughout the Group.
The Group operates approximately 130 electric vehicles, which replace internal combustion motor vehicles
and reduce the demand for more fossil fuelled vehicles, thereby contributing to an overall reduction of
approximately 97,000 kg of CO
2
emissions. The Group continues with its efforts to reduce paper use.
The Group continues with its efforts to preserve buildings of architectural importance now serving as modern
and functional branches/offices. ‘Restoration with respect’ continues to be the Group’s motto when acquiring
and renovating buildings of architectural heritage value, delivering them back to society in their original
splendour.
Preservation and reuse of such property reduces resources and material consumption, generates less waste
and consumes less energy than developing greenfield and / or brownfield sites.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
19
Directors’ Report (continued)
MaltaPost p.l.c. runs a postal museum also in a restored building in Valletta housing a collection of artefacts
related to Malta’s postal history. Additions to the collection of artefacts are made as opportunities arise,
thereby enriching further the country’s postal heritage.
The Group’s business is mostly carried out in Malta. The Malta climate-related risks are not expected to have
a consequence on the impairment or fair value of assets, give rise to credit losses and / or potential provisions
or contingent liabilities. Therefore, the impact of climate change on the financial performance is not expected
to be material. That said, like any other business the Group is however not shielded from the economic risks
of climate change, which in turn can have an impact on the financial performance.
The Bank is mindful of the increasing requirements emanating from the Environmental, Social & Governance
(ESG) regulatory framework. It continues following developments closely, improve understanding so as to
further determine how ESG considerations influence the manner in which it carries out its business and the
extent to which such considerations are incorporated within its risk management framework. ESG initiatives
geared towards the Bank meeting with regulatory expectations remain on-going. The ESG Working Group
continues to coordinate, advise and provide recommendations and related actions on ESG matters. This
Working Group is also responsible for ensuring compliance with regulatory expectations and liaising with
Senior Management, the Board-appointed Committees and the Board of Directors in this regard. The Group
also intends to further enhance its data collection efforts in order to widen its scope for further improving its
ESG credentials.
7.
Risk Reporting
The Group has in place an enterprise-wide risk management framework which, inter alia, lays down the
foundation for the risk management reporting process. To ensure it meets the requirements of the markets in
which the Group operates, including regulatory standards and industry best practices, this is subject to
constant evaluation.
This framework is also enhanced by well-defined procedures and subject to ongoing review including clear
organisational structures and reporting lines.
The Group’s plain vanilla organisation structure ensures that responsibilities and duties are well-defined,
managed and communicated. Processes are in place to identify, monitor, manage and report risks. Effective
internal control mechanisms are in place to assist Management safeguard resources and ensure that our first
line of defence complies with relevant processes.
To achieve the above, a formal Risk Management Policy, which is reviewed periodically, is in place. This
overarching Policy allows for the applying of strict internal controls and discretionary limits, and optimising the
returns thereof, invariably in line with the Bank’s risk appetite, thus achieving the objective of enhancing and
maintaining stakeholder value as well as the successful execution of its strategy.
The risk appetite determines the maximum risk the Bank is willing to accept to meet business objectives. For
the purposes of strategic direction, macroeconomic developments and changes in the regulatory environment,
it is reviewed and updated at least annually, this after a thorough analysis of the current risk profile.
The main categories of risk to which the Group is exposed to are:
Capital Risk – arises from the inability to hold sufficient capital to allow the Group to continue as a going
concern, provide suitable returns for shareholders, maintain a strong capital base to support the development
of the business, comply with regulatory requirements and ensure sufficient capital to cater for sudden
unexpected shocks. Constant monitoring of the Bank’s capital positions against regulatory and management
limits as set in our Risk Appetite Statement is carried out. Where required, this monitoring is supplemented by
a robust capital planning process which establishes suitable capital levels tailored for the Bank’s risk profile
and regulatory requirements. Risk-based capital measures are further strengthened by a volume-based
leverage ratio which protects the Bank from excessive growth in its Balance Sheet (Notes to the Financial
Statements note 2.7; Additional Regulatory Disclosures notes 6 and 7).
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
20
Directors’ Report (continued)
Credit Risk – arises from adverse changes in the credit quality should any of the Group’s customers or
counterparties fail to honour their contractual obligations to the Group. This constitutes the Group’s single
largest risk in view of its significant lending and securities portfolio. In this respect, Credit risk mainly arises
from customer loans and advances since risks to exposures in credit institutions and investments is considered
to be low. Prior to granting a facility, a comprehensive assessment of the Customer’s repayment capability is
carried out. To further minimise this risk, facilities are generally adequately secured by tangible security. These
are reviewed periodically to ensure that the conduct is in line with the terms and conditions stipulated in the
Sanction letter and to ensure the collateral still covers the facilities (Notes to the Financial Statements note
2.3; Additional Regulatory Disclosures note 2).
Liquidity Risk – arises when the Bank is unable to meet current and future anticipated and unforeseen payment
obligations as they fall due. Liquidity management comprises of constant monitoring of liquidity positions
through established ratios against regulatory and internal limits as set in our Risk Appetite Statement. Through
its Assets & Liabilities Committee, the Bank’s liquidity profile is managed in such a way that cash flows and all
anticipated obligations are met when due. The Bank continued to hold robust liquidity buffers and adequate
stable funding to ensure that the Liquidity Coverage Ratio (LCR) and Net Stability Funding Ratio (NSFR) remains
significantly above regulatory minima (Notes to the Financial Statements note 2.5; Additional Regulatory
Disclosures note 4).
Market Risk – arises from adverse movements in the fair value or future cash flows because of fluctuations in
market prices or rates such as interest rates, credit spreads and foreign exchange rates. Should these risks
materialise, the Group may experience significant losses in its investment portfolio declines in interest income
and negative movements in the fair value of assets and liabilities. The Bank does not operate a Trading Book
and hence this risk is limited to Interest Rate Risk, Currency Risk and Equity Price Risk. The Bank seeks to
manage and control market risk by taking measures to limit the adverse impact of market movements.
Currency risk for the Group is low since a natural hedge strategy is adopted whereby Customer Deposits in one
currency are matched with a corresponding asset of a similar currency almost instantaneously. Likewise, Equity
Price risk is also deemed to be low given that the Group’s assets in the form of equity is less than 1% of the
Group’s assets (Notes to the Financial Statements note 2.3; Additional Regulatory Disclosures note 2).
Macroeconomic and Market Conditions Risk – refers to risks associated with a deterioration in the economic
and general business climate, both domestically and at global level. The prolonged occurrence of such events
may have an adverse material affect on the Group’s financial performance and possibly asset quality.
Non-Financial Risks – are risks arising out of inadequate or failed internal processes, people or systems. Non-
financial risks and losses cover a wide spectrum of areas including financial crime, regulatory compliance, fraud,
people, systems and processes which would in turn affect income and capital. Non-financial risks are described
in depth in our Risk Appetite Statement and Risk Management Policy, these serving as one of the four pillars
of the Risk Management Framework. These risks are benchmarked by using established parameters that are
reviewed periodically and set by the Board. Operational policies and procedures are in place to ensure that the
Bank remains in compliance with the limits set within its Risk Appetite.
Since the nature and frequency of non-financial risks materialising cannot be predicted, the Bank has in place
adequate insurance cover to cater for operational failures. Also, as part of the Bank’s Capital Risk management,
a capital charge for unforeseeable losses arising from these risks is also taken (notes to the Financial
Statements note 2.6; Additional Regulatory Disclosures note 5).
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
21
Directors’ Report (continued)
Regulatory Compliance Risk – arises out of legal sanctions or regulatory sanctions, material financial loss, or
loss to reputation the Bank may suffer as a result of failing to comply with regulations, code of conduct, laws,
rules, and standards of best practice. This risk is managed by our Regulatory Compliance Function which holds
a second line of defence role and is independent of operations. The Bank promotes the mitigation of
Compliance Risk as part of a culture that encompasses the whole Bank and all staff. Also, the Function acts as
the Bank’s central point through which all interaction with regulatory and enforcement bodies are channelled.
Financial Crime Risk – is related to offences such as money laundering, terrorist financing, fraud, bribery &
corruption, market abuse, insider trading and sanctions. The Bank through its various policies, procedures and
various systems in place, is committed to combating financial crime and ensuring that its products and services
are not misused for the purpose of money laundering, terrorism financing and fraud events. A number of
policies and procedures related to Financial Crime are in place. These set out the Bank’s risk appetite in respect
of customer on-boarding, economic sectors and jurisdictions that it considers acceptable.
Information Security Risk – is associated with the risk of data and / or financial loss resulting from deliberate or
accidental loss, alteration, falsification or leakage of information, destruction, disruption, errors or misuse of
information systems. Likewise, in its daily operations, the Bank runs the risk of loss from threats or malicious
attacks from internal staff and / or potential malicious intruders. The Bank is cognisant of these threats and in
this regard has in place Data Protection and Information & Cyber Security Policies to mitigate such risks. These
Policies ensure that corporate information and systems are safeguarded and protected against the risk of data
compromise and growing cyber security threats. Procedures supporting these Policies highlight that sufficient
internal controls and adequate measures are set and maintained at all times to mitigate such threats.
ESG risks – arise from environmental, social, and governance (ESG) matters, including climate change, societal
impact on nature, and human rights violations. Climate & Environmental risks, pose broader risks through
market, credit, reputational, and regulatory avenues, potentially affecting the Group’s business and reputation.
The Group is also susceptible to governance risks which may arise from inadequate management and control,
which would in turn affect income and capital. For the purposes of complying with ESG-related disclosure
requirements, the Bank relies on various data sources, with improving data quality but still limited
comparability. Failure to address ESG requirements appropriately could have a material adverse effect on the
Group’s business, operations, reputation, prospects and strategy.
Key Performance Indicators (KPIs)
The Group has in place a set of financial and non-financial key performance indicators (KPIs) that are set by the
Board of Directors in its Risk Appetite Statement, monitored by the Risk Management Function and submitted
to the Audit & Risk Committee for continuous assessment. These are a set of quantifiable metrics that ensure
that material risks faced are kept within set parameters as detailed in the Risk Appetite Statement. A selection
of key metrics as at 31 December 2023 are presented hereunder.
Solvency
TCR
21.0%
Leverage
14.2%
Liquidity
LCR
301.8%
NSFR
155.7%
Profitability
Asset Quality
ROE*
NPL
5.6%
3.7%
*
After tax
The KPIs are reported in the form of a risk scorecard by using the “traffic light” approach and comparing the
actual metric to the limits set in the Risk Appetite Statement.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
22
Directors’ Report (continued)
Consolidated disclosures pursuant to Article 8 of the EU Taxonomy Regulation
Introduction
In order to achieve the targets established by the European Union (‘EU’) of reaching net zero greenhouse gas
(‘GHG’) emissions by 2050, with an interim target of reducing GHG emissions by 55% by 2030, compared to 1990
levels, the EU has developed the EU Taxonomy Regulation
2
(‘the EU Taxonomy’). This is a classification system
which establishes the criteria for determining whether an economic activity qualifies as environmentally
sustainable, in terms of six environmental objectives, against which entities assess whether economic activities
qualify as environmentally sustainable.
In order to qualify as such, an economic activity must be assessed to substantially contribute to at least one of
these environmental objectives, whilst doing no significant harm to the remaining objectives. This is achieved by
reference to technical screening criteria established in delegated acts to the EU Taxonomy. The economic activity
is also required to meet minimum safeguards established in the EU Taxonomy.
The six environmental objectives established by the EU Taxonomy are the following, where climate-related
environmental objectives (1-2 below) are established in the Climate Delegated Act
3
(‘CDA’), whilst non-climate
environmental objectives (3-6 below) are established in the Environmental Delegated Act
4
(‘EDA’).
1. Climate change mitigation;
2. Climate change adaptation;
3. Sustainable use and protection of water and marine resources;
4. Transition to a circular economy;
5. Pollution prevention and control; and
6. Protection and restoration of biodiversity and ecosystems.
A delegated act to the EU Taxonomy was issued in 2021, supplementing Article 8 of the Taxonomy Regulation (‘the
Disclosures Delegated Act
5
’), which establishes the disclosure requirements of entities within the scope of the
Taxonomy Regulation, which currently comprises entities subject to an obligation to publish non-financial
information pursuant to the Non-Financial Reporting Directive (‘NFRD
6
’), emanating from article 19a or 29a of the
Accounting Directive
7
.
The Disclosures Delegated Act was further updated in 2023 by the Complementary Climate Delegated Act
8
to
include certain energy activities relating to fossil gas and nuclear energy.
Taxonomy eligibility of economic activities have been reported in financial years 2021 and 2022, in respect of both:
- total on-balance sheet assets of Lombard Bank Malta p.l.c.;
- total turnover, CapEx, and OpEx of the Bank’s subsidiary MaltaPost p.l.c.
2
EU Regulation 2020/852
3
Commission Delegated Regulation 2021/2139
4
Commission Delegated Regulation 2023/2486
5
Commission Delegated Regulation 2021/2178
6
EU Directive 2014/95/EU. NFRD entities are public interest entities exceeding an average of 500 employees during the reporting period. The
introduction of EU Directive 2022/2464/EU (the Corporate Sustainability Reporting Directive, ‘CSRD’, which will replace the NFRD) will
significantly extend the scope of EU Taxonomy reporting.
7
EU Directive 2013/34/EU
8
Commission Delegated Regulation 2022/1214
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
23
Directors’ Report (continued)
The Bank is now also required to disclose its initial Taxonomy alignment of eligible activities in the Climate
Delegated Act based on the current financial year of reporting, and also required to report its initial Taxonomy
eligibility of exposures in respect of the Environmental Delegated Act.
Comparative templates relating to prior period reporting of EU Taxonomy disclosures are not required given that
this is the Bank’s first EU Taxonomy disclosure in line with mandatory templates required by the Disclosures
Delegated Act. Furthermore, since the Bank’s prior period EU Taxonomy eligibility disclosure was not required with
the same level of detail as the current financial year, and was based on total assets rather than covered assets,
Taxonomy eligibility disclosures are not strictly comparable. Accordingly, comparative EU Taxonomy information
has not been reported.
Scope of consolidation
On 21
st
December 2023, the EC published a Draft Commission Notice
9
in the form of a set of FAQs specific to
financial undertakings’ EU Taxonomy reporting. The Draft Commission Notice clarifies that parent undertakings of
mixed groups are required to consolidate the activities of their financial subsidiaries, and separately consolidate
the activities of their non-financial subsidiaries, reporting relevant Taxonomy KPIs as relevant in both cases.
Accordingly, the Bank reports relevant Taxonomy KPIs applicable to credit institutions in respect of the Bank, and
relevant Taxonomy KPIs applicable to non-financial undertakings in respect of the Bank’s non-financial subsidiaries
within the contextual information, as referred to in FAQ 10 of the Draft Commission Notice, which contemplates
Taxonomy disclosures of mixed groups in which the activities of subsidiaries may differ in risks or impacts from
those of the Group.
The Draft Commission Notice is, at the time of reporting, yet to be adopted into the Official Journal of the European
Union. Considering this, and the recency of the publication of such FAQs, interpretations to the guidance resulting
from such FAQs have been implemented on a best-effort basis. It has therefore not been operationally possible to
implement all aspects of the mentioned FAQs in time for this reporting year.
EU Taxonomy KPIs disclosed
The following KPIs related to the Bank are reported in the templates disclosed.
- The Green Asset Ratio (‘GAR’) is a ratio calculated as the percentage of EU Taxonomy aligned assets as a
proportion of total covered assets.
- The numerator of the GAR includes loans and advances, debt securities, equities and
repossessed collateral financing Taxonomy aligned economic activities based on turnover KPI
and CapEx KPI of underlying assets.
- The denominator of the GAR includes total loans and advances, total debt securities, total
equities, total repossessed collateral and other covered on-balance sheet assets outlined in the
section ‘Assets excluded from the numerator for GAR calculation (covered in the denominator)’.
- The calculation of the KPI for off-balance sheet exposures relates to Lombard Bank Malta plc’s assets
under management, reported in Template 1 relating to GAR as off-balance sheet items and also in
Template 5 as off-balance sheet items in their own right. Other off-balance sheet exposures such as
commitments are excluded from the off-balance sheet KPI.
- The Green Ratio for Assets under Management (‘AuM KPI’) is calculated as the percentage of
assets under management from undertakings financing Taxonomy aligned economic activities
as a proportion of the total assets under management of the Bank.
- The Green Ratio for Financial Guarantees to financial and non-financial undertakings (‘FinGuar
KPI’) is not calculated since it relates to guarantees supporting loans and advances and debt
securities. The Bank did not issue guarantees in respect of loans and advances and debt
securities throughout the financial year.
9
Draft Commission Notice on the interpretation and implementation of certain legal provisions of the Disclosures Delegated Act under
Article 8 of the EU Taxonomy Regulation on the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets (third
Commission Notice).
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
24
Directors’ Report (continued)
The following KPIs related to the Bank’s non-financial subsidiaries are reported in the contextual disclosures to
the templates disclosed.
- The turnover KPI is a ratio calculated as the percentage of EU Taxonomy aligned turnover as a proportion
of total revenue.
- The CapEx KPI is a ratio calculated as the percentage of EU Taxonomy aligned CapEx as a proportion of
total CapEx.
- The OpEx KPI is a ratio calculated as the percentage of EU Taxonomy aligned OpEx as a proportion of total
OpEx.
Furthermore, a contextual consolidated group-level KPI is disclosed in the section ‘Consolidated group-level KPI on
Taxonomy aligned activities in the form of a weighted average KPI’ of the Bank’s Taxonomy disclosure, in line with
FAQ 9 of the Draft Commission Notice.
Green Asset Ratio
Covered assets
Covered assets comprise all on-balance sheet assets other than those excluded altogether from the GAR, where
such exclusions relate to exposures to central governments, central banks and supranational issuers. Lending
towards, or financing of, local governments where the use of proceeds is unknown (i.e. general purpose lending)
is also excluded from the GAR.
These assets are all excluded from both the numerator and denominator of the GAR.
Assets excluded from the numerator for GAR calculation (covered in the denominator)
Exposures to undertakings that are not in scope of NFRD, derivatives, on-demand interbank loans, cash and cash-
related assets, as well as other assets including tangible and intangible assets are excluded from the assessment
of Taxonomy eligible economic activities. Similarly, retail exposures, except for the mortgage lending portfolio,
building renovations loans, and credit consumption loans for cars, are also excluded from the EU Taxonomy
framework, and not assessed for Taxonomy eligibility. These assets are therefore all excluded from the numerator
of the GAR but included in the denominator. The Bank’s cheques in course of collection from NFRD banks as at
reporting date are allocated towards row 47 of Template 1 ‘Other categories of assets’ since these are not
considered to be loans and advances to banks in nature.
Taxonomy eligible and aligned economic activities
Taxonomy eligible economic activities are those activities which can be assessed as environmentally sustainable
and are therefore included in annexes to the EU Taxonomy with relevant technical screening criteria available.
Taxonomy aligned economic activities are those activities which have been assessed as environmentally
sustainable, and therefore also comply with the applicable technical screening criteria. Throughout all templates
disclosed, ‘Environmentally sustainable assets’ therefore refers to Taxonomy aligned assets.
Taxonomy eligibility and alignment of general purpose lending (where the use of proceeds is unknown), have been
assessed using the turnover and CapEx eligibility and alignment ratios published in the most recently available
annual reports by the Bank’s in-scope counterparties.
Taxonomy eligibility and alignment of specific purpose lending (where the use of proceeds is known), have been
assessed in line with the technical screening criteria established in the EU Taxonomy, comprising ‘substantial
contribution’ and ‘do no significant harm’ criteria. Compliance with minimum safeguards is required further to this,
which is an integral part of assessing EU Taxonomy alignment. This is applicable to specific purpose lending in the
case of financial and non-financial counterparties, since households and public authorities are not required to meet
minimum safeguards under article 18 of the EU Taxonomy. In this respect, the Bank has not yet developed a system
of capturing such information.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
25
Directors’ Report (continued)
In addition, the Bank’s car loan and renovation loan exposures are allocated towards row 24 ‘Households’ of
Template 1 of Annex VI of the Disclosures Delegated Act without further allocation.
Data limitations
In the case of the Bank’s exposures where the use of proceeds is not known, in the case of NFRD entity
counterparties, the Bank relies on published counterparty eligibility and alignment ratios to assess eligibility and
alignment of exposures. In this respect, the Bank determines whether counterparties are subject to NFRD through
the use of both research and a financial data terminal. Upon identification of relevant counterparties, the Bank
researches annual reports of such entities in order to obtain relevant EU Taxonomy KPIs.
However, in certain cases, the Bank is unable to obtain the required information from counterparties. This is
relevant in the case of counterparties disclosing EU Taxonomy data for the first time in 2024, particularly:
- Financial undertakings’ Taxonomy alignment disclosures; and
- Financial and non-financial undertakings’ Taxonomy eligibility disclosures in terms of non-climate
environmental objectives. Accordingly, the specific columns in the Bank’s disclosure templates relating
to the non-climate environmental objectives have been excluded from all templates.
As data becomes more available and improvements in data quality take place over time, differences in the data
reported in future financial years, when compared to the current financial year, are expected, as more
counterparties adopt the EU Taxonomy requirements for their own disclosures, and enhance their relevant
processes relating to EU Taxonomy reporting.
Business Strategy
The process around EU Taxonomy reporting within the Bank is led by an ESG working group comprising a number
of the Bank’s senior officials, who are tasked with such process and the strategy related to the Bank’s disclosures.
The ESG working group expects the Bank’s business strategy to develop in line with the EU Taxonomy, where
engagement with clients and counterparties related to the Taxonomy eligibility and alignment of exposures will
develop accordingly.
EU Taxonomy templates – Annex VI
This section outlines the templates to be disclosed by credit institutions, such requirement emanating from Annex
VI of the Disclosures Delegated Act.
Each template is duplicated in order to disclose Turnover-based and CapEx-based information, except for Template
0, which is adjusted to also include CapEx-based information.
The Bank is also required to disclose the Taxonomy eligibility and Taxonomy alignment of its relevant exposures by
climate-related environmental objective. However, until now, certain non-financial undertakings have reported
Taxonomy eligibility and Taxonomy alignment of economic activities without distinguishing between the
environmental objectives of Climate Change Mitigation and Climate Change Adaptation. For the purposes of its
GAR calculation, the Bank does not assign exposures to individual environmental objectives, disclosing respective
amounts in ‘total’ columns i.e. ‘Total (CCM + CCA)'. In this respect, this will be done once all counterparty Taxonomy
disclosures are fully allocated towards individual environmental objectives.
The Bank does not currently extend loans and advances to counterparties in scope of NFRD, except for money
market placements with counterparty banks.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
26
Directors’ Report (continued)
Template 0: Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation
Template 0 summarises the KPIs required to be disclosed by the Bank as a credit institution.
The Fees and Commissions KPI is required to be disclosed from 1 January 2026, whilst in respect of the Trading Book KPI, also applicable from the same date, the Bank does not
operate a trading book. Therefore, the applicable rows for these KPIs are not populated.
0. Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation
Total environmentally
sustainable assets
(Turnover)
€ million
KPI
(Turnover)
%
Total environmentally
sustainable assets
(CapEx)
€ million
KPI
(CapEx)
%
% coverage
(over total assets)
%
% of assets excluded from
the numerator of the GAR
(Article 7(2) and (3) and
Section 1.1.2. of Annex V)
%
% of assets excluded from the
denominator of the GAR
(Article 7(1) and Section 1.2.4
of Annex V)
%
Main KPI
Green asset ratio (GAR) stock
0.65
0.07%
0.76
0.06%
75.42%
50.04%
24.58%
Total environmentally
sustainable assets
(Turnover)
€ million
KPI (Turnover)
%
Total environmentally
sustainable assets (CapEx)
€ million
KPI (CapEx)
%
% coverage (over total assets)
%
% of assets excluded from
the numerator of the GAR
(Article 7(2) and (3) and
Section 1.1.2. of Annex V)
%
% of assets excluded from the
denominator of the GAR
(Article 7(1) and Section 1.2.4
of Annex V)
%
Additional KPIs
GAR (flow)
0.00
0.00%
0.00
0.00%
91.52%
63.48%
8.48%
Trading book
Financial guarantees
-
-
-
-
Assets under management
2.16
4.84%
0.27
2.50%
Fees and commissions income
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
27
Directors’ Report (continued)
Template 1: Assets for the calculation of GAR
Template 1 discloses assets used in the calculation of the GAR disaggregated by counterparty type and asset class. Total assets are further categorised between the following.
- Covered assets in both numerator and denominator;
- Assets excluded from the numerator for GAR calculation (covered in the denominator); and
- Assets not covered for GAR calculation
This template has been duplicated to disclose turnover-based and CapEx-based information, where in both cases, the Bank’s ‘Main KPI’ Green Asset Ratio can be calculated with
reference to amounts reported in Row 48 of Template 1 ‘Total GAR assets’, where Column ‘ac’ ‘Of which environmentally sustainable (Taxonomy-aligned)’ relates to the numerator,
and Column ‘a’ ‘Total gross carrying amount’ relates to the denominator.
The gross carrying amount column excludes impairment allowances for all banking exposures. As a result, total assets reported in this template is not equal to total assets reported
in the Bank’s balance sheet, with the difference amounting to impairment allowances on banking exposures.
Row 34 'SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations' also includes non-NFRD financial undertakings in the EU, in the absence of a more
appropriate row for such financial undertakings.
In the case of off-balance sheet exposures, the Bank does not issue any financial guarantees supporting loans and advances or debt securities.
The gross carrying amount disclosed for assets under management forms the denominator of the respective KPIs and includes exposures to both NFRD and non-NFRD
counterparties while excluding exposures to central governments, central banks and supranational issuers. In the case of assets under management which are funds, these are
treated as non-NFRD entities since the Bank does not look through to underlying investees regarding their status as NFRD entities, given data limitations.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
28
Directors’ Report (continued)
1.Assets for the calculation of GAR (Turnover)
a
b
c
d
e
f
g
h
i
j
ab
ac
ad
ae
af
Million EUR
Disclosure reference date 2023
Total [gross]
carrying amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which towards taxonomy relevant
sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-aligned)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both numerator and
denominator
1
Loans and advances, debt securities and equity
instruments not HfT eligible for GAR calculation
316.67
-
-
-
-
-
-
-
-
-
290.37
0.65
0.02
0.01
0.02
2
Financial undertakings
30.00
-
-
-
-
-
-
-
-
-
9.44
0.19
0.02
0.01
0.02
3
Credit institutions
27.62
-
-
-
-
-
-
-
-
-
9.09
0.18
0.02
0.01
0.02
4
Loans and advances
9.04
-
-
-
-
-
-
-
-
-
2.50
0.05
-
0.02
5
Debt securities, including UoP
16.36
-
-
-
-
-
-
-
-
-
5.73
0.13
0.02
-
0.0033
6
Equity instruments
2.22
-
-
-
-
-
-
-
0.86
0.00
-
0.0003
7
Other financial corporations
2.38
-
-
-
-
-
-
-
-
-
0.35
0.01
-
-
-
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
12
of which management companies
0.33
-
-
-
-
-
-
-
-
-
0.07
-
-
-
-
13
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity instruments
0.33
-
-
-
-
-
-
-
0.07
-
-
-
16
of which insurance undertakings
2.05
-
-
-
-
-
-
-
-
-
0.28
0.01
-
-
-
17
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
Debt securities, including UoP
2.05
-
-
-
-
-
-
-
-
-
0.28
0.01
-
-
-
19
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
20.53
-
-
-
-
-
-
-
-
-
15.50
0.46
-
-
-
21
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22
Debt securities, including UoP
3.45
-
-
-
-
-
-
-
-
-
1.55
0.46
-
-
-
23
Equity instruments
17.08
-
-
-
-
-
-
-
13.95
-
-
-
24
Households
265.43
-
-
-
-
-
-
-
-
-
265.43
-
-
-
-
25
of which loans collateralised by residential
immovable property
231.20
-
-
-
-
-
-
-
-
-
231.20
-
-
-
-
26
of which building renovation loans
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27
of which motor vehicle loans
-
-
-
-
-
-
-
-
-
-
-
28
Local governments financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
Housing financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
Other local government financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking possession:
residential and commercial immovable properties
0.70
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32
Assets excluded from the numerator for GAR
calculation (covered in the denominator)
624.44
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33
Financial and Non-financial undertakings
537.67
34
SMEs and NFCs (other than SMEs) not
subject to NFRD disclosure obligations
529.42
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
29
Directors’ Report (continued)
a
b
c
d
e
f
g
h
i
j
ab
ac
ad
ae
af
Million EUR
Disclosure reference date 2023
Total [gross]
carrying amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which towards taxonomy relevant
sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-aligned)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
35
Loans and advances
513.31
36
of which loans collateralised by
commercial immovable property
-
37
of which building renovation loans
-
38
Debt securities
9.33
39
Equity instruments
6.78
40
Non-EU country counterparties not
subject to NFRD disclosure obligations
8.25
41
Loans and advances
-
42
Debt securities
7.35
43
Equity instruments
0.89
44
Derivatives
-
45
On demand interbank loans
16.86
46
Cash and cash-related assets
8.15
47
Other categories of assets (e.g. Goodwill,
commodities etc.)
61.76
48
Total GAR assets
941.11
-
-
-
-
-
-
-
-
-
290.37
0.65
0.02
0.01
0.02
49
Assets not covered for GAR calculation
306.73
50
Central governments and Supranational
issuers
180.44
51
Central banks exposure
126.29
52
Trading book
-
53
Total assets
1,247.84
-
-
-
-
-
-
-
-
-
290.37
0.65
0.02
0.01
0.02
Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations
54
Financial guarantees
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55
Assets under management
44.54
-
-
-
-
-
-
-
-
-
2.34
2.16
0.17
0.01
0.20
56
Of which debt securities
20.16
-
-
-
-
-
-
-
-
-
0.32
0.32
0.17
0.01
0.17
57
Of which equity instruments
4.17
-
-
-
-
-
-
-
-
-
0.46
0.05
-
0.004
0.03
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
30
Directors’ Report (continued)
1.Assets for the calculation of GAR (CapEx)
a
b
c
d
e
f
g
h
i
j
ab
ac
ad
ae
af
Million EUR
Disclosure reference date 2023
Total [gross]
carrying
amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which towards taxonomy relevant
sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-aligned)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both numerator and
denominator
1
Loans and advances, debt securities and equity
instruments not HfT eligible for GAR calculation
316.67
-
-
-
-
-
-
-
-
-
283.81
0.76
0.02
0.01
0.50
2
Financial undertakings
30.00
-
-
-
-
-
-
-
-
-
8.91
0.22
0.02
0.01
0.03
3
Credit institutions
27.62
-
-
-
-
-
-
-
-
-
8.80
0.21
0.02
0.01
0.03
4
Loans and advances
9.04
-
-
-
-
-
-
-
-
-
2.52
0.07
-
0.003
0.03
5
Debt securities, including UoP
16.36
-
-
-
-
-
-
-
-
-
5.43
0.14
0.02
0.004
0.01
6
Equity instruments
2.22
-
-
-
-
-
-
-
0.85
0.001
-
0.001
7
Other financial corporations
2.38
-
-
-
-
-
-
-
-
-
0.11
0.01
-
-
-
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
12
of which management companies
0.33
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity instruments
0.33
-
-
-
-
-
-
-
-
-
-
-
16
of which insurance undertakings
2.05
-
-
-
-
-
-
-
-
-
0.11
0.01
-
-
-
17
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
Debt securities, including UoP
2.05
-
-
-
-
-
-
-
-
-
0.11
0.01
-
-
-
19
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
20.53
-
-
-
-
-
-
-
-
-
9.47
0.54
-
-
0.47
21
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22
Debt securities, including UoP
3.45
-
-
-
-
-
-
-
-
-
2.07
0.54
-
-
0.47
23
Equity instruments
17.08
-
-
-
-
-
-
-
7.40
-
-
-
24
Households
265.43
-
-
-
-
-
-
-
-
-
265.43
-
-
-
-
25
of which loans collateralised by residential
immovable property
231.20
-
-
-
-
-
-
-
-
-
231.20
-
-
-
-
26
of which building renovation loans
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27
of which motor vehicle loans
-
-
-
-
-
-
-
-
-
-
-
28
Local governments financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
Housing financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
Other local government financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking possession:
residential and commercial immovable
properties
0.70
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32
Assets excluded from the numerator for GAR calculation
(covered in the denominator)
624.44
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33
Financial and Non-financial undertakings
537.67
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
31
Directors’ Report (continued)
a
b
c
d
e
f
g
h
i
j
ab
ac
ad
ae
af
Million EUR
Disclosure reference date 2023
Total [gross]
carrying
amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which towards taxonomy relevant
sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-aligned)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
34
SMEs and NFCs (other than SMEs) not
subject to NFRD disclosure obligations
529.42
35
Loans and advances
513.31
36
of which loans collateralised by
commercial immovable property
-
37
of which building renovation loans
-
38
Debt securities
9.33
39
Equity instruments
6.78
40
Non-EU country counterparties not
subject to NFRD disclosure obligations
8.25
41
Loans and advances
-
42
Debt securities
7.35
43
Equity instruments
0.89
44
Derivatives
-
45
On demand interbank loans
16.86
46
Cash and cash-related assets
8.15
47
Other categories of assets (e.g. Goodwill,
commodities etc.)
61.76
48
Total GAR assets
941.11
-
-
-
-
-
-
-
-
-
283.81
0.76
0.02
0.01
0.50
49
Assets not covered for GAR calculation
306.73
50
Central governments and Supranational
issuers
180.44
51
Central banks exposure
126.29
52
Trading book
-
53
Total assets
1,247.84
-
-
-
-
-
-
-
-
-
283.81
0.76
0.02
0.01
0.50
Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations
54
Financial guarantees
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55
Assets under management
44.54
-
-
-
-
-
-
-
-
-
2.78
1.12
0.52
0.05
0.58
56
Of which debt securities
20.16
-
-
-
-
-
-
-
-
-
2.43
1.06
0.52
-
-
57
Of which equity instruments
4.17
-
-
-
-
-
-
-
-
-
0.35
0.06
-
-
-
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
32
Directors’ Report (continued)
Template 2: GAR Sector information
Template 2 presents eligible and aligned exposures in the banking book to non-financial counterparties subject to NFRD, broken down by sector of economic activities based on
the NACE code of the principal activity of the immediate counterparty.
2. GAR sector information (Turnover)
a
b
c
d
e
f
g
h
y
z
aa
ab
Breakdown by sector - NACE 4 digits level (code and label)
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates (Subject
to NFRD)
SMEs and other NFC not
subject to NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
NFRD
Mn
EUR
Of which
environmentally
sustainable (CCM)
Mn
EUR
Of which
environmentally
sustainable (CCM)
Mn
EUR
Of which
environmentall
y sustainable
(CCA)
Mn
EUR
Of which
environmentall
y sustainable
(CCA)
Mn EUR
Of which
environmentall
y sustainable
(CCM + CCA)
Mn
EUR
Of which
environmentally
sustainable (CCM
+ CCA)
1
M7010 - Activities of head offices
-
-
-
-
0.80
-
2
K6420 - Activities of holding companies
-
-
-
-
0.31
-
3
C1105 - Manufacture of beer
-
-
-
-
0.32
-
4
J6201 - Computer programming activities
-
-
-
-
0.74
-
5
C2910 - Manufacture of motor vehicles
-
-
-
-
0.82
0.09
6
H4910 - Passenger rail transport, interurban
-
-
-
-
0.73
0.36
7
H5310 - Postal activities under universal service obligation
-
-
-
-
16.81
-
2. GAR sector information (CapEx)
a
b
c
d
e
f
g
h
y
z
aa
ab
Breakdown by sector - NACE 4 digits level (code and label)
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
NFRD
Mn
EUR
Of which
environmentally
sustainable (CCM)
Mn
EUR
Of which
environmentally
sustainable (CCM)
Mn
EUR
Of which
environmentally
sustainable (CCA)
Mn
EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmen
tally
sustainable
(CCM +
CCA)
Mn
EUR
Of which
environmentally
sustainable (CCM
+ CCA)
1
M7010 - Activities of head offices
-
-
-
-
0.80
-
2
K6420 - Activities of holding companies
-
-
-
-
0.31
-
3
C1105 - Manufacture of beer
-
-
-
-
0.32
-
4
J6201 - Computer programming activities
-
-
-
-
0.74
-
5
C2910 - Manufacture of motor vehicles
-
-
-
-
0.82
0.27
6
H4910 - Passenger rail transport, interurban
-
-
-
-
0.73
0.27
7
H5310 - Postal activities under universal service obligation
-
-
-
-
16.81
-
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
33
Directors’ Report (continued)
Template 3: GAR KPI Stock
Template 3 discloses the proportion of total covered assets funding Taxonomy relevant sectors in respect of both Taxonomy eligibility and Taxonomy alignment on a stock basis.
The Bank’s approach towards disclosing GAR KPI (stock) ratios in this template is based on the amounts of assets disclosed in Template 1, whereby each ratio’s denominator is
equal to the respective gross carrying amount of the particular counterparty type and asset class. This is in line with guidance provided in the respective sub-sections of section
1.2.1 of the Disclosures Delegated Act.
Template 3 also discloses the particular counterparty type and asset class captured in each relevant row as a proportion of the Bank’s total assets.
3. GAR KPI stock (Turnover)
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
af
% (compared to total covered assets in the denominator)
Disclosure reference date 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion
of total
assets
covered
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered
assets funding taxonomy
relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both numerator and denominator
1
Loans and advances, debt securities and equity
instruments not HfT eligible for GAR calculation
-
-
-
-
-
-
-
-
-
91.70%
0.20%
0.01%
0.002%
0.01%
25.38%
2
Financial undertakings
-
-
-
-
-
-
-
-
-
31.47%
0.63%
0.06%
0.02%
0.07%
2.40%
3
Credit institutions
-
-
-
-
-
-
-
-
-
32.91%
0.65%
0.07%
0.02%
0.07%
2.21%
4
Loans and advances
-
-
-
-
-
-
-
-
-
27.66%
0.52%
-
0.03%
0.18%
0.72%
5
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
35.04%
0.80%
0.11%
0.02%
0.02%
1.31%
6
Equity instruments
-
-
-
-
-
-
-
38.57%
0.02%
-
-
0.18%
7
Other financial corporations
-
-
-
-
-
-
-
-
-
14.77%
0.39%
-
-
-
0.19%
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
12
of which management companies
-
-
-
-
-
-
-
-
-
21.50%
-
-
-
-
0.03%
13
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity instruments
-
-
-
-
-
-
-
21.50%
-
-
-
0.03%
16
of which insurance undertakings
-
-
-
-
-
-
-
-
-
13.70%
0.45%
-
-
-
0.16%
17
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
13.70%
0.45%
-
-
-
0.16%
19
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
-
-
-
-
-
-
-
-
-
75.49%
2.23%
-
-
-
1.65%
21
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
44.85%
13.28%
-
-
-
0.28%
23
Equity instruments
-
-
-
-
-
-
-
81.68%
-
-
-
1.37%
24
Households
-
-
-
-
-
-
-
-
-
100.00%
-
-
-
-
21.27%
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
34
Directors’ Report (continued)
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
af
% (compared to total covered assets in the denominator)
Disclosure reference date 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion
of total
assets
covered
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered
assets funding taxonomy
relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
25
of which loans collateralised by residential
immovable property
-
-
-
-
-
-
-
-
-
100.00%
-
-
-
-
18.53%
26
of which building renovation loans
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27
of which motor vehicle loans
-
-
-
-
-
28
Local governments financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
Housing financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
Other local government financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking possession:
residential and commercial immovable
properties
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.06%
32
Total GAR assets
-
-
-
-
-
-
-
-
-
30.85%
0.07%
0.002%
0.001%
0.002%
75.42%
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
35
Directors’ Report (continued)
3. GAR KPI stock (CapEx)
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
af
% (compared to total covered assets in the denominator)
Disclosure reference date 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion
of total
assets
covered
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered
assets funding taxonomy
relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both numerator and denominator
1
Loans and advances, debt securities and equity
instruments not HfT eligible for GAR calculation
-
-
-
-
-
-
-
-
-
89.62%
0.24%
0.01%
0.00%
0.16%
25.38%
2
Financial undertakings
-
-
-
-
-
-
-
-
-
29.70%
0.75%
0.06%
0.02%
0.12%
2.40%
3
Credit institutions
-
-
-
-
-
-
-
-
-
31.86%
0.77%
0.07%
0.02%
0.13%
2.21%
4
Loans and advances
-
-
-
-
-
-
-
-
-
27.87%
0.80%
-
0.03%
0.31%
0.72%
5
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
33.18%
0.85%
0.11%
0.02%
0.04%
1.31%
6
Equity instruments
-
-
-
-
-
-
-
38.39%
0.04%
-
0.03%
0.18%
7
Other financial corporations
-
-
-
-
-
-
-
-
-
4.59%
0.53%
-
-
-
0.19%
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
12
of which management companies
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.03%
13
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
0.03%
16
of which insurance undertakings
-
-
-
-
-
-
-
-
-
5.32%
0.61%
-
-
-
0.16%
17
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
5.32%
0.61%
-
-
-
0.16%
19
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
-
-
-
-
-
-
-
-
-
46.12%
2.62%
-
-
2.27%
1.65%
21
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
60.09%
15.61%
-
-
13.49%
0.28%
23
Equity instruments
-
-
-
-
-
-
-
43.30%
-
-
-
1.37%
24
Households
-
-
-
-
-
-
-
-
-
100.00%
-
-
-
-
21.27%
25
of which loans collateralised by residential
immovable property
-
-
-
-
-
-
-
-
-
100.00%
-
-
-
-
18.53%
26
of which building renovation loans
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27
of which motor vehicle loans
-
-
-
-
-
28
Local governments financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
Housing financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
Other local government financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking possession:
residential and commercial immovable
properties
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.06%
32
Total GAR assets
-
-
-
-
-
-
-
-
-
22.74%
0.06%
0.001%
0.001%
0.04%
75.42%
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
36
Directors’ Report (continued)
Template 4: GAR KPI Flow
Template 4 discloses the proportion of total covered assets funding Taxonomy relevant sectors in respect of both Taxonomy eligibility and Taxonomy alignment on a flow basis.
The Bank’s approach towards disclosing GAR (flow) KPI ratios in this template is based on the amounts of new covered assets throughout the financial year, whereby each ratio's
denominator is equal to the respective gross carrying amount of the particular counterparty type and asset class. This is in line with guidance provided in the respective sub-
sections of section 1.2.1 of the Disclosures Delegated Act.
Template 4 also discloses the particular counterparty type and asset class captured in each relevant row as a proportion of the Bank’s total new assets throughout the financial
year.
4. GAR KPI flow (Turnover)
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
af
% (compared to flow of total eligible assets)
Disclosure reference date 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion
of total new
assets
covered
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered
assets funding taxonomy
relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both numerator and
denominator
1
Loans and advances, debt securities and
equity instruments not HfT eligible for GAR
calculation
-
-
-
-
-
-
-
-
-
99.78%
0.001%
-
-
-
36.52%
2
Financial undertakings
-
-
-
-
-
-
-
-
-
59.02%
0.20%
-
-
-
0.11%
3
Credit institutions
-
-
-
-
-
-
-
-
-
59.02%
0.20%
-
-
-
0.11%
4
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
59.02%
0.20%
-
-
-
0.11%
6
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
7
Other financial corporations
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
12
of which management companies
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
14
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
16
of which insurance undertakings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
-
-
-
-
-
-
-
-
-
38.12%
-
-
-
-
0.06%
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
37
Directors’ Report (continued)
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
af
% (compared to flow of total eligible assets)
Disclosure reference date 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion
of total new
assets
covered
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered
assets funding taxonomy
relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
21
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
38.12%
-
-
-
-
-
23
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
24
Households
-
-
-
-
-
-
-
-
-
100.00%
-
-
-
-
36.36%
25
of which loans collateralised by
residential immovable property
-
-
-
-
-
-
-
-
-
100.00%
-
-
-
-
32.78%
26
of which building renovation loans
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27
of which motor vehicle loans
-
-
-
-
-
-
-
-
-
-
-
28
Local governments financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
Housing financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
Other local government financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking
possession: residential and commercial
immovable properties
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32
Total GAR assets
-
-
-
-
-
-
-
-
-
36.44%
0.0002%
-
-
-
91.52%
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
38
Directors’ Report (continued)
4. GAR KPI flow (CapEx)
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
af
% (compared to flow of total eligible assets)
Disclosure reference date 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion
of total new
assets
covered
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both numerator and
denominator
1
Loans and advances, debt securities and
equity instruments not HfT eligible for GAR
calculation
-
-
-
-
-
-
-
-
-
99.85%
0.001%
0.02%
-
-
36.52%
2
Financial undertakings
-
-
-
-
-
-
-
-
-
58.35%
0.28%
8.23%
-
-
0.11%
3
Credit institutions
-
-
-
-
-
-
-
-
-
58.35%
0.28%
8.23%
-
-
0.11%
4
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
58.35%
0.28%
8.23%
-
-
0.11%
6
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
7
Other financial corporations
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
12
of which management companies
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
16
of which insurance undertakings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
-
-
-
-
-
-
-
-
-
83.43%
-
-
-
-
0.06%
21
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
83.43%
-
-
-
-
0.06%
23
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
24
Households
-
-
-
-
-
-
-
-
-
100.00%
-
-
-
-
36.36%
25
of which loans collateralised by
residential immovable property
-
-
-
-
-
-
-
-
-
100.00%
-
-
-
-
32.78%
26
of which building renovation loans
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27
of which motor vehicle loans
-
-
-
-
-
-
-
-
-
-
-
28
Local governments financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
Housing financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
Other local government financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking
possession: residential and commercial
immovable properties
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32
Total GAR assets
-
-
-
-
-
-
-
-
-
36.47%
0.0003%
0.01%
-
-
91.52%
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
39
Directors’ Report (continued)
Template 5: KPI off-balance-sheet exposures
Template 5 presents eligible and aligned off-balance sheet exposures as a proportion of covered assets by Taxonomy environmental objective. The covered assets forming the
denominator of each ratio is the respective off-balance sheet exposure relating to the Bank’s assets under management, including exposures with both NFRD and non-NFRD
counterparties while excluding exposures to central governments, central banks and supranational issuers.
In the case of assets under management which are funds, these are treated as non-NFRD entities since the Bank does not look through to underlying investees regarding their
status as NFRD entities, given data limitations.
5. KPI off-balance sheet exposures (Turnover) (Stock)
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
% (compared to total eligible off-balance sheet assets)
Disclosure reference date 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
1
Financial guarantees (FinGuar KPI)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
Assets under management (AuM KPI)
-
-
-
-
-
-
-
-
-
5.26%
4.84%
0.39%
0.03%
0.46%
5. KPI off-balance sheet exposures (Turnover) (Flow)
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
% (compared to total eligible off-balance sheet assets)
Disclosure reference date 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
1
Financial guarantees (FinGuar KPI)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
Assets under management (AuM KPI)
-
-
-
-
-
-
-
-
-
24.65%
3.70%
0.52%
0.27%
2.45%
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
40
Directors’ Report (continued)
5. KPI off-balance sheet exposures (CapEx) (Stock)
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
% (compared to total eligible off-balance sheet assets)
Disclosure reference date 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
1
Financial guarantees (FinGuar KPI)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
Assets under management (AuM KPI)
-
-
-
-
-
-
-
-
-
6.24%
2.50%
1.16%
0.12%
1.30%
5. KPI off-balance sheet exposures (CapEx) (Flow)
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
% (compared to total eligible off-balance sheet assets)
Disclosure reference date 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
1
Financial guarantees (FinGuar KPI)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
Assets under management (AuM KPI)
-
-
-
-
-
-
-
-
-
35.95%
5.05%
0.81%
1.09%
4.48%
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
41
Directors’ Report (continued)
EU Taxonomy templates - Annex XII
The following template is required to be disclosed by the Bank in terms of Annex XII of the Disclosures Delegated Act.
Template 1: Nuclear and fossil gas related activities
Template 1 indicates whether, or not, the Bank carries out, funds, or has exposures to the nuclear energy and fossil gas related activities referred to in rows 1-6 of such template.
Since the Bank does not carry out, fund, or have exposures to such activities in the current year, it consequently does not disclose the remainder of the nuclear and fossil gas
related templates found in Annex XII of the Disclosures Delegated Act (Templates 2-5), in line with FAQ 28 of the afore-mentioned Draft Commission Notice issued in December
2023.
Row
Nuclear energy related activities
1
The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the
fuel cycle.
NO
2
The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as
hydrogen production, as well as their safety upgrades, using best available technologies.
NO
3
The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen
production from nuclear energy, as well as their safety upgrades.
NO
Fossil gas related activities
4
The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.
NO
5
The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels.
NO
6
The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels
NO
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
42
Directors’ Report (continued)
Disclosure in respect of the Bank’s subsidiary MaltaPost p.l.c.
The Bank’s subsidiary MaltaPost p.l.c. (‘MaltaPost’) is subject to the NFRD and is therefore also subject to
disclosure requirements emanating from the Disclosures Delegated Act as a Group in its own right.
The Group is required to disclose the share of its turnover, capital expenditure (CapEx) and operating expenditure
(OpEx) for its non-financial subsidiaries, which are associated with the following, in accordance with the Disclosures
Delegated Act.
- Taxonomy-eligible and Taxonomy-aligned economic activities in respect of climate-related environmental
objectives; and
- Taxonomy-eligible economic activities in respect of non-climate environmental objectives.
Proportion of Taxonomy-eligible and Taxonomy-aligned economic activities in total turnover, CapEx
and OpEx
Total
(€000)
Proportion of
Taxonomy-eligible
(non-aligned)
economic
activities
Proportion of
Taxonomy-aligned
economic
activities
Proportion of
Taxonomy non-
eligible economic
activities
FY 2023
Turnover
39,610
86%
0%
14%
CapEx
1,844
42%
0%
58%
OpEx
1,141
82%
0%
18%
FY 2022
Turnover
31,513
83%
0%
17%
CapEx
2,246
44%
0%
56%
OpEx
1,146
78%
0%
22%
Taxonomy eligibility of turnover-generating activities
The Group has examined all economic activities which it carries out to determine which of these are Taxonomy
eligible in accordance with Annexes I and II to the Climate Delegated Act and Annexes I to IV to the Environmental
Delegated Act. The table below indicates the activities performed by the Group which have been identified as
Taxonomy eligible and the environmental objective with which the activity may be associated. Given that none of
the Group’s economic activities in terms of turnover, CapEx, or OpEx are Taxonomy aligned, no further detail with
respect to Taxonomy alignment is provided.
Taxonomy eligible activities were identified by extracting the total turnover, CapEx and OpEx required to be
captured in the denominators of the respective KPIs and assessing the NACE code of the activities to which the
amounts relate. The Group then assessed which of the identified NACE codes relate to activities included within
the annexes to the Climate Delegated Act. For the identified eligible activities, the Group then began the process
to assess them against the technical screening criteria.
Through the activities highlighted in the following table, the Group generates turnover, and may incur both CapEx
and OpEx for such activities.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
43
Directors’ Report (continued)
Economic activity
Description
Turnover
(%)*
CapEx
(%)*
OpEx
(%)*
Environmental
objective(s)
6.4 Operation of personal
mobility devices, cycle
logistics
Postal revenue earned through
delivery of post on foot and by
e-pedal cargo bikes
14%
0%
0%
CCM, CCA
6.5 Transport by
motorbikes, passenger
cars and light commercial
vehicles
Postal revenue earned through
delivery services by motorbikes,
cars and light commercial
vehicles including electric
vehicle quadricycles
52%
37%
72%
CCM, CCA
6.15 Infrastructure
enabling low-carbon road
transport and public
transport
Postal revenue earned through
infrastructure and related
activities in sorting centres and
hubs essential to minimise the
transport activities required
20%
0%
0%
CCM, CCA
*of the total turnover, CapEx and OpEx included in the denominator of the respective KPI
The Group has developed a system to allocate the proportion of its postal turnover towards transport activities.
This is based on transport modalities of postal beats, in the case of delivery services, where 17% of the Group’s
turnover attributable to its non-financial undertaking activities is allocated towards activity 6.4 ‘Operation of
personal mobility devices, cycle logistics’, and 60% towards activity 6.5 ‘Transport by motorbikes, passenger cars
and light commercial vehicles’. In the case of sorting activities, this is based on the area of its property used for
sorting as a proportion of total property area, where the remaining 23% of turnover attributable to Group non-
financial undertaking activities is allocated towards activity 6.15 ‘Infrastructure enabling low-carbon road transport
and public transport’.
Economic activities classified under activity 6.4 ‘Operation of personal mobility devices, cycle logistics’ relate to on-
foot deliveries and e-pedal cargo bikes, being two delivery methods used in the Group’s Last Mile Delivery which
are eligible under such activity.
Economic activities classified under activity 6.5 ‘Transport by motorbikes, passenger cars and light commercial
vehicles’ relate to motorcycles, delivery vans and light cargo electric vehicles (Micro Logistics Electric Vehicles),
which are another three delivery methods used in the Group’s Last Mile Delivery which are eligible under this
activity. In this respect, the CapEx classified as Taxonomy eligible entails capital investments pertaining to the
execution of such turnover-generating economic activity. Such CapEx relates to motor vehicle additions throughout
the year, whilst OpEx in this respect pertains to direct non-capitalised costs incurred in the day-to-day servicing of
such motor vehicles, namely running expenses relating to repair and maintenance, and short-term operating
leases.
Economic activities classified under activity 6.15 ‘Infrastructure enabling low-carbon road transport and public
transport’ relate to infrastructure and related activities in the Group’s sorting centre and hubs, which are
considered essential to enable the efficient transport of letters, small packets and parcels, making it a driver in
minimising the required transport activities in the postal business.
The Group also operates four heavy vehicles in scope of activity 6.6 ‘Freight transport services by road’, however,
these are considered not to directly contribute to turnover generation.
The Group assessed its turnover-generating economic activities in light of the Environmental Delegated Act,
however, none are currently deemed to be eligible in this respect.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
44
Directors’ Report (continued)
Whilst the Group currently assesses its operating activities in accordance with activities classified under section 6
‘Transport’ of the Climate Delegated Act, PostEurop, the trade association that represents European public postal
operators, submitted a position paper on the EU Taxonomy in September 2022 recommending that the postal
sector be captured under a specific sector, as opposed to ‘Transport’. Therefore, in the future, should the Climate
Delegated Act be amended in light of such a proposal, the Group will re-assess the Taxonomy eligibility of its
turnover-generating activities.
Other turnover-generating activities classified as Taxonomy non-eligible
The Group’s Taxonomy non-eligible economic activities include warehousing services, document management
services, philatelic activities, retail sale of stamps, non-postal stationery and provision of non-postal services.
Taxonomy eligibility of investment activities not directly related to turnover-generating activities
Further to the activities from which the Group generates turnover, and generally incurs both CapEx and OpEx, it
also engages in investment activities not directly related to its turnover-generating activities as highlighted in the
following table.
Economic activity
Description
CapEx
(%)*
OpEx
(%)*
Environmental
objective(s)
7.7 Acquisition and ownership
of buildings
Additions to leased property
5.5%
10%
CCM, CCA
*of the total CapEx and OpEx included in the denominator of the respective KPI
Economic activities classified under activity 7.7 Acquisition and ownership of buildings relate to additions to leased
property.
The Group assessed its investment activities not directly related to turnover-generating economic activities in light
of the Environmental Delegated Act, however, none are currently deemed to be eligible in this respect.
Consolidated group-level KPI on Taxonomy aligned activities in the form of a weighted average KPI
The Group discloses a weighted average KPI of its financial and non-financial activities as required by FAQ7 in the
afore-mentioned Draft Commission Notice. The Group’s weighted average turnover-based KPI is 0.03% while its
weighted average CapEx-based KPI is 0.02%
Signed on behalf of the Bank's Board of Directors on 26 April 2024 by Michael C. Bonello (Chairman) and Joseph Said
(Director and Chief Executive Officer) as per the Directors' Declaration on ESEF Annual Financial Report submitted
in conjunction with the Annual Report and Financial Statements 2023.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
45
Statement of Compliance with the Principles of Good Corporate Governance
A.
INTRODUCTION
In terms of the Capital Markets Rules of the Malta Financial Services Authority (Rule 5.94), Lombard Bank Malta
p.l.c. (the Bank), as a company having its securities admitted to trading on a regulated market, is obliged to report
on the extent to which it has adopted the ‘Code of Principles of Good Corporate Governance’ (the ‘ Principles’)
embodied in Appendix 5.1 to Chapter 5 of the same Capital Markets Rules, as well as the measures which have
been taken by the Bank to ensure compliance with these Principles.
While the Principles are not mandatory, the Board of Directors of the Bank has endeavoured to ensure that they
are upheld to the fullest extent possible, and this while acknowledging that good corporate governance is indeed
beneficial to all the Bank’s stakeholders. The instances in which the Bank has departed from the Principles are
explained below under Section C - ‘Non- Compliance with the Code’.
After having carried out a review of the extent to which the Bank has been compliant with the Principles throughout
the financial year ended 31 December 2023, the Board of Directors, in terms of Capital Markets Rule 5.97, presents
its report as follows:
B.
COMPLIANCE WITH THE CODE
Principle 1: The Board
As at 31 December 2023, the Board of Directors of the Bank consisted of six (6) Directors, five (5) of whom being
non-executive Directors together with the Chief Executive Officer of the Bank being also a Director.
In January 2024, the Bank’s Qualifying Shareholder the National Development and Social Fund (NDSF) appointed
a further director (Mr Richard Dimech) on the Board of Directors. Furthermore, with effect from 13 March 2024,
Graham A. Fairclough resigned from his position as non-executive director subsequent to which the Board of
Directors co-opted Aldo-Joseph Giordano as non-executive director. As at the date of publication of this Annual
Report, these appointments are subject to regulatory approval. The Directors, individually and collectively, are
considered fit and proper to direct the business of the Bank, having the necessary skills and experience to be able
to do so.
In order to assist it in the execution of its duties and responsibilities, the Board of Directors has set up a number of
committees and these include the Audit & Risk Committee, the Assets & Liabilities Committee, the Credit Committee
and the Suitabilities & Evaluations Committee, all of which are regulated by their own Terms of Reference as approved
and periodically reviewed by the Board.
Principle 2: Chairman and Chief Executive Officer
Different individuals occupy the positions of Chairman and Chief Executive Officer. A clear division of
responsibilities exists between the Chairman’s responsibility for the running of the Board of Directors and the
Chief Executive Officer’s responsibility for the running and managing of the Bank’s business. This separation of
roles of the Chairman and Chief Executive Officer avoids concentration of power, authority and unfettered
discretion in one individual alone and differentiates leadership of the Board from the running of the Bank’s
business.
The Chairman’s responsibilities, inter alia, include: (i) leading the Board and helping it reach its full potential,
particularly by facilitating the effective contribution of Directors and encouraging discussion; (ii) setting of the
Agenda for Board meetings; (iii) ensuring that the Directors receive precise, timely and objective information so
that they can make sound decisions and effectively monitor the performance of the Bank; (iv) ensuring that all
strategic and policy issues are appropriately discussed and formally approved; and (v) maintaining effective
communication with the Bank’s shareholders at all times. As stated below, the Chairman meets the independence
criteria set out in the Principles.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
46
Statement of Compliance with the Principles of Good Corporate Governance (continued)
The Board of Directors appoints the Chief Executive Officer. The Chief Executive Officer is responsible for managing
the day-to-day business of the Bank in conformity with the agreed plans, policies and strategies approved by the
Board. The Board of Directors also appointed two Deputy Chief Executive Officers, who support the Chief Executive
Officer in the exercise of his duties while leading the Credit and Operations functions respectively.
Principle 3: Composition of the Board
The following Directors served on the Board during the period under review:
Michael C. Bonello
John Bonello *
Graham A. Fairclough * *
Kimon Palamidis
Peter Perotti
Joseph Said
***
* John Bonello was appointed as a Director of the Bank by the Bank’s Qualifying Shareholder, the National Development & Social
Fund (‘NDSF’) and upon receipt of regulatory approval on 23 October 2023, his appointment became effective as of such date.
** Graham A. Fairclough resigned from his position as non-executive director with effect from 13 March 2024, subsequent to
which the Board of Directors co-opted Aldo-Joseph Giordano as non-executive director which appointment, as at the date of
publication of this Annual Report, is subject to regulatory approval.
*** As reported above, Richard Dimech was appointed by the National Development & Social Fund which appointment, as at
the date of publication of this Annual Report, is subject to regulatory approval.
All Board members are Non-Executive Directors who are not engaged in the daily management of the Bank,
with the exception of Joseph Said who is also Chief Executive Officer of the Bank. Furthermore, the Board
considers Michael C. Bonello, John Bonello, Kimon Palamidis and Peter Perotti as independent Directors. Kimon
Palamidis is still considered to be independent despite the fact that he has served on the Board for more than
twelve consecutive years. In determining the independence of its members, the Board takes into consideration
the relevant criteria and Principles as well as what are generally considered sound, acceptable standards. All
Non-Executive Directors have declared in writing to the Board that they undertake:
to maintain in all circumstances their independence of analysis, decision and action;
not to seek or accept any unreasonable advantages that could be considered as compromising their
independence; and
to clearly express their opposition in the event that they find that a decision of the Board may harm the Bank.
It is considered that, in the current circumstances in which the Bank is operating, the size of the Board is
sufficient for the requirements of the business and that the balance of skills and experience therein is appropriate
to properly enable the Board to carry out its duties and responsibilities. This is considered so also taking into
account, inter alia, the Bank’s simple model and the principle of proportionality, based on the Bank’s size and the
nature, scale and complexity of its activities and products. Should the necessity arise to supplement the skills of
its members, the Board has at its disposal the facility to appoint any external consultants to provide assistance and
advice so as to further enhance the Board’s oversight functions.
The composition and election of the Board of Directors is determined by the Bank’s Articles of Association wherein
it is established that it is the shareholders who must appoint Directors to serve on the Board. Within these
parameters, options for further strengthening the Board are always considered. In addition, however, the Bank,
by virtue of the Board-appointed Suitabilities & Evaluations Committee, carries out suitability assessments of its
existing Directors and any new nominated Directors in order to ensure that the suitability, fit and proper criteria
are observed, pursuant to all applicable laws, rules, regulations, guidelines etc.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
47
Statement of Compliance with the Principles of Good Corporate Governance (continued)
The overall composition of the Board and the collective knowledge, skills and experience required are evaluated
during individual suitability assessments and collective suitability assessments so as to ensure that the Board is
effectively discharging all its duties and obligations at all times.
The appointment of Directors to the Board is a matter that is reserved entirely to the Bank’s shareholders in terms
of the Memorandum and Articles of Association. Therefore diversity, to an extent, depends on the profiles of
nominees proposed and their suitability in terms of applicable laws, rules, regulations, guidelines, etc. The benefits
of diversity, including that in educational and professional backgrounds, age, gender, experience and geographical
provenance would be considered by the Suitability and Evaluations Committee in its assessment of suitability of
any nominees.
The Board considers that as a policy and as reflected in its Board of Directors’ Charter, it endeavours to have a
varied board, particularly in terms of diverse educational and professional backgrounds and extensive and
specialised experience of its members. The Board is confident that for this reason, and in light of the current
circumstances in which it is operating, also taking into account proportionality and the Bank’s size and the nature,
scale and complexity of its activities and products, it benefits from a satisfactory diversity of skills, knowledge and
experience. This allows for a good understanding of current affairs, the Bank’s activities, business model, strategy
and associated risks, applicable regulatory framework and the environment in which the Bank operates and
longer-term risks and opportunities related to the Bank’s business. It also benefits from international expertise.
The Board is cognisant of the fact that the appropriate mix of Board Members ensures diverse perspectives,
experience and knowledge. It continues to remain committed to achieving further diversity among its members
particularly in terms of age, geographical provenance, gender, experience, educational and professional
backgrounds.
Principle 4: The Responsibility of the Board
In pursuing the execution of the four basic roles of corporate governance, namely, accountability, monitoring,
strategy formulation and policy development, the Board of Directors, having the first level of responsibility for
such execution:
regularly reviews and evaluates corporate strategy, major operational and financial plans, risk policy,
performance objectives and monitors implementation and corporate performance within the parameters of all
relevant laws, regulations and codes of best business practice;
applies high ethical standards and takes into account the interests of stakeholders and acts responsibly and
with integrity and on a fully informed basis, in good faith, with due diligence and in the best interests of the
Bank and its shareholders;
recognises that the Bank’s success depends upon its relationship with all groups of its stakeholders, including
employees, suppliers, customers and the wider community in which the Bank operates;
monitors effectively the application and implementation by Management of its policies and strategy;
recognises and supports enterprise and innovation within Management and examines how best to motivate
the Bank’s Management;
seeks to establish an effective decision-making process in order to develop the Bank’s business efficiently; and
• ensures that a balance is struck between enterprise and control in the Bank.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
48
Statement of Compliance with the Principles of Good Corporate Governance (continued)
Furthermore, the Board of Directors:
defines in clear and concise terms the Bank’s strategy, policies, management performance criteria and
business policies and effectively monitors the implementation of such by Management;
establishes a clear internal and external reporting system so that the Board has continuous access to
accurate, relevant and timely information;
has appointed Committees, including the Audit & Risk Committee, Credit Committee, Assets & Liabilities
Committee and Suitabilities & Evaluations Committee;
continuously assesses and monitors the present and future operations’ opportunities, threats and risks;
evaluates the Management’s implementation of corporate strategy and financial objectives;
ensures that the Bank has appropriate policies and procedures in place to assure that the Bank and its
employees maintain the highest standards of corporate conduct, including compliance with applicable laws,
regulations, business and ethical standards;
ensures that the financial statements of the Bank and the annual audit thereof are completed within the
stipulated time periods; and
requires Management to constantly monitor performance and report fully and accurately to the Board.
Furthermore, Directors keep themselves updated on an ongoing basis of their statutory and fiduciary duties, the
Bank’s operations and prospects, the general business environment and skills and competences of Senior
Management. The expectations of the Board are also discussed regularly.
Principle 5: Board Meetings
The Board convened twelve (12) times during the period under review with attendance of the Directors as follows:
Michael C. Bonello 12
John Bonello 3*
Graham A. Fairclough 12
Kimon Palamidis 12
Peter Perotti 12
Joseph Said 12
* John Bonello was appointed as a Director of the Bank by the Bank’s Qualifying Shareholder, the National
Development & Social Fund (‘NDSF’)
and upon receipt of regulatory approval on 23 October 2023, his
appointment became effective as of such date.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
49
Statement of Compliance with the Principles of Good Corporate Governance (continued)
The dates when the Board meetings are scheduled to be held are determined prior to the beginning of the year in
question. When required, further meetings are scheduled.
Ahead of Board meetings an agenda and supporting documentation are made available to all Directors. Other than in
the case of meetings specially convened to discuss particular matters, generally the agendas of regular Board
meetings set out items of a long-term strategic nature, as well as performance-related issues together with credit
applications which fall within the discretionary limits of the Board and also include various compliance and risk-
related matters. During meetings, Directors are encouraged to present their views pertinent to the subject matter
and are given every opportunity to contribute to the relevant issues on the agenda. Following each meeting, minutes
which record attendance as well as all decisions taken are circulated to all Board members.
Principle 6: Information and Professional Development
Each newly appointed Member of the Board is briefed by the Chief Executive Officer, Senior Management officials,
Heads of Internal Control Functions and any other staff members as necessary, on all aspects of the Bank’s
business and functions, while the Company Secretary provides each newly appointed Director with relevant
corporate governance information.
Board members are reminded that the Company Secretary is at their disposal to provide any advice or service that
may be required in the discharge of their duties and responsibilities. The Company Secretary is responsible for
advising the Board, through the Chairman, on all governance matters. The Secretary is responsible for ensuring that
Board procedures are complied with as well as that effective information flows within the Board, its committees
and with Senior Management. The Secretary also facilitates induction and assists with professional development,
as required.
Directors are given the opportunity to update and develop their skills and knowledge, particularly through detailed
presentations, briefings and training by senior executives and other relevant Bank officials. They are invited to attend
training sessions organised specifically for the Board and are also informed of and encouraged to attend externally
run seminars throughout their directorship.
Furthermore, Directors have access to the advice and services of any advisors and also the external auditors. The
External Auditors are invited to attend all Audit & Risk Committee meetings as well as Board meetings when
required.
The Board continues to be mindful of the crucial importance of recruiting, retaining and motivating quality
management. The ongoing training and development of staff at all levels is considered of the utmost importance
and this also in the light of the need for orderly succession.
Principle 7: Evaluation of the Board’s Performance
An assessment exercise of the Board’s performance was carried out through a ‘self-evaluation’ questionnaire in which
Board members participated. Furthermore, assessment exercises of performance of the committees were also
carried out by virtue of ‘self-evaluation’ questionnaires completed by the members and some regular attendees
of the Audit & Risk Committee, the Assets & Liabilities Committee and the Credit Committee. These exercises also
included an evaluation of the Chairman of each respective Committee. These ‘self-evaluation’ questionnaires were
then analysed by the Suitabilities & Evaluations Committee established by the Board to report to the Board
accordingly. This exercise did not reveal the need for any material changes in the Bank’s governance structures
and organisation.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
50
Statement of Compliance with the Principles of Good Corporate Governance (continued)
Principle 8: Committees
The Board has appointed the following committees:
Audit & Risk Committee
The primary purpose of the Audit & Risk Committee is to protect the interests of the Bank’s shareholders and to
assist 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. The Committee assists the
Board in fulfilling its supervisory and monitoring responsibility for effective financial reporting, risk management,
control and governance and this by, inter alia, reviewing any financial information, statements and disclosures to be
issued, systems of governance, systems of internal control established by Management and the Board, the risk
management processes, the external and internal audit processes as well as the compliance processes. The Audit
& Risk Committee met seven (7) times during the period under review.
With respect to Risk Management, the Committee, inter alia, reviews reports from the Risk Management Function
which enable the Committee (and the Board) to consider the process of risk identification and management, to
assess the risks involved in the Bank’s business and to understand how they are controlled and monitored by
Management. The Committee also advises the Board on the Bank’s overall current and future risk appetite and
strategy and assists the Board in overseeing the implementation of that strategy by Management.
During the year under review, the Audit & Risk Committee was composed of the following four (4) non-executive
Board members three (3) of whom being independent: Michael C. Bonello, Graham A. Fairclough, Kimon Palamidis
and Peter Perotti in accordance with the Audit & Risk Committee’s Terms of Reference. As stated earlier, Graham
A. Fairclough resigned from his position as non-executive director with effect from 13 March 2024.
Kimon Palamidis is the Chairman of this Committee and is considered by the Board to be independent as
explained earlier on in this statement. Together with other members, he is also competent in accounting and /
or auditing in terms of the Capital Markets Rules. The Bank’s Head of Internal Audit and Chief Risk Officer attend
meetings of the Audit & Risk Committee. The Bank’s External Auditors and members of Senior Management and
others, including, inter alia, the Chief Executive Officer, the two Deputy Chief Executive Officers, the Chief Financial
Officer, and the Compliance Officer and Money Laundering Reporting Officer, are also invited to attend meetings as
is deemed necessary by the Committee. The Company Secretary acts as Secretary to the Audit & Risk Committee.
Assets & Liabilities Committee (ALCO)
Membership of this Committee is made up of a number of Chief Officers and senior officers, including from the
Finance and Treasury departments and the Corporate Advisory & Research and Asset and Fund Management
functions. The Chief Executive Officer chairs the ALCO whose main objective is to manage risks within approved
limits at the same time as maximising returns by efficient and judicious management of the Bank’s assets and
liabilities. Risk Management officials are also invited to attend meetings. A Secretary is appointed by the
Committee.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
51
Statement of Compliance with the Principles of Good Corporate Governance (continued)
Credit Committee
The Credit Committee is responsible for considering and approving credit applications within delegated limits of
authority. It is composed of a number of Chief Officers and senior officers. The Chief Executive Officer chairs this
Committee and a Secretary is appointed by the Committee.
Suitabilities & Evaluations Committee
This Committee is responsible for carrying out suitability assessments of nominated and existing Directors, Key
Function holders or any other persons as may be required and also assesses the Board’s annual performance and
that of its committees following the completion of the self-evaluations by the Board and committee members.
The Chairman of the Committee, Peter Perotti, is an independent non-executive Director and Committee member
and the Company Secretary acts as Secretary.
Remuneration Committee
The functions of the Remuneration Committee are carried out by the Board of Directors in view of the fact that the
remuneration of Directors for the holding of their office on the Board is not performance-related.
A separate ‘Remuneration Report’ features on page 56 of this Annual Report in compliance with the Principles.
Principle 9 and 10: Relations with Shareholders and Markets and Institutional Shareholders
The Bank fully appreciates the importance of maintaining open lines of communication with shareholders, the
markets and institutional shareholders. The Board, in this regard, considers that throughout the period under
review the Bank has continued to communicate appropriately by means of regular company announcements and
meetings with shareholders and other stakeholders as necessary. Ahead of the 2023 Rights Issue, the Bank sought
to provide shareholders and financial intermediaries with the relevant information also by virtue of Information
Sessions held in person which gave the opportunity to the relevant stakeholders to understand further the process
also by virtue of a presentation and to ask questions and seek clarifications as necessary.
The Bank also communicates with its shareholders with respect to its General Meetings. The documentation relative
to General Meetings is sent to all shareholders at least twenty-one (21) days prior to the holding of the Meeting.
The Bank’s website (www.lombardmalta.com), contains information about the Bank and its business and is
updated regularly.
It is therefore the Bank’s policy:
to publish information that can have a significant effect on the Bank’s share price through the Malta Stock
Exchange and immediately after on the Bank’s website;
to make other published information available to the public on the Bank’s website;
to strive for open, transparent communications;
to ensure continuity and high quality in the information disclosed; and
to be accessible to all stakeholders.
Minority shareholders are entitled to call special meetings should a minimum threshold of share ownership be
established in accordance with the Bank’s Memorandum and Articles of Association. Furthermore, minority
shareholders may formally present an issue to the Board if they own the predefined minimum threshold of shares.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
52
Statement of Compliance with the Principles of Good Corporate Governance (continued)
Principle 11: Conflicts of Interest
The Board of Directors recognises that its members have a primary responsibility to always act in the interest of the
Bank and its shareholders as a whole, irrespective of who appointed them to the Board.
Strict policies are in place, particularly in the Board of Directors’ Charter, to enable the management of conflict of
interest, both actual as well as potential, should the occasion arise.
In addition, the Bank’s Policy on the Prevention of Market Abuse was adopted and implemented in conformity with
Market Abuse laws and regulations. Directors and staff members are also regularly reminded of their obligations
when dealing in securities of the Bank and other scheduled financial instruments.
Joseph Said, who is a Director of the Bank, holds a directorship in two companies that have a shareholding in the
Group, as disclosed in the Directors’ Report.
Principle 12: Corporate Social Responsibility
The Bank is well aware of the need to adhere to accepted principles of corporate social responsibility and in this
regard remains fully committed to conducting its activities ethically at all times. It consistently seeks to contribute
to economic and social development while also improving the quality of life of its staff members and their families.
These principles also include matters concerning data privacy and protection, diversity and inclusion, talent
management, customer relations, innovation, community and staff engagement as well as responsible lending.
The Bank implements these principles of corporate social responsibility through strong governance and risk
management practices.
It extends support to various initiatives and projects together with direct community involvement. The Bank is also
sensitive to the fact that success in these areas requires investment in the community, customers and staff
members while not overlooking the impact that its activities may have on the environment.
C.
NON-COMPLIANCE WITH THE CODE
Principle 4: (Code Provision 4.2.7)
The above Code Provision states, ‘The Board should develop a succession policy for the future composition of the
Board of Directors and particularly of the executive component thereof, for which the Chairman should hold key
responsibility’.
In terms of law and the Bank’s Memorandum and Articles of Association, as stated earlier, the appointment of
Directors to the Board is a matter that is reserved to the Bank’s shareholders. Therefore, Board composition and size,
to an extent depend on the nominees proposed by shareholders as well as on their respective profiles and suitability.
The Bank also has a Qualifying Shareholder owning 49.01% of its shareholder base with rights pertaining to the
appointment of Directors. During the year under review, despite not having a formal consolidated Board Succession
Policy in place, the Board remained guided by its policy in this regard as set out in other relevant policies, applicable
laws, rules, regulations etc., its Board of Directors’ Charter, Terms of Reference of the Bank’s Suitability & Evaluations
Committee as well as the Bank’s Memorandum and Articles of Association. Furthermore, the Board continued to
remain on the alert to identify potentially suitable nominees who could be qualified to eventually succeed current
members and / or be added on as Board members. The concept of rotation of directors as currently stipulated in the
Bank’s Memorandum and Articles of Association also provides an element of continuity on the Board.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
53
Statement of Compliance with the Principles of Good Corporate Governance (continued)
During 2024, the Board of Directors shall be approving a consolidated Succession Policy document which is currently
being drafted and will serve as a dedicated document setting the basic principles to be adopted so as to ensure the
orderly succession of its directors, subject to the parameters of applicable laws, rules, regulations etc., and the Bank’s
Memorandum and Articles of Association.
Principle 8A: (Remuneration Committee)
The Board did not establish a Remuneration Committee as specified in Code Provision 8.A.1. In terms of Code
Provision 8.A.2 of the Principles, given that the remuneration of Directors for the holding of their office on the
Board is not performance-related, the functions of the Remuneration Committee are carried out by the Board of
Directors.
Principle 8B: (Nomination Committee)
A Nomination Committee has not been set up since the appointment of Directors to the Board is a matter that is
reserved entirely to the Bank’s shareholders in terms of the Memorandum and Articles of Association.
In this connection every member of the Bank holding in the aggregate at least fifteen percent (15%) of the ordinary
issued share capital of the Bank shall be entitled to appoint one (1) Director for each and every fifteen percent
(15%) of the ordinary issued share capital owned by that member.
Any fractional shareholding in excess of fifteen percent (15%) not applied in appointing such a Director or Directors,
and only that fraction, shall be entitled to vote in the election of the remaining Directors together with the
remaining body of shareholders. These are entitled to appoint the remaining Board members in accordance with
the provisions of the Bank’s statute.
This notwithstanding, in light of regulatory requirements, the Suitabilities & Evaluations Committee referred to
above was set up specifically to carry out suitability assessments of nominated and existing Directors, key function
holders or any other persons as may be required and also to assess the Board’s annual performance and that of its
committees. This Committee remains guided by applicable laws, rules, regulations and guidelines.
Principle 9: (Code Provision 9.3)
There are no procedures disclosed in the Bank’s Memorandum or Articles as recommended in Code Provision 9.3 to
resolve conflicts between minority shareholders and controlling shareholders.
D.
INTERNAL CONTROL (CAPITAL MARKETS RULE 5.97.4)
The Board is ultimately responsible for the Bank’s internal controls as well as their effectiveness, while authority to
operate the Bank is delegated to the Chief Executive Officer. The Bank’s system of internal controls is designed to
manage all the risks in the most appropriate manner. Such controls, however, cannot completely eliminate the
possibility of material error or fraud. The Board, therefore, assumes responsibility for executing the four basic roles
of corporate governance, i.e. accountability, monitoring, strategy formulation and policy development.
In summary, the Board is therefore responsible for:
reviewing the Bank’s strategy on an ongoing basis as well as setting the appropriate business objectives
in order to enhance value for all stakeholders;
appointing and monitoring the Chief Executive Officer whose function it is to manage the operations of the
Bank; and
identifying and ensuring that significant risks are managed satisfactorily.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
54
Statement of Compliance with the Principles of Good Corporate Governance (continued)
Given the fiduciary responsibility involved, the Board of Directors also sets high business and ethical standards for
adoption right across the organisation.
The Board upholds a policy of clear demarcation between its role and responsibilities and those of Management. It
has defined the level of authority that it retains over strategy formulation and policy determination together with
delegated authority and has vested accountability for the Bank’s day-to-day business in the Assets & Liabilities
Committee, Credit Committee and in the management team comprising of the:
•
Chief Executive Officer; and
•
Deputy Chief Executive Officers (effective from 1 April 2023);
•
Chief Officers and other officers.
The Board frequently participates in asset allocation decisions as well as credit proposals above a certain
threshold, after the appropriate recommendations have been made.
The Bank’s internal control framework covering all the Bank’s activities ensures:
•
effective and efficient operations and prudent conduct of business;
•
proper risk management;
•
reliable financial and non-financial information; and
•
compliance with all internal policies, processes and procedures, laws, rules and regulations.
To this effect, a three-lines-of-defence model has been adopted by the Bank as follows:
•
First line of defence – Business Units Operations: This is provided by front line staff members and business
unit management. The internal controls and systems, the culture and control environment developed and
implemented by these business units play a vital role in anticipating and managing operational risks.
•
Second line of defence - Risk Management & Compliance: The Bank maintains permanent and effective
compliance and risk management functions which report directly to the Audit & Risk Committee and Board of
Directors. The Compliance Function identifies, assesses and manages compliance risk. The Risk Management
Function is responsible for overseeing the Bank’s activities and for identifying, monitoring, controlling and
reporting such risk. Through the Bank’s Risk Management Framework, an appropriate balance is struck
between sound practices and profitability, by applying strict internal controls and discretionary limits, and
optimising the returns thereof, in line with the Bank’s risk appetite.
•
Third line of defence – Internal Audit: This is an integral part of the Bank’s control environment and provides
Management and the Audit & Risk Committee and Board of Directors with an independent and objective
review of the Bank’s business activities and support functions.
E.
GENERAL MEETINGS (CAPITAL MARKETS RULE 5.97.6)
General meetings are called by giving at least twenty-one (21) days’ notice and conducted in accordance with the
provisions contained in the Bank’s Articles of Association.
The ‘Ordinary Business’ which is dealt with at the Annual General Meeting consists of the adoption of the annual
financial statements, declaration of a dividend, appointment of Board members, appointment of auditors and the
fixing of their remuneration together with the voting of remuneration to the Directors for the holding of their
office. All other business shall be deemed ‘Special Business’.
All shareholders registered in the shareholders’ register on record date as defined in the Capital Markets Rules
have the right to attend, participate and vote in the general meeting.
A shareholder or shareholders holding not less than five per cent (5%) of the voting issued share capital of the Bank
may: (i) request the Bank to include items on the agenda and; (ii) table draft resolutions for items included in the
agenda of a general meeting. Such requests shall be submitted to the Bank at least forty-six (46) days before the
date set for the general meeting.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
55
Statement of Compliance with the Principles of Good Corporate Governance (continued)
Every shareholder shall be entitled to appoint only one (1) person to act as proxy holder to attend and vote at a
general meeting instead of him. The proxy holder shall enjoy the same rights to speak and ask questions in the
general meeting as those to which the member thus represented would be entitled.
Signed on behalf of the Bank's Board of Directors on 26 April 2024 by Michael C. Bonello (Chairman) and Joseph
Said (Director and Chief Executive Officer) as per the Directors' Declaration on ESEF Annual Financial Report
submitted in conjunction with the Annual Report and Financial Statements 2023.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
56
Remuneration Report
As indicated in the ‘Statement of Compliance with the Code of Principles of Good Corporate Governance’, in terms
of the ‘Code of Principles of Good Corporate Governance’ within the Capital Markets Rules issued by the Malta
Financial Services Authority, the Board of Directors performs the functions of a Remuneration Committee on the
basis that the remuneration of the Bank’s Directors for the holding of their office on the Board, is not performance-
related and does not include share options, pension benefits, profit-sharing arrangements or any emolument related
to the performance of the Bank. Among the obligations established in the Capital Markets Rules, the Board, where
applicable, carries out the main duties established in the Supporting Principles enshrined in Principle 8A of the ‘Code
of Principles of Good Corporate Governance’. This Remuneration Report was approved by the Board of Directors at
the Board Meeting held on 26 April 2024.
Directors
The Bank’s Remuneration Policy for Directors is drawn up in terms of the Capital Markets Rule 12.26A et seq and
sets out the Bank’s remuneration policy with respect to its Directors, Chief Executive Officer and Deputy Chief
Executive Officers with their remuneration being paid in accordance with the same. During 2023, this Policy was
reviewed and revised so as to include reference to Deputy Chief Executive Officers due to their appointments with
effect from 1 April 2023 and it was approved by the Annual General Meeting on 22 June 2023 (Refer to
https://www.lombardmalta.com/annual-general-meeting-2023).
This Policy is reviewed by the Board on an annual basis and shall be put to a vote by the General Meeting at every
material change and, in any case, at least every four years. No changes are being proposed for approval at the 2024
Annual General Meeting.
In terms of the Bank’s Memorandum and Articles of Association, the Bank’s shareholders determine the maximum
annual aggregate remuneration of the Directors. The maximum amount is established by resolution at each Annual
General Meeting of the Bank. The aggregate amount fixed for this purpose during the 2023 Annual General Meeting
was one hundred and twenty thousand euro (€120,000).
As per policy, members of the Board, in their role as directors, only receive a fixed fee, the amount of which is
determined on the basis of market practice as well as the Bank’s size and internal organisation and the nature, scale
and complexity of its activities and business model.
The fees paid to Directors for the holding of their office during 2023 amounted to € €92,794 (2022: €85,673). This
amount is within the limit of €120,000 approved by the Annual General Meeting of 22 June 2023.
It is confirmed that none of the Directors in their role as directors of the Bank are entitled to profit-sharing, share
options, pension benefits, variable remuneration, any other remuneration or related payments. During the year
under review, one Director (Graham A. Fairclough who resigned as non-executive director of the Bank with effect
from 13 March 2024 as indicated earlier in this Annual Report) provided specific services to the Group until 30
September 2023. Only one of the Directors has a service contract with the Bank, which Director is the only Executive
Director and is the CEO Joseph Said.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
57
Remuneration Report (continued)
In terms of Code Provisions 8.A.5 of the Malta Financial Services Authority Capital Markets Rules, the total
emoluments received by Directors relative to their directorship for the financial year 2023, as compared to 2022
and 2021, are specified below:
* John Bonello was appointed as a non-executive director of the Bank with effect from 23 October 2023.
** Michael Zammit was a non-executive director who passed away on 3 February 2022.
In determining the remuneration of the CEO and Deputy CEOs, the Board of Directors considers factors which
include among others, professional qualifications, experience, initiative, acumen, number of years of service, the
design and implementation of the overall business strategy, objectives and risk appetite at Bank as well as Group
level. The remuneration of the CEO and Deputy CEOs is fixed with no variable remuneration other than a
discretionary annual bonus which may be awarded as set out in the above-mentioned Policy.
The CEO and Deputy CEOs are also entitled to the use of a company car, health insurance and telecommunication
allowance.
In a previous financial year, the Bank had decided to grant the CEO an ex-gratia gratuity upon his eventual
retirement, which amount was fully provided for and reflected in the financial statements of previous years.
In terms of Code Provision 8.A.5 of the Capital Markets Rules, during financial year 2023, the total emoluments
received from the Group by the Executive Director amounted to €385,513 (2022: €362,718; 2021: €361,368), split
as follows:
€
€
€
2023
2022
2021
Gross annual, fixed salary & fixed role-based allowances
352,513
330,718
333,377
Director Fees - Lombard Bank Malta p.l.c.
15,000
15,000
10,991
Chairman / Director Fees MaltaPost p.l.c.
18,000
17,000
17,000
The total remuneration for 2023 of the Non-Executive Director who until 30 September 2023 provided specific
services to the Group, amounted to €76,118 (2022: €93,808; 2021: €81,229), split as follows:
€
€
€
2023
2022
2021
Payments for specific services
38,268
57,708
54,138
Director Fees – Lombard Bank Malta p.l.c.
15,000
15,000
10,991
Director Fees - MaltaPost p.l.c.
8,850
7,100
7,100
Company Secretary Fees - MaltaPost p.l.c.
4,000
4,000
4,000
Director Fees – Lombard Select SICAV p.l.c.
10,000
10,000
5,000
€
2023
€
2022
€
2021
Michael C. Bonello (Chairman)
30,000
30,000
25,480
John Bonello*
2,794
N/A
N/A
Graham A. Fairclough
15,000
15,000
10,991
Joseph Said
15,000
15,000
10,991
Michael Zammit**
N/A
N/A
10,991
Peter Perotti
15,000
10,673
N/A
Kimon Palamidis
15,000
15,000
10,991
Total
92,794
85,673
69,444
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
58
Remuneration Report (continued)
There is no formal provision for the reclamation of variable remuneration.
During the financial year 2023, the total emoluments received by the Deputy Chief Executive Officers, appointed on
the 1 April 2023, from the Group amounted to €208,698 split as follows:
€
€
€
2023
2022
2021
Gross annual & fixed salary
99,924
N/A
N/A
€
€
€
2023
2022
2021
Gross annual & fixed salary
99,924
N/A
N/A
Director Fees – MaltaPost p.l.c.
8,850
N/A
N/A
The above remuneration levels for 2023 comply with the provisions of the approved Remuneration Policy for
Directors and take into consideration the interests of all the Bank's stakeholders together with the external
context and there were no deviations from the procedure for the implementation of the said Policy.
Senior Management
Senior Management refers to the Chief Officers of the Bank, excluding the Chief Executive Officer and Deputy Chief
Executive Officers.
The Board of Directors is satisfied that the packages offered to Senior Management continue to ensure that the
Bank attracts and retains management staff with the necessary qualities and skills. The Bank’s policy remains that
of engaging its Senior Management staff on the basis of indefinite contracts of employment, and this after a period
of probation. The terms and conditions of employment of Senior Management are established in the relative
employment contracts. The applicable notice period, after probation, is that provided for in the relevant legislation.
Share options, share incentive schemes and profit sharing do not feature in the Bank’s Remuneration Policy, and
the individual contracts of employment of Senior Management do not contain provisions for termination payments
and / or other payments linked to early termination other than as determined by the law.
From time to time the Board of Directors of the Bank approves the allocation of a financial contribution towards
retirement gratuities that it may decide to grant and contribute towards a staff pension fund that may be formally
established in the future. Gratuities that it may make, on an ex-gratia basis, to its employees are made accordingly.
Amounts contributed for this purpose in respect of 2023 amounted to €100,000 (2022: €150,000). Once contributed,
these amounts are held in a separate bank account which is not controlled by the Bank and is therefore not included
in the Bank’s financial statements. Amounts intended as a contribution to an eventual pension fund will be regulated
by rules yet to be determined in light of relevant legislation. No other pension benefits are currently payable by the
Bank.
Senior Management staff are eligible for annual salary increases, which are not directly performance-related. The
remuneration of Senior Management staff members is determined also by the role, responsibilities covered, market
practice, seniority, experience and qualifications. Annual bonuses are paid to Senior Management staff members
according to individual overall performance during the previous financial year. Bonus payments do not exceed 100%
of the fixed component of the total remuneration for each individual.
Non-cash benefits include private health care insurance as well as death-in-service benefits and personal accident
insurance cover.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
59
Remuneration Report (continued)
Total emoluments received by Senior Management, excluding the CEO and Deputy CEOs, during the period under
review are as detailed below, in terms of Code Provision 8.A.5.
Fixed Remuneration
Variable Remuneration
Share Options
Others
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
€
€
€
€
€
€
€
€
€
€
€
€
478,146
769,000
568,000
116,000
88,000
98,000
-
-
-
-
-
-
For other employees, fixed pay is determined by a Collective Agreement and annual bonuses are differentiated by
individual performance and grade.
The changes effected in the Bank’s Remuneration Policy during the financial year under review were such as to
further align it with regulatory requirements. Furthermore, the Bank does not plan to effect changes in its
Remuneration Policy in the forthcoming financial year, unless required to do so in terms of any regulatory obligations
or otherwise.
In terms of Chapter 12 of the Capital Markets Rules, this Remuneration Report is being put to an advisory vote at
the 2024 Annual General Meeting in accordance with the requirements of the Capital Markets Rule 12.26 L.
The Directors’ Remuneration Report for 2022 was approved at the Annual General Meeting held on 22 June 2023.
There were no issues raised on the Report during the said Annual General Meeting.
Other information on remuneration in terms of Appendix 12.1 of the Capital Markets Rules
In terms of the requirements within Appendix 12.1 of the Capital Markets Rules, the following tables present the
annual change regarding each individual director’s remuneration, the performance of the Bank, and of average
remuneration on a full-time equivalent basis of employees of the Bank, other than Directors over the three most
recent financial years.
2023
€
2022
€
2021
€
% change
(2023-2022)
% change
(2022-2021)
Michael C. Bonello (Chairman)
30,000
30,000
25,480
0%
18%
John Bonello*
2,794
N/A
N/A
N/A
N/A
Graham A. Fairclough
15,000
15,000
10,991
0%
36%
Joseph Said
15,000
15,000
10,991
0%
36%
Kimon Palamidis
15,000
15,000
10,991
0%
36%
Peter Perotti
15,000
10,637
N/A
N/A
N/A
Michael Zammit**
N/A
N/A
10,991
N/A
N/A
Total
92,794
85,637
69,444
* John Bonello was appointed as a non-executive director of the Bank with effect from 23 October 2023.
** Michael Zammit was a non-executive director who passed away on 3 February 2022.
% annual change of the
Bank’s performance based
on profit before tax
(2023-2022)
% annual change of the
Bank’s performance based
on profit before tax
(2022-2021)
% annual change of the
average remuneration on
a full-time equivalent
basis of employees of the
Bank other than Directors
(2023-2022)
% annual change of the
average remuneration on
a full-time equivalent
basis of employees of the
Bank other than Directors
(2022-2021)
(52%)
136%
0%
4%
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
60
Remuneration Report (continued)
€'000
2023
2022
% change
Group
Bank
Group
Bank
Group
Bank
Employee remuneration (excluding CEO)
24,031
8,542
23,681
8,352
1%
2%
CEO remuneration
353
353
331
331
6%
6%
Entity’s performance – Profit before tax
14,526
13,850
27,676
28,767
(48%)
(52%)
€'000
2022
2021
% change
Group
Bank
Group
Bank
Group
Bank
Employee remuneration (excluding CEO)
23,681
8,352
24,027
7,862
(1%)
6%
CEO remuneration
331
331
333
333
(1%)
(1%)
Entity’s performance – Profit before tax
27,676
28,767
12,638
12,193
119%
136%
The Group’s / Bank’s performance is measured using Profit before tax.
The contents of the Remuneration Report have been reviewed by PricewaterhouseCoopers, the external auditors, to
ensure that the information required in terms of Appendix 12.1 to Chapter 12 of the Capital Markets Rules have been
included.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
61
Company Information
Number of shareholders analysed by range:
31 December 2023
31 March 2024
Range
Shareholders
Shares
Shareholders
Shares
1 – 500
115
20,736
114
20,611
501 – 1000
42
34,351
41
33,699
1001 – 5000
373
1,145,265
369
1,128,384
5001 and over
994
153,371,911
993
153,389,569
Total
1,524
154,572,263
1,517
154,572,263
The Bank has one class of shares and each share is entitled to one vote.
BOARD OF DIRECTORS
Michael C. Bonello
John Bonello
Chairman
Graham A. Fairclough
Kimon Palamidis
Peter Perotti
Joseph Said
COMPANY SECRETARY
Helena Said
SENIOR MANAGEMENT
Joseph Said
Anthony Bezzina
Eugenio Farrugia
Chief Executive Officer
Deputy Chief Executive Officer
Deputy Chief Executive Officer
David Attard
Chief Officer - Group Corporate Services
Moira Balzan
Carlos Camenzuli
Chief Financial Officer
Chief Risk Officer
Helena Said
Anthony Zahra
Chief Legal Officer
Chief Information Officer
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
62
Company Information (continued)
REGISTERED OFFICE
Tel: 25581 117
BRANCHES
43, Pitkali Road, Attard ATD 2219 Bertu Fenech Square, Balzan BZN 1409
Tel: 25581 560 Tel: 25581 500
82, St Sebastian Street, Qormi, QRM 2335 198, Naxxar Road, San Gwann SGN 9030
Tel: 25581 360 Tel: 25581 650
4, Fleur-De-Lys Junction, Santa Venera SVR 1587 41, Robert Arrigo Street, Sliema SLM 3174
Tel: 25581 300 Tel: 25581 251
225, Tower Road, Sliema SLM 1601 67, Republic Street, Valletta VLT 1117
Tel: 25581 260 Tel: 25581 100
Ninu Cremona Street, Victoria VCT 2561 19, Sanctuary Street, Zabbar, ZBR 1010
Tel: 25581 600 Tel: 25581 400
21, Gregorio Bonici Square, Zejtun ZTN 1051
Tel: 25581 245
24/7 OUTLET
Paceville Avenue, St. Julian’s STJ 3103
CREDIT
9A St. Fredrick Street, Valletta VLT 1470
Tel: 25581 115
HOME LOANS
4 Main Street, Qormi QRM 1100
Tel: 25581 370
INTERNATIONAL BUSINESS BANKING
Graham Street, Sliema SLM 1711
Tel: 25581 226
LEGAL OFFICE
59 Republic Street, Valletta VLT 1117
Tel: 25581 116
TRADE SERVICES
4 Main Street, Qormi QRM 1100
Tel: 25581 366
WEALTH MANAGEMENT
Financial Advice & Stockbroking Services: 225A, Tower Road, Sliema SLM 1601
Tel: 25581 167
Portfolio Management: 225A, Tower Road, Sliema SLM 1601
Tel: 25581 288
Research & Corporate Advisory: 225A, Tower Road, Sliema SLM 1601
Tel: 25581 287
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
63
Financial Statements
Statements of Financial Position
Group
Bank
Notes
2023
2022
2023
2022
€ 000
€ 000
€ 000
€ 000
Assets
Balances with Central Bank of Malta,
treasury bills and cash
5
146,308
138,393
Cheques in course of collection
1,880
1,053
Financial investments
6
214,505
218,286
Loans and advances to banks
7
33,605
20,936
Loans and advances to customers
8
758,304
711,613
Trade and other receivables
16
3,405
3,445
Accrued income and other assets
17
4,537
4,581
Assets classified as held for sale
8
703
703
Current tax assets
-
296
Inventories
15
639
602
Investments in subsidiaries
9
-
-
17,135
16,058
Investments in associates
10
1,645
1,645
Intangible assets
11
19
57
Property, plant and equipment
12
42,255
42,400
Deferred tax assets
14
11,381
10,552
1,236,320
146,308
Total assets
1,236,321
1,170,620
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
64
Statements of Financial Position (continued)
Group
Bank
Notes
2023
2022
2023
2022
€ 000
€ 000
€ 000
€ 000
Equity and Liabilities
Equity
Share capital
18
19,322
11,341
Share premium
19
56,534
18,530
Revaluation and other reserves
19
(1,297)
1,918
Retained earnings
111,444
100,204
Equity attributable to equity holders of the
Bank
186,003
131,993
Non-controlling interests
-
-
Total equity
186,003
131,993
Liabilities
Amounts owed to banks
20
145
535
Amounts owed to customers
21
1,021,254
1,010,100
Current tax liabilities
1,556
-
Accruals and deferred income
24
7,958
7,589
Other liabilities
23
16,236
17,220
Provisions for liabilities and other charges
22
369
383
Deferred tax liabilities
14
2,800
2,800
-
1,050,317
Total liabilities
1,050,318
1,038,627
Total equity and liabilities
1,236,321
1,170,620
Memorandum items
Contingent liabilities
25
14,315
13,610
Commitments
25
258,525
203,285
The notes on pages 72 to 196 are an integral part of these financial statements.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
65
Income Statements
Group
Bank
Notes
2023
2022
2023
2022
€ 000
€ 000
€ 000
€ 000
Interest receivable and similar income
- on loans and advances, balances with Central
Bank of Malta and treasury bills
26
31,492
26,455
- on debt and other fixed income instruments
26
2,094
2,450
Interest expense
26
(7,837 )
(6,744 )
(7,791)
(6,702)
Net interest income
25,795
22,203
Fee and commission income
27
4,475
4,569
Fee and commission expense
27
(288 )
(253 )
(288)
(253)
Net fee and commission income
4,187
4,316
Postal sales and other revenues
28
488
605
Dividend income
29
1,860
1,798
Net trading income
30
525
634
Other operating income
21
117
Operating income
32,876
29,673
Employee compensation and benefits
31
(24,384 )
(24,012 )
(8,895)
(8,683)
Other operating costs
33
(27,176 )
(20,867 )
(7,596)
(7,239)
Depreciation and amortisation
11,12
(3,159 )
(2,915 )
(1,219)
(1,121)
Net movement in provisions for liabilities and other
charges
22
(2 )
-
26
Net movement in expected credit losses
32
(1,261 )
(1,316)
16,111
Operating profit
13,850
28,767
Share of loss attributable to investment accounted for
using the equity method, net of tax
10
(315 )
(399 )
-
-
Profit before taxation
13,850
28,767
Income tax expense
34
(4,909 )
(10,050 )
(5,053)
(10,279)
Profit for the year
8,797
18,488
Attributable to:
Equity holders of the Bank
8,797
18,488
Non-controlling interests
-
-
Profit for the year
8,797
18,488
Earnings per share
35
€0.09
€0.19
The notes on pages 72 to 196 are an integral part of these financial statements.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
66
Statements of Comprehensive Income
Group
Bank
Notes
2023
2022
2023
2022
€ 000
€ 000
€ 000
€ 000
Profit for the year
8,797
18,488
Other comprehensive income
Items that may be subsequently reclassified to profit
or loss
Investments in debt securities measured at FVOCI
Net losses from changes in fair value, before tax
6
(2,380 )
(25,825 )
(2,243)
(25,483)
Net losses reclassified to profit or loss on disposal,
before tax
376
-
Net movements in credit losses released to profit or
loss, before tax
(55 )
(55)
62
Income taxes relating to these items
34
672
8,897
Items that will not be subsequently reclassified to
profit or loss
Net gains/(losses) from changes in fair value of
investments in equity instruments designated at
FVOCI, before tax
6
(1,717 )
1,123
(1,717)
Remeasurements of defined benefit obligations,
before tax
-
-
Income taxes relating to these items
34
(449 )
(393)
617
Other comprehensive income for the year, net of
income tax
(554 )
(17,794 )
(520)
(17,624)
Total comprehensive income for the year, net of
income tax
(168 )
8,277
864
Attributable to:
Equity holders of the Bank
(217 )
Non-controlling interests
Total comprehensive income for the year, net of
income tax
(168 )
The notes on pages 72 to 196 are an integral part of these financial statements.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
67
Statements of Changes in Equity
Group
Attributable to equity holders of the Bank
Revaluation
Non-
Share
Share
and other
Retained
controlling
Total
capital
premium
reserves
earnings
Total
interests
Equity
Notes
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
At 1 January 2022
Comprehensive income
Profit for the year
Other comprehensive income
Fair valuation of financial assets measured at FVOCI:
Net movements in fair value arising during the year
(17,909 )
(17,909 )
(96 )
(18,005 )
Reclassification adjustments:
- net movement attributable to changes in credit risk
Remeasurements of defined benefit obligations
Total other comprehensive income for the year
(17,747 )
(17,747 )
(47 )
(17,794 )
Total comprehensive income for the year
(17,747 )
(217 )
(168 )
Transfers and other movements
19
(1,282 )
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Dividends to equity holders
36
(873 )
(873 )
(429 )
(1,302 )
Bonus issue
18
(149 )
Total transactions with owners
(1,022 )
(873 )
(429 )
(1,302 )
At 31 December 2022
The notes on pages 72 to 196 are an integral part of these financial statements.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
68
Statements of Changes in Equity (continued)
Group
Attributable to equity holders of the Bank
Revaluation
Non-
Share
Share
and other
Retained
controlling
Total
capital
premium
reserves
earnings
Total
interests
Equity
Notes
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
At 1 January 2023
Comprehensive income
Profit for the year
Other comprehensive income
Fair valuation of financial assets measured at FVOCI:
Net movements in fair value arising during the year
(824 )
(824 )
(41 )
(865 )
Reclassification adjustments:
- net movement attributable to changes in credit risk
(36 )
(36 )
(36 )
- net amounts reclassified to profit or loss on disposal
Remeasurements of defined benefit obligations
Total other comprehensive income for the year
(542 )
(542 )
(12 )
(554 )
Total comprehensive income for the year
(542 )
Transfers and other movements
19
(2,695 )
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Dividends to equity holders
36
(305 )
(305 )
Rights issue of ordinary shares
18
Bonus issue
18
(252 )
Changes in ownership interests in subsidiaries that do not result in loss of control
Impacts of change in non-controlling interests in subsidiary
(100 )
(82 )
Total transactions with owners
(352 )
(223 )
At 31 December 2023
The notes on pages 72 to 196 are an integral part of these financial statements.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
69
Statements of Changes in Equity (continued)
Bank
Revaluation
Share
Share
and other
Retained
Total
capital
premium
reserves
earnings
Equity
Notes
€ 000
€ 000
€ 000
€ 000
€ 000
At 1 January 2022
11,192
18,530
20,828
81,452
132,002
Comprehensive income
Profit for the year
-
-
-
18,488
18,488
Other comprehensive income
Fair valuation of financial assets measured at FVOCI:
Net movements in fair value arising during the year
-
-
(17,664)
-
(17,664)
Reclassification adjustments:
- net movement attributable to changes in credit risk
-
-
40
-
40
Total other comprehensive income for the year
-
-
(17,624)
-
(17,624)
Total comprehensive income for the year
-
-
(17,624)
18,488
864
Transfers and other movements
19
-
-
(1,286)
1,286
-
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Dividends to equity holders
36
-
-
-
(873)
(873)
Bonus issue
18
149
-
-
(149)
-
Total transactions with owners
149
-
-
(1,022)
(873)
At 31 December 2022
11,341
18,530
1,918
100,204
131,993
The notes on pages 72 to 196 are an integral part of these financial statements.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
70
Statements of Changes in Equity (continued)
Bank
Revaluation
Share
Share
and other
Retained
Total
capital
premium
reserves
earnings
Equity
Notes
€ 000
€ 000
€ 000
€ 000
€ 000
At 1 January 2023
11,341
18,530
1,918
100,204
131,993
Comprehensive income
Profit for the year
-
-
-
8,797
8,797
Other comprehensive income
Fair valuation of financial assets measured at FVOCI:
Net movements in fair value arising during the year
-
-
(728)
-
(728)
Reclassification adjustments:
- net movement attributable to changes in credit risk
-
-
(36)
-
(36)
- net amounts reclassified to profit or loss on disposal
-
-
244
-
244
Total other comprehensive income for the year
-
-
(520)
-
(520)
Total comprehensive income for the year
-
-
(520)
8,797
8,277
Transfers and other movements
19
-
-
(2,695)
2,695
-
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Rights issue of ordinary shares
18
7,729
38,004
-
-
45,733
Bonus issue
18
252
-
-
(252)
-
Total transactions with owners
7,981
38,004
-
(252)
45,733
At 31 December 2023
19,322
56,534
(1,297)
111,444
186,003
The notes on pages 72 to 196 are an integral part of these financial statements.
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2023
71
Statements of Cash Flows
Group
Bank
2023
2022
2023
2022
Notes
€ 000
€ 000
€ 000
€ 000
Cash flows from operating activities
Interest, fees and commission receipts
35,614
30,918
Receipts from customers relating to
postal sales and other revenue
488
605
Interest, fees and commission payments
(7,757 )
(6,651 )
(7,759)
(6,651)
Payments to employees and suppliers
(58,653 )
(48,175 )
(16,248)
(15,302)
Cash flows attributable to funds collected on
behalf of third parties
-
-
Cash flows from operating profit before changes
in operating assets and liabilities
12,095
9,570
Movements in operating assets:
Treasury bills
(34,069 )
52,695
(34,069)
Balances with Central Bank of Malta
(6,130 )
(6,130)
7,245
Loans and advances to banks and customers
(47,557 )
(49,399 )
(48,157)
(52,799)
Other receivables
(763 )
(2,227 )
(829)
(2,236)
Movements in operating liabilities:
Amounts owed to banks and to customers
11,154
31,735
Other payables
(1,015 )
(949)
2,229
Net cash generated from/(used in) operating
activities, before tax
(33,105 )
19,879
(38,325)
Income tax paid
(3,989 )
(3,176 )
(3,171)
(2,392)
Net cash flows generated from/(used in)
operating activities
(36,281 )
16,708
(40,717)
Cash flows from investing activities
Dividends received
203
1,798
Interest received from debt securities
4,568
3,359
Purchase of financial investments
6
(8,359 )
(27,519 )
(8,359)
(27,519)
Proceeds from maturity/disposal of investments
9,779
5,194
Purchase of property, plant and equipment and
intangible assets
(2,657 )
(3,709 )
(900)
(1,660)
Investments in associates
10
(1,000 )
-
-
Investments in subsidiaries
9
-
(200)
Net cash flows generated from/(used in) investing
activities
(22,381 )
5,291
(19,028)
Cash flows from financing activities
Proceeds from rights issue of ordinary shares
45,733
-
Principal elements of lease payments
13
(491 )
(478 )
(194)
(162)
Dividends paid to equity holders of the Bank
36
(873 )
-
(873)
Dividends paid to non-controlling interests
(299 )
(429 )
-
-
Net cash flows generated from/(used in) financing
activities
(1,780 )
45,539
(1,035)
Net movement in cash and cash equivalents
(60,442 )
67,538
(60,780)
Cash and cash equivalents at beginning of year
100,898
161,678
Cash and cash equivalents at end of year
37
168,436
100,898
The notes on pages 72 to 196 are an integral part of these financial statements.
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
72
Notes to the Financial Statements
1. Summary of material accounting policies ................................................................................................. 73
2. Financial risk management........................................................................................................................ 87
3. Accounting estimates and judgements ................................................................................................... 158
4. Segmental information ............................................................................................................................ 161
5. Balances with Central Bank of Malta, treasury bills and cash ................................................................. 162
6. Financial investments .............................................................................................................................. 162
7. Loans and advances to banks .................................................................................................................. 164
8. Loans and advances to customers ........................................................................................................... 165
9. Investment in subsidiaries ....................................................................................................................... 165
10. Investment in associates ......................................................................................................................... 167
11. Intangible assets ...................................................................................................................................... 168
12. Property, plant and equipment ............................................................................................................... 169
13. Leases ...................................................................................................................................................... 173
14. Deferred tax assets and liabilities ............................................................................................................ 176
15. Inventories ............................................................................................................................................... 178
16. Trade and other receivables .................................................................................................................... 178
17. Accrued income and other assets ............................................................................................................ 178
18. Share capital ............................................................................................................................................ 179
19. Reserves ................................................................................................................................................... 180
20. Amounts owed to banks .......................................................................................................................... 181
21. Amounts owed to customers ................................................................................................................... 181
22. Provisions for liabilities and other charges .............................................................................................. 181
23. Other liabilities ........................................................................................................................................ 183
24. Accruals and deferred income ................................................................................................................. 183
25. Commitments and contingent liabilities .................................................................................................. 184
26. Net interest income ................................................................................................................................. 185
27. Net fee and commission income .............................................................................................................. 185
28. Postal sales and other revenues .............................................................................................................. 186
29. Dividend income ...................................................................................................................................... 186
30. Net trading income .................................................................................................................................. 186
31. Employee compensation and benefits ..................................................................................................... 186
32. Net movement in expected credit losses ................................................................................................ 187
33. Profit before taxation .............................................................................................................................. 188
34. Income tax expense ................................................................................................................................. 190
35. Earnings per share ................................................................................................................................... 191
36. Dividends ................................................................................................................................................. 192
37. Cash and cash equivalents....................................................................................................................... 192
38. Related parties ........................................................................................................................................ 193
39. Investor compensation scheme ............................................................................................................... 196
40. Statutory information .............................................................................................................................. 196
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
73
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
74
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
75
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
76
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
77
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
78
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
79
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
80
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
81
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
82
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
83
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
84
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
85
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
86
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
87
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
88
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
89
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
90
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
91
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
92
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
93
nKey audit matters
nce initial recognitio
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
94
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
95
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
96
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
97
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
98
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
99
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
100
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
101
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
102
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
103
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
104
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
105
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
106
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
107
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
108
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
109
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
110
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
111
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
112
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
113
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
114
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
115
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
116
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
117
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
118
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
119
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
120
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
121
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
122
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
123
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
124
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
125
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
126
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
127
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
128
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
129
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
130
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
131
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
132
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
133
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
134
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
135
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
136
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
137
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
138
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
139
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
140
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
141
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
142
2. Financial risk management (continued)
Bank
Average
effective
Between
Between
Carrying
interest
Less than
3 months
1 year
More than
Non-interest
amount
rate
3 months
and 1 year
and 5 years
5 years
bearing
As at 31 December 2023
€ 000
%
€ 000
€ 000
€ 000
€ 000
€ 000
Financial assets
Balances with Central Bank of Malta, treasury bills and cash
146,308
4.19
137,174
983
-
-
8,151
Debt and other fixed income instruments measured at FVOCI
197,700
1.01
1,474
26,682
96,611
72,933
-
Debt and other fixed income instruments measured at amortised cost
8,285
5.12
-
-
7,227
1,058
-
Loans and advances to banks
33,605
2.59
33,605
-
-
-
-
Loans and advances to customers
758,304
3.67
594,376
53,652
106,060
759
3,457
Total financial assets
1,144,202
766,629
81,317
209,898
74,750
11,608
Financial liabilities
Amounts owed to banks
145
0.22
134
-
-
-
11
Amounts owed to customers
1,021,254
1.09
488,764
105,285
167,407
77,571
182,227
Total financial liabilities
1,021,399
488,898
105,285
167,407
77,571
182,238
Interest repricing gap
277,731
(23,968)
42,491
(2,821)
Cumulative gap
277,731
253,763
296,254
293,433
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
143
2. Financial risk management (continued)
Bank
Average
effective
Between
Between
Carrying
interest
Less than
3 months
1 year
More than
Non-interest
amount
rate
3 months
and 1 year
and 5 years
5 years
bearing
As at 31 December 2022
€ 000
%
€ 000
€ 000
€ 000
€ 000
€ 000
Financial assets
Balances with Central Bank of Malta, treasury bills and cash
138,393
2.15
110,881
21,238
-
-
6,274
Debt and other fixed income instruments measured at FVOCI
210,862
1.11
1,682
4,747
120,384
84,049
-
Loans and advances to banks
20,936
-
20,936
-
-
-
-
Loans and advances to customers
711,613
3.73
576,811
40,546
80,374
10,047
3,835
Total financial assets
1,081,804
710,310
66,531
200,758
94,096
10,109
Financial liabilities
Amounts owed to banks
535
0.16
535
-
-
-
-
Amounts owed to customers
1,010,100
0.87
480,024
85,609
192,235
78,368
173,864
Total financial liabilities
1,010,635
480,559
85,609
192,235
78,368
173,864
Interest repricing gap
229,751
(19,078)
8,523
15,728
Cumulative gap
229,751
210,673
219,196
234,924
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
144
2. Financial risk management (continued)
At the end of the reporting periods the interest rate profile of the Bank’s interest-bearing financial
instruments was:
Bank
Fixed rate
Variable rate
2023
2022
2023
2022
€ 000
€ 000
€ 000
€ 000
Interest-bearing assets
Balances with Central Bank of Malta and treasury bills
129,737
123,872
8,420
8,247
Debt and other fixed income instruments measured at:
FVOCI
197,700
210,862
-
-
Amortised cost
8,285
-
-
-
Loans and advances to banks
16,298
-
17,307
20,936
Loans and advances to customers
168,298
132,948
586,548
574,830
520,318
467,682
612,275
604,013
Interest-bearing liabilities
Amounts owed to banks
23
23
112
512
Amounts owed to customers
432,121
392,296
406,906
443,940
432,144
392,319
407,018
444,452
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
145
2. Financial risk management (continued)
Bank
2023
2022
€ 000
€ 000
(+) 250 bp
4,947
3,989
(-) 250 bp
(4,947)
(3,989)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
146
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
147
2. Financial risk management (continued)
The following tables summarise the Bank’s exposures to foreign currency risk. Included in the tables are
the entity’s financial instruments which are subject to foreign exchange risk at carrying amounts,
categorised by currency.
Bank
Total
EUR
GBP
USD
Other
€ 000
€ 000
€ 000
€ 000
€ 000
At 31 December 2023
Financial assets
Balances with Central Bank of Malta,
treasury bills and cash
146,308
124,136
220
21,932
20
Financial investments measured at FVOCI
206,220
192,214
4,915
9,091
-
Financial investments measured at amortised cost
8,285
8,285
-
-
-
Loans and advances to banks
33,605
6,563
4,099
20,136
2,807
Loans and advances to customers
758,304
749,956
7,201
1,143
4
Other assets
7,906
7,509
91
305
1
Total financial assets
1,160,628
1,088,663
16,526
52,607
2,832
Financial liabilities
Amounts owed to banks
145
145
-
-
-
Amounts owed to customers
1,021,254
949,930
16,400
52,128
2,796
Other liabilities
25,749
25,509
142
87
11
Total financial liabilities
1,047,148
975,584
16,542
52,215
2,807
Net currency position
113,079
(16)
392
25
Commitments and contingent liabilities
272,734
271,027
1,164
543
-
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
148
2. Financial risk management (continued)
Bank
Total
EUR
GBP
USD
Other
€ 000
€ 000
€ 000
€ 000
€ 000
At 31 December 2022
Financial assets
Balances with Central Bank of Malta,
treasury bills and cash
138,393
92,746
21,624
24,017
6
Financial investments measured at FVOCI
218,286
199,294
6,338
12,654
-
Loans and advances to banks
20,936
3,191
5,300
8,104
4,341
Loans and advances to customers
711,613
706,057
4,594
962
-
Other assets
7,396
6,839
86
471
-
Total financial assets
1,096,624
1,008,127
37,942
46,208
4,347
Financial liabilities
Amounts owed to banks
535
535
-
-
-
Amounts owed to customers
1,010,100
921,440
38,334
45,962
4,364
Other liabilities
24,809
24,226
108
463
12
Total financial liabilities
1,035,444
946,201
38,442
46,425
4,376
Net currency position
61,926
(500)
(217)
(29)
Commitments and contingent liabilities
216,717
215,286
432
999
-
Under the scenario that the euro appreciates by 20% against all currencies the effect would result in a
decrease of €80,000 (2022: €149,000) in the carrying amount of financial instruments with the adverse
impact recognised in profit or loss. Should the euro depreciate against all currencies by 20%, the effect
would result in a gain of €80,000 (2022: €149,000) in the carrying amount of financial instruments and the
favourable impact would be recognised in profit or loss.
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
149
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
150
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
151
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
152
2. Financial risk management (continued)
Between
Between
Less than
3 months
1 year and
More than
No maturity
Bank
3 months
and 1 year
5 years
5 years
date
Total
As at 31 December 2023
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
Financial assets
Balances with Central Bank of Malta, treasury bills and cash
137,967
983
-
-
7,358
146,308
Financial investments measured at FVOCI
1,475
26,682
96,611
72,932
8,520
206,220
Financial investments measured at amortised cost
-
-
7,227
1,058
-
8,285
Loans and advances to banks
33,605
-
-
-
-
33,605
Loans and advances to customers
137,556
49,065
140,617
431,066
-
758,304
Other assets
5,283
2,379
-
-
244
7,906
Total financial assets
315,886
79,109
244,455
505,056
16,122
1,160,628
Financial liabilities
Amounts owed to banks
145
-
-
-
-
145
Amounts owed to customers
670,991
105,285
167,407
77,571
-
1,021,254
Other liabilities
12,923
594
1,269
6,378
4,585
25,749
Total financial liabilities
684,059
105,879
168,676
83,949
4,585
1,047,148
Maturity gap
(368,173)
(26,770)
75,779
421,107
Cumulative gap
(368,173)
(394,943)
(319,164)
101,943
As at 31 December 2022
Financial assets
Balances with Central Bank of Malta, treasury bills and cash
109,629
21,238
-
-
7,526
138,393
Financial investments measured at FVOCI
1,682
4,747
120,384
84,049
7,424
218,286
Loans and advances to banks
20,936
-
-
-
-
20,936
Loans and advances to customers
146,698
29,675
157,474
377,766
-
711,613
Other assets
4,628
2,379
-
-
389
7,396
Total financial assets
283,573
58,039
277,858
461,815
15,339
1,096,624
Financial liabilities
Amounts owed to banks
535
-
-
-
-
535
Amounts owed to customers
653,888
85,609
192,235
78,368
-
1,010,100
Other liabilities
12,049
28
1,453
7,160
4,119
24,809
Total financial liabilities
666,472
85,637
193,688
85,528
4,119
1,035,444
Maturity gap
(382,899)
(27,598)
84,170
376,287
Cumulative gap
(382,899)
(410,497)
(326,327)
49,960
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
153
2. Financial risk management (continued)
Bank
Between
Between
Less than
3 months
1 year
More than
3 months
and 1 year
and 5 years
5 years
Total
As at 31 December 2023
€ 000
€ 000
€ 000
€ 000
€ 000
Financial liabilities
Amounts owed to banks
145
-
-
-
145
Amounts owed to customers
671,702
107,363
177,459
90,185
1,046,709
Other liabilities
12,928
795
2,517
5,328
21,568
Total financial liabilities
684,775
108,158
179,976
95,513
1,068,422
As at 31 December 2022
Financial liabilities
Amounts owed to banks
535
-
-
-
535
Amounts owed to customers
654,111
87,922
206,229
87,297
1,035,559
Other liabilities
12,049
208
2,734
6,212
21,203
Total financial liabilities
666,695
88,130
208,963
93,509
1,057,297
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
154
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
155
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
156
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
157
2. Financial risk management (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
158
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
159
3. Accounting estimates and judgements (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
160
3. Accounting estimates and judgements (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
161
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
162
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
163
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
164
6. Financial investments (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
165
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
166
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
167
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
168
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
169
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
170
12. Property, plant and equipment (continued)
Bank
Land and
Computer
buildings
equipment
Other
Total
€ 000
€ 000
€ 000
€ 000
At 1 January 2022
Cost
41,910
2,709
2,919
47,538
Accumulated depreciation
(1,394)
(2,131)
(2,428)
(5,953)
Net book amount
40,516
578
491
41,585
Year ended 31 December 2022
At 1 January 2022
40,516
578
491
41,585
Additions
797
560
275
1,632
Disposals
-
(40)
(14)
(54)
Adjustments to right-of-use assets
212
-
-
212
Depreciation charge for the year
(608)
(279)
(141)
(1,028)
Depreciation released on disposals
-
40
13
53
At 31 December 2022
40,917
859
624
42,400
At 31 December 2022
Cost or valuation
42,919
3,229
3,180
49,328
Accumulated depreciation
(2,002)
(2,370)
(2,556)
(6,928)
Net book amount
40,917
859
624
42,400
Year ended 31 December 2023
At 1 January 2023
40,917
859
624
42,400
Additions
318
457
245
1,020
Disposals
-
(11)
(20)
(31)
Adjustments to right-of-use assets
18
-
-
18
Depreciation charge for the year
(592)
(404)
(185)
(1,181)
Depreciation released on disposals
-
11
18
29
At 31 December 2023
40,661
912
682
42,255
At 31 December 2023
Cost or valuation
43,255
3,675
3,405
50,335
Accumulated depreciation
(2,594)
(2,763)
(2,723)
(8,080)
Net book amount
40,661
912
682
42,255
In 2023, the adjustments to the Group’s right-of-use assets referred to in the table above, comprise the
impacts of the reassessment of the lease term in respect of lease extensions in respect of lease agreements
of MaltaPost p.l.c, which resulted in an increase in right-of-use assets of €503,000.
The adjustment to the Bank’s right-of-use assets pertains to a specific lease contract resulting in an increase
in right-of-use assets of €18,000.
In 2022, the adjustments to right-of-use assets referred in the tables above, consist of the impacts of
reassessment of lease payments, determined on the basis of an index. These comprise adjustments of the
future lease payments based on the NSO Index of Inflation for the Housing (Decontrol) Ordinance in
accordance with the respective lease agreement which resulted in an increase in right-of-use assets of
€212,000.
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
171
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
172
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
173
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
174
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
175
13. Leases (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
176
Bank
Deferred tax asset, after offsetting
Differences between depreciation
and capital allowances
-
(140)
(140)
-
(134)
(134)
Provisions for liabilities and
charges
119
-
119
119
-
119
Credit loss allowances
4,353
-
4,353
3,778
-
3,778
Fair value movements on financial
investments
7,049
-
7,049
6,789
-
6,789
11,521
(140)
11,381
10,686
(134)
10,552
Deferred tax liability
Revaluation of property
-
(2,800)
(2,800)
-
(2,800)
(2,800)
-
(2,800)
(2,800)
-
(2,800)
(2,800)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
177
14. Deferred tax assets and liabilities (continued)
Bank
Differences between depreciation and capital allowances
(117)
(17)
-
(134)
(6)
-
(140)
Provisions for liabilities and charges
128
(9)
-
119
-
-
119
Credit loss allowances
9,274
(5,474)
(22)
3,778
556
19
4,353
Revaluation of property
(2,800)
-
-
(2,800)
-
-
(2,800)
Fair value movements on investments
(2,747)
-
9,536
6,789
-
260
7,049
-
2
3,738
(5,500)
9,514
7,752
550
279
8,581
The recognised deferred tax assets and liabilities are expected to be recovered or settled principally after more than twelve months from the end of the reporting period. The deferred
tax liabilities reflected in other comprehensive income relate principally to the revaluation of property, plant and equipment and the fair valuation of investments measured at FVOCI
(note 34).
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
178
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
179
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
180
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
181
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
182
22. Provisions for liabilities and other charges (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
183
22. Provisions for liabilities and other charges (continued)
Bank
2023
2022
Legal
Expected
Credit Loss
Legal
Expected
Credit Loss
claims
allowance
Total
claims
allowance
Total
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
At 1 January
340
43
383
366
69
435
Reversal recognised in profit or loss
-
-
-
(26)
-
(26)
Change in ECL provision on off-
balance sheet items
-
(14)
(14)
-
(26)
(26)
At 31 December
340
29
369
340
43
383
In addition, the Bank is also a defendant in legal actions by other customers as a result of which the
Directors are of the opinion that no liability will arise.
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
184
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
185
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
186
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
187
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
188
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
189
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
190
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
191
34. Income tax expense (continued)
2023
2022
Before tax
Tax credit/
(charge)
Net of tax
Before tax
Tax credit/
(charge)
Net of tax
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
Bank
Fair valuation of financial
assets measured at FVOCI:
- Net changes in fair value
(1,120)
392
(728)
(27,200)
9,536
(17,664)
- Reclassification
adjustments to profit or
loss upon disposal
376
(132)
244
-
-
-
- Net movement attributable
to change in credit risk
(55)
19
(36)
62
(22)
40
(799)
279
(520)
(27,138)
9,514
(17,624)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
192
35. Earnings per share (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
193
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
194
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
195
38. Related parties (continued)
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2023
196
39. Investor compensation scheme
In accordance with the requirements of the Investor Compensation Scheme Regulations, 2003 issued
under the Investment Services Act, 1994 (Chapter 370 of the Laws of Malta) licence holders are required
to transfer a variable contribution to an Investor Compensation Scheme Reserve and place the equivalent
amount with a bank, pledged in favour of the Scheme. Alternatively licence holders can elect to pay the
amount of variable contribution directly to the Scheme. Lombard Bank Malta p.l.c. has elected to pay the
amount of the variable contribution directly to the Scheme.
40. Statutory information
Lombard Bank Malta p.l.c. is a public limited liability company domiciled and incorporated in Malta
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
197
Additional Regulatory Disclosures
1. Risk management
1.1 Overview of risk disclosures
The Additional Regulatory Disclosures seek to increase public disclosure with respect to a bank’s capital
structure and adequacy as well as its risk management policies and practices. These disclosures have been
prepared by the Bank in accordance with the Pillar III quantitative and qualitative disclosure requirements
as governed by Banking Rule BR/07: Publication of Annual Report and Audited Financial Statements of
Credit Institutions authorised under the Banking Act, 1994, issued by the Malta Financial Services Authority.
These disclosures are published by the Bank on an annual basis as part of the Annual Report. The rule
follows the disclosure requirements of Directive 2013/36/EU (Capital Requirements Directive) and EU
Regulation No. 575/2013 (Capital Requirements Regulation) of the European Parliament and of the Council
of 26 June 2013.
Consistent with the requirements of banking regulations, these disclosures are not subject to an external
audit, except to the extent that any disclosures are equivalent to those made in the Financial Statements
which have been prepared in accordance with the requirements of International Financial Reporting
Standards (‘IFRS’) as adopted by the EU. The Bank is satisfied that internal verification procedures ensure
that these Additional Regulatory Disclosures are presented fairly.
1.2 Risk Management Framework
The Board of Directors has overall responsibility for the establishment and oversight of the Bank’s risk
management framework.
To enhance its risk oversight efforts, the Board of Directors established an Audit & Risk Committee with a
mandate to supervise and monitor inter alia, the Bank’s compliance with its risk management policies and
procedures, review any financial information, statements and disclosures to be issued and the adequacy of
the Bank’s risk management framework, including its risk appetite statement and strategy.
The Bank has also established the Assets & Liabilities Committee (‘ALCO’) and the Credit Committee that
are responsible for developing the Bank’s risk management policies in their specific areas.
The Bank also has an independent Risk Management function as the Bank's second line of defence and
independent of operations which also reports directly to the ARC and is represented during meetings of the
above-mentioned committees. It is responsible for ensuring that the Bank's Risk Management Policy, Risk
Appetite Statement and any other guidelines support the Bank’s objectives. It is also responsible for further
identifying any unmitigated risks and for formulating suitable action plans for their treatment. The function
monitors the high-level principles that guide staff in its day-to-day management of risk through oversight
of policies, limits, procedures, processes and systems as well as by using methods and tools for risk
measuring, monitoring, controlling and reporting.
The Bank considers risk management a core competency that helps produce consistently high returns for
its various stakeholders. The Bank’s business involves taking on risks in a targeted manner and managing
them professionally. The Bank aims to manage all major types of risk by applying methods that meet best
practice. The Bank considers it important to have a clear distribution of responsibilities within risk
management. One of the main tasks of the Bank’s executive management is to set the framework for this
area. The core functions of the Bank’s risk management are to identify all key risks for the Bank, measure
these risks, manage the risk positions and determine capital allocations. The Bank regularly reviews its risk
management policies and systems to reflect changes in markets, products and best market practice.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
198
1. Risk management (continued)
An understanding of risk-taking and transparency in risk-taking are key elements in the Bank’s business
strategy and thus in its ambition to be a strong financial institution. The Bank’s internal risk management
processes support this objective.
Risk management within the Bank is mainly carried out on a unified basis, using an integrated and global
framework. This framework is based on local and international guidelines, such as the Basel III Accord and
corresponding Directives and Regulations of the European Union, including technical standards, as well as
on contemporary international banking practices guided by the Basel Committee on Banking Supervision.
The Bank has adopted the Standardised Approach and the Basic Method with respect to the calculation of
capital requirements and management of credit and foreign exchange risk respectively, as well as the Basic
Indicator Approach with respect to operational risk.
The Bank’s risk management policies are established to identify and analyse the risks faced by the Bank, to
set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management
policies and systems are reviewed regularly to reflect changes in market conditions, products and services
offered. The Bank, through its training and management standards and procedures, aims to develop a
disciplined and constructive control environment, in which all employees understand their roles and
obligations.
The Board deems the risk management framework adopted by the Bank to be adequate and gives assurance
to the Bank’s stakeholders that the risk management systems are appropriate in relation to the Bank’s risk
profile and strategy.
The Bank’s different operational functions, on an entity-wide basis, are primarily responsible for risk
management procedures and activities in their respective areas. All the operational functions have a
primary role in risk management at Bank-wide level. The Risk Management Function provides oversight,
independently from operations. The Bank’s risk management is implemented and handled properly by the
operational functions. The Bank’s Internal Audit Function, through verification, ensures that effective risk
management procedures and activities are adequately designed and operating as prescribed.
1.3 Board appointed Committees
The Bank’s Board of Directors is responsible for ensuring that adequate processes and procedures exist to
ensure effective internal control systems for the Bank. These internal control systems ensure that decision-
making capability and the accuracy of the reporting and financial results are maintained at a high level at
all times. The Board assumes responsibility for:
- setting business objectives, goals and the general strategic direction for Management with a view to
maximise value;
- selecting and appointing the Chief Executive Officer who is entrusted with the day-to-day operations of
the Bank;
- management of the Bank’s operations, as well as appointment of members of Management;
- ensuring that significant business risks are identified and appropriately managed; and
- setting the highest business standards and code for ethical behaviour, and monitoring performance in
this respect.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
199
1. Risk management (continued)
In deciding how best to discharge its responsibilities, the Board upholds a policy of clear demarcation
between its role and responsibilities and those of Management. It has defined the level of authority that it
retains over strategy formulation and policy determination, and delegated authority and vested
accountability for the Bank’s day-to-day business in the Assets & Liabilities Committee and Credit
Committee and, for the Bank’s day-to-day operations, in an Executive Team comprising the Chief Executive
Officer and Chief Officers. The Audit & Risk Committee reviews the processes and procedures to ensure the
effectiveness of the Bank’s system of internal control, as well as the implementation of the Board’s risk
strategy by Management. The Audit & Risk Committee is supported by the Internal Audit, Risk Management
and Compliance functions.
The ALCO monitors the Bank’s financial performance, considers investment policy and overseas
counterparty limits. Membership of this Committee is made up of a number of Chief Officers and Senior
Managers including managers from Finance and Treasury Departments. The Chief Executive Officer is
Chairman of ALCO and retains primary responsibility for asset and liability management. The ALCO oversees
risk management practices in relation to asset and liability management.
The Credit Committee considers the development of general lending principles and oversees risk
management practices in lending operations. The Credit Committee is chaired by the Chief Executive Officer
and is composed of other Chief Officers as well as other Senior Officers.
The Audit & Risk Committee assists the Board in fulfilling its supervisory and monitoring responsibility by
reviewing the financial statements and disclosures, the system of internal control established by
management as well as the external and internal audit processes. The Audit & Risk Committee is also
responsible for monitoring compliance with the Bank’s risk management policies and procedures, and for
reviewing the adequacy of the risk management framework in relation to the risks faced by the Bank.
The Bank’s independent Internal Audit Department reviews the adequacy and proper operation of internal
controls in individual areas of operation and reports its findings to the Audit & Risk Committee. The Internal
Audit Function carries out both regular and ad-hoc reviews of risk management controls and procedures,
in both cases reporting its findings.
The Bank has an appropriate organisational structure for planning, executing, controlling and monitoring
business operations in order to achieve the Bank’s objectives.
Authority to operate the Bank and its subsidiaries is delegated to the Chief Executive Officer within the
limits set by the Board. The Board is ultimately responsible for the Bank’s system of internal control and for
reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to
achieve business objectives, and can provide only reasonable, and not absolute, assurance against material
misstatement or loss.
The Bank is committed to the highest standards of business conduct and seeks to maintain these standards
across all of its operations. Bank policies and procedures are in place for the reporting and resolution of
fraudulent activities.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
200
1. Risk management (continued)
1.4 Key risk components
The Bank’s Board of Directors is empowered to set out the overall risk policies and limits for all material risk
types. The Board also decides on the general principles for managing and monitoring risks.
To ensure coherence between the Bank’s strategic considerations regarding risk-taking and day-to-day
decisions, from time to time, the Bank establishes its risk appetite as a strategic tool. Risk appetite is the
maximum risk that the Bank is willing to assume to meet business targets. The Bank’s risk appetite is set in
a process based on a thorough analysis of its current risk profile. The Bank identifies a number of key risk
components and for each determines a target that represents the Bank’s views on the component in
question.
In terms of the CRR, an ‘exposure’ is the amount at risk arising from the reporting credit institution's assets
and off-balance sheet instruments. Consistent with this, an exposure would include the amount at risk
arising from the Bank’s:
- claims on a customer including actual and potential claims which would arise from the drawing down in
full of undrawn advised facilities, which the Bank has committed itself to provide;
- contingent liabilities arising in the normal course of business, and those contingent liabilities which
would arise from the drawing down in full of undrawn advised facilities which the Bank has committed
itself to provide; and
- other on and off-balance sheet financial assets and commitments.
The Bank is exposed to a number of risks, which it manages at different organisational levels.
The main categories of risk are:
- Credit risk: Credit risk stems from the possible non-prompt repayment or non-payment of existing and
contingent obligations by the Bank’s counterparties, resulting in the loss of equity and profit. It
comprises the risk that deterioration in the financial condition of a borrower will cause the asset value
to decrease or be extinguished. Country risk and Settlement risk are included in this category. Country
risk refers to the risk of losses arising from economic or political changes that affect the country from
which the asset originates. Settlement risk refers to the risk of losses through failure of the counterparty
to settle outstanding dues on the settlement date owing to bankruptcy or other causes.
- Market risk: Risk of losses arising from unfavourable changes in the level and volatility of interest rates,
foreign exchange rates or investment prices.
- Liquidity risk: Liquidity risk may be divided into two sub-categories:
o Market (product) liquidity risk: Risk of losses arising from difficulty in accessing a product or market
at the required time, price and volume.
o Funding liquidity risk: Risk of losses arising from a timing mismatch between investing, placements
and fund raising activities resulting in obligations missing the settlement date or satisfied at higher
than normal rates.
- Operational risk: Risk of loss resulting from the lack of skilful management or good governance within
the Bank and the inadequacy of internal control, which might involve internal operations, staff, systems
or external occurrences that in turn affect the income and capital funds of financial institutions. The
Bank has adopted an operational risk management framework and procedures, which provide for the
identification, assessment, management, monitoring and reporting of the Bank’s operational risks.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
201
1. Risk management (continued)
1.5 Risk statement by the Board of Directors
The Bank’s business model throughout the years has been that of retaining a stable deposit base and
granting credit principally to the commercial real estate sector, particularly because the Board strongly
believes that despite the increased capital requirements introduced by the CRR, an active commercial real
estate market is a fundamental source of employment and economic growth in Malta. Nonetheless, the
Bank is conscious of the risks involved in commercial real estate lending, and thus ensures it prices loans by
reference to underlying risks. In this respect, the Bank’s return on assets, expressed as a percentage of profit
after tax to average total assets, for the reporting period ended 31 December 2023 amounts to 0.7%.
In this respect, the loan loss coverage ratio, calculated as provisions for impairment on non-performing
exposures to total non-performing exposures, which as at 31 December 2023, amounted to 27.3% differs
from that experienced within the sector, which generally tends to fluctuate between 50% to 55%. This
clearly illustrates the robustness of the Bank’s risk management practices particularly in respect of credit
risk.
2. Credit risk
2.1 Introduction to Credit risk
Credit risk is the risk of suffering financial loss, should any of the Bank’s customers, clients or market
counterparties fail to fulfil their contractual obligations to the Bank. Credit risk arises mainly from
commercial and consumer loans and advances and loan commitments arising from such lending activities,
but can also arise from credit enhancement provided, such as financial guarantees, letters of credit,
endorsements and acceptances.
Credit risk constitutes the Bank’s largest risk in view of its significant lending and securities portfolios, which
are monitored in several ways. The Bank is fully aware of such risk and places great importance on its
effective management.
The Bank allocates considerable resources in ensuring the ongoing compliance with approved credit limits
and to monitor its credit portfolio. In particular, the Bank has a fixed reporting cycle to ensure that the
relevant management bodies, including the Board of Directors and the Executive Team, are kept informed
on an ongoing basis of developments in the credit portfolio, non-performing loans and other relevant
information.
2.2 Credit risk management
The Board of Directors has delegated the responsibility for the monitoring of management of credit risk to
the Credit Committee. The granting of a credit facility is based on the Bank’s insight into the customer’s
financial position, which is reviewed regularly to assess whether the basis for the granting of credit has
changed. Furthermore, the customer must be able to demonstrate a reasonable ability to repay the debt.
Approval limits are graded starting from authorised staff members and leading up to the Credit Committee
and the Board of Directors depending on the size and the particular risk attached to the loan. Facilities are
generally adequately secured either by property and/or guarantees and are reviewed periodically by
Management both in terms of the exposure to the Bank and to ensure that security is still valid.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
202
2. Credit risk (continued)
The Bank’s Credit Department is responsible for undertaking and managing credit risk in relation to the
entity’s lending activities; covering all the stages in the lending cycle comprising credit proposal, loan
approval, effecting advances, credit and collateral monitoring, processing repayments and credit recovery
procedures. The Bank manages, limits and controls concentrations of credit risk arising from loans and
advances wherever they are identified − in particular, to individual customers and groups, and to industry
sectors. Such risks are monitored on a revolving basis and subject to frequent review, as considered
necessary. The exposure to any one borrower is further restricted by sub-limits covering on and off-balance
sheet exposures. Actual exposures against limits are monitored at end of day on a daily basis and on a real-
time basis too. As highlighted previously, the Bank’s reporting framework with respect to lending credit
risk is comprehensive with regular reporting by the Credit Department to the Board, Credit Committee and
Executive Team on adherence to limits, activity levels, performance measures and specific credit risk
events.
In order to minimise the credit risk undertaken, counterparty credit limits may be defined, which consider
a counterparty’s creditworthiness, the value of collateral and guarantees which can reduce the overall
credit risk exposure, as well as the type and the duration of the credit facility. In order to examine a
counterparty’s creditworthiness, the following are considered: country risk, quantitative and qualitative
characteristics, as well as the industry sector in which the counterparty operates. The Bank has set limits of
authority and has segregated duties so as to maintain impartiality and independence during the approval
process and control for new and existing credit facilities.
The Bank’s maximum exposure amount to credit risk before taking account of any collateral held or other
credit enhancements can be classified in the following categories:
- Financial assets recognised on-balance sheet comprising principally balances with Central Bank of Malta,
Malta Government treasury bills, cheques in course of collection, financial assets measured at FVOCI
and amortised cost as well as loans and advances to banks and customers. The maximum exposure of
these financial assets to credit risk equals their carrying amount.
- Guarantee obligations incurred on behalf of third parties. The maximum exposure to credit risk is the
full amount that the Bank would have to pay if the guarantees are called upon.
- Loan commitments and other credit related commitments that are irrevocable over the life of the
respective facilities. The maximum exposure to credit risk is the full amount of the committed facilities.
The Bank’s credit risk exposure amounts reflect the maximum exposure to credit risk before collateral held
or other credit enhancements in accordance with the regulatory information submitted to the MFSA and
are as follows:
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
203
2. Credit risk (continued)
2023
2023
Average value
Year end
Exposure value
€ 000
€ 000
Central governments or central banks
309,416
317,638
Public sector industries
536
529
Multilateral development banks
7,712
7,304
Institutions
57,543
59,829
Corporates
72,522
77,653
Retail
23,712
32,748
Secured by mortgages on immovable property
533,734
550,942
Exposures in default
15,337
14,952
Exposures associated with particularly high risk
123,402
116,114
Equity
24,176
24,994
Other items
60,844
61,571
1,228,934
1,264,274
The exposures set out in the table above are based on the sum of on-balance sheet exposures and off-
balance sheet exposures adjusted for the credit conversion factors stipulated in Article 166(10) of the CRR.
The following is an analysis of the Bank’s exposure to credit risk split by on-balance sheet assets and off-
balance sheet instruments:
2023
€ 000
On-balance sheet assets
1,236,321
Other adjustments
513
Off-balance sheet instruments
27,440
1,264,274
As set out in the Financial Statements under ‘Accounting estimates and judgements’, the measurement of
the Expected Credit Loss allowance for financial assets measured at amortised cost and Fair Value through
Other Comprehensive Income (‘FVOCI’) is an area that requires the use of complex models and significant
assumptions about future economic conditions and credit behaviour. As previously explained, the level of
economic uncertainty remained elevated during the financial year ended 31 December 2023, primarily
driven by the geopolitical developments mentioned above, as well as widespread supply chain disruptions,
which triggered inflationary pressures across the world. In order to curb the spiralling effect of inflationary
pressures, the European Central Bank (‘ECB’) and other national central banks applied monetary policy tools
at their disposal by increasing interest rates to manage demand.
At the reporting date the asset quality of the Bank’s financial assets remains sound and there is no evidence
of an increase in credit risk. The Bank will continue to closely monitor its exposures in the light of
developments so as to align the Expected Credit Loss accordingly.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
204
2. Credit risk (continued)
2.3 Concentration risk
Concentration risk arises as a result of the concentration of exposures within the same category, whether
the category relates to geographical location, industry sector or counterparty type.
As at 31 December 2023, no loans and advances to customers were deemed to be prohibited large
exposures, prior to any eligible exemptions, in accordance with the requirements of Part Four of the CRR,
Large Exposures. A limited number of customers account for a certain percentage of the Bank’s loans and
advances.
Credit risk attributable to concentration of investments is not considered by the Directors to be significant
in view of the credit standing of the issuers.
The following tables analyse the concentration of credit risk by geographical region, industry sector and
residual maturity at the end of the reporting period.
2.3.1 Credit risk exposures analysed by geographical region
The Bank monitors concentration of credit risk by geographical region. The following table summarises the
country of risk by exposure class:
At 31 December 2023
Total
Malta
Eurozone
Other European
countries
Other
€ 000
€ 000
€ 000
€ 000
€ 000
Central governments or central banks
317,638
311,633
2,641
2,023
1,341
Public Sector entities
529
-
529
-
-
Multilateral Development Banks
7,304
-
5,172
-
2,132
International Organisations
-
-
-
-
-
Institutions
59,829
12,866
36,997
4,968
4,998
Corporates
77,653
76,307
803
543
-
Retail
32,748
32,748
-
-
-
Secured by mortgages on immovable property
550,942
550,942
-
-
-
Exposures in default
14,952
14,952
-
-
-
Items associated with particularly high risk
116,114
116,114
-
-
-
Equity
24,994
24,095
-
-
899
Other items
61,571
61,571
-
-
-
1,264,274
1,201,228
46,142
7,534
9,370
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
205
2. Credit risk (continued)
2.3.2 Credit risk exposures analysed by industry sector
The following are the exposure amounts split by exposure class according to the respective industry concentration:
At 31 December 2023
Property and
Personal,
professional and
Financial
Other
Total
Manufacturing
Tourism
Trade
construction
home loans
Institutions
sectors
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
Central governments or central banks
317,638
-
-
-
-
-
317,638
-
Public Sector entities
529
-
-
-
-
-
529
-
Multilateral Development Banks
7,304
-
-
-
-
-
7,304
-
International Organisations
-
-
-
-
-
-
-
-
Institutions
59,829
-
-
-
-
-
59,829
-
Corporates
77,653
8,523
4,588
27,472
7,659
3,819
19,975
5,617
of which: SME
14,379
3,472
1,003
7,291
1,456
-
997
160
Retail
32,748
35
634
210
272
29,225
11
2,361
of which: SME
1,891
25
601
86
54
1,016
11
98
Secured by mortgages on immovable property
550,942
2,016
49,235
24,827
136,437
211,819
101,200
25,408
of which: SME
59,404
48
1,189
4,927
31,895
2,160
17,944
1,241
Exposures in default
14,952
292
975
353
9,070
1,146
375
2,741
of which: SME
6,422
152
-
184
6,045
-
-
41
Items associated with particularly high risk
116,114
-
-
1,328
99,747
2,217
12,649
173
of which: SME
17,621
-
-
-
17,621
-
-
-
Equity
24,994
230
1,645
-
-
-
4,343
18,776
Other items
61,571
-
2,379
-
41,461
-
10,687
7,044
1,264,274
11,096
59,456
54,190
294,646
248,226
534,540
62,120
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
206
2. Credit risk (continued)
2.3.3 Credit risk exposures analysed by residual maturity
The residual maturity breakdown by exposure class at the end of the reporting period was as follows:
Over 1 but
Carrying
Less than
less than
Over
Amount
1 year
5 years
5 years
At 31 December 2023
€ 000
€ 000
€ 000
€ 000
Central Government or central banks
317,638
171,428
92,634
53,576
Public sector entities
529
529
-
-
Multilateral Development Banks
7,304
3,541
3,763
-
International Organisations
-
-
-
-
Institutions
59,829
36,988
5,210
17,631
Corporates
77,653
34,011
15,991
27,651
Retail
32,748
5,800
4,515
22,433
Secured by mortgages on immovable property
550,942
107,661
68,638
374,643
Exposures in default
14,952
6,571
252
8,129
Exposures associated with particularly high risk
116,114
61,891
53,408
815
Equity exposures
24,994
24,994
-
-
Other items
61,571
61,571
-
-
1,264,274
514,985
244,411
504,878
2.3.4 Counterparty banks’ risk
The Bank runs the risk of loss of funds due to the possible delay in the repayment of existing and future
obligations by counterparty banks.
Within its daily operations, the Bank transacts with banks and other financial institutions. By conducting
these transactions, the Bank is running the risk of losing funds due to the possible delays in the repayment
to the Bank of the existing and future obligations of the counterparty banks. The Bank primarily places
short-term funds with pre-approved banks subject to the limits in place and subject to the respective
institutions’ credit rating being within controlled parameters. The positions are checked against the limits
in real time and at end of day on a daily basis.
2.3.5 Country risk
The Bank runs the risk of loss of funds due to the possible political, economic and other events in a particular
country where funds have been placed or invested with several counterparties. Countries are assessed
according to their size, economic data and prospects and their credit ratings from international rating
agencies. Existing country credit risk exposures are monitored and reviewed periodically. The Bank’s assets
are predominantly in Malta. The Bank’s exposures to other countries are mainly limited to bank balances
and money market placements with a total carrying amount of €33,597,000 (2022: €20,926,000) at the end
of the reporting period.
2.4 Use of External Credit Assessment Institutions
In calculating its risk-weighted exposure amounts, the Bank uses an External Credit Assessment Institution
(‘ECAI’) for Central governments, Institutions, Corporates and Items associated with particularly high risk
for which a credit assessment is available. The credit quality of such exposures is determined by reference
to external credit ratings applicable to issuers or counterparties. The Bank maps the external ratings to the
credit quality steps prescribed in the CRR as required by CEBS publication ‘Standardised Approach: Mapping
of ECAIs’ credit assessments to credit quality steps’.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
207
2. Credit risk (continued)
The following are the exposure values for which an ECAI is used:
Credit
quality
step
Central
governments
or central
banks
Public
Sector
entities
Multilateral
Development
Banks
International
organisations
Institutions
Total
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
At 31 December 2023
AAA to AA-
1
2,853
529
7,304
-
7,559
18,245
A+ to A-
2
311,633
-
-
-
31,719
343,352
BBB+ to BBB-
3
3,152
-
-
-
15,507
18,659
BB+ to BB-
4
-
-
-
-
-
-
B+ to B-
5
-
-
-
-
-
-
CCC+ and below
6
-
-
-
-
5,044
5,044
317,638
529
7,304
-
59,829
385,300
2.5 Credit quality of the Bank’s lending portfolio
The Bank manages the credit quality of its loans and advances to customers by using internal risk grades,
which provide a progressively increasing risk profile ranging from ‘P1’ (best quality, less risky) to ‘NP’. These
risk grades are an essential tool for the Bank to identify both non-performing exposures and better-
performing customers. The internal risk grades used by the Bank are as follows:
- Performing: Internal grade ‘P1’
- Under performing: Internal grades ‘P2’, ‘P3’ and ‘PF’; and
- Non-performing: Internal grade ‘NP’.
P1
The Bank’s loans and advances to customers which are categorised as ‘P1’ are principally debts in respect
of which the payment of interest and/or capital is not overdue by 30 days and with no recent history of
customer default. Management does not expect any losses from non-performance by these customers.
P2
Loans and advances which attract a ‘P2’ grading are those which are receiving the close attention of the
Bank’s Management and are being reviewed periodically in order to determine whether such advances
should be reclassified to either ‘P1’ or ‘P3’ classification. Credit facilities that attract this category include
those where the payment of interest and/or capital becomes overdue by 30 days and over but not
exceeding 60 days.
P3
Loans and advances which attract a ‘P3’ grading are those having the weaknesses inherent in those loans
and advances classified as ‘P2’ with the added characteristics that repayment is inadequately protected by
the current sound worth and paying capacity of the borrower. Loans and advances so graded have a well-
defined weakness or weaknesses that could jeopardise the repayment of the debt. They are characterised
by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Credit
facilities that attract this category include those where the payment of interest and/or capital becomes
overdue by 60 days and over but not exceeding 90 days.
PF
Loans and advances which attract a ‘PF’ grading are those facilities (other than Non-Performing Exposures)
in respect of which forbearance measures have been extended. Forbearance measures consist of
concessions towards a debtor facing or about to face difficulties in meeting its financial commitments
(financial difficulties).
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
208
2. Credit risk (continued)
A concession is deemed to have taken place when any of the following two actions are taken;
(a) a modification of the previous terms and conditions of a contract, as the debtor is considered unable to
comply therewith, due to its financial difficulties (‘troubled debt’) to allow for sufficient debt service ability,
that would not have been granted had the debtor not been in financial difficulties; and/or
(b) a total or partial refinancing of a troubled debt contract, that would not have been granted had the
debtor not been in financial difficulties.
NP
Loans and advances which attract a ‘NP’ grading are those facilities where the Bank deems the
recoverability of principal to be remote as a result of worsening conditions of loans and advances classified
as ‘P3’. Credit facilities that attract this category include those where the payment of interest and/or capital
becomes overdue by more than 90 days. These loans and advances are generally past due by more than 90
days and comprise those exposures which are deemed by the Bank as credit-impaired (see definition in note
2.3.10).
The following table provides a detailed analysis of the credit quality of the Bank’s lending portfolio.
2023
€ 000
Gross loans and advances to customers
Performing (‘Stage 1’ assets)
611,313
Under-performing (‘Stage 2’ assets)
129,224
Non-performing (‘Stage 3’ assets)
29,218
769,755
2.5.1 Credit-impaired loans and advances to customers
Credit-impaired loans and advances are advances which are either more than 90 days past due, or for which
the Bank determines as probable that it will be unable to collect all principal and interest due according to
the contractual terms of the loans and advances agreement(s). The Bank’s credit-impaired loans and
advances mainly relate to a number of independent customers which are not meeting repayment
obligations or deemed by the Bank as unlikely to pay their obligations to the Bank without recourse by the
Bank to realising the collateral.
2.5.2 Past due but not credit-impaired loans
Past due but not credit-impaired loans include loans and advances where contractual interest or principal
payments are past due. Credit losses that may arise are covered through the Bank’s assessment of Expected
Credit Loss allowances.
Loans and advances to customers are analysed into credit-impaired, past due and other exposures as
follows:
2023
€ 000
Gross loans and advances to customers
Credit-impaired
29,218
Past due but not credit-impaired
12,402
Neither past due nor credit-impaired
728,135
769,755
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
209
2. Credit risk (continued)
The table below analyses the impaired and the past due but not impaired gross loans and advances to
customers by industry sector.
Past due but
At 31 December 2023
Impaired
not impaired
€ 000
€ 000
Manufacturing
423
54
Tourism
2,494
51
Trade
550
5,191
Property and construction
20,801
4,833
Personal, professional and home loans
1,383
1,800
Financial institutions
564
1
Other sectors
3,003
472
29,218
12,402
The majority of the impaired and past due but not impaired loans and advances to customers were
concentrated within Malta.
2.5.3 Collateral
The Bank holds collateral against exposures in the form of hypothecs over property, other registered
securities over assets and guarantees. The nature and level of collateral required depends on a number of
factors, including, but not limited to, the amount of the exposure, the type of facility provided, the term of
the facility, the amount of the counterparty’s contribution and an evaluation of the level of the credit risk
or Probability of Default involved. Collateral is an important mitigant of credit risk. Nevertheless, it is the
Bank’s policy to establish that facilities are within the customer’s capacity to repay rather than to over rely
on security. In certain cases, depending on the customer’s standing and the type of product, facilities may
be unsecured. The Bank applies various measures to reduce the risk on individual transactions, including
collateral in the form of physical assets and guarantees.
The principal collateral types used as credit risk mitigants are mortgages on residential properties and
commercial real estate. For regulatory purposes, none of the Bank’s collateral in the form of commercial
real estate qualifies as eligible collateral, as these properties fail to meet the conditions of Article 126(2) of
the CRR.
Out of the €757.9 million exposures arising from the Bank’s lending, €532.7 million are secured by
mortgages on immovable property, while €112.8 million are classified within the high-risk exposures since
these are associated with speculative immovable property financing. From the €532.7 million exposures
secured by mortgages on immovable property, €230.8 million qualify as fully and completely secured by
mortgages on residential immovable property, and accordingly attract a risk-weight of 35%.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
210
2. Credit risk (continued)
2.5.4 Loss allowances
The Bank assesses on a forward-looking basis the expected credit losses associated with its loans and advances portfolio. The Bank recognises a loss allowance for such losses at
each reporting date.
Total
Manufacturing
Tourism
Trade
Property and
construction
Personal,
professional and
home loans
Financial
institutions
Other sectors
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
Expected credit losses
At 1 January 2023
9,949
350
1,651
827
4,835
909
1,274
103
Additions
4,392
116
78
197
2,661
1,033
255
52
Reversals
(2,890)
(143)
(132)
(292)
(1,027)
(488)
(774)
(34)
At 31 December 2023
11,451
323
1,597
732
6,469
1,454
755
121
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
211
2. Credit risk (continued)
2.5.5 Write-off policy
The Bank writes off loan or advance balances (and any related allowances for impairment losses) when it
determines that these are uncollectible. This decision is reached after considering information such as the
occurrence of significant changes in the borrower’s financial position, such that the borrower can no longer
pay the obligation, or that proceeds from collateral will not be sufficient to pay back the entire exposure.
3. Market risk
The Bank takes on exposure to market risk, which is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market prices. Market risks arise from open
positions in interest rate, currency and equity products, all of which are exposed to general and specific
market movements and changes in the level of volatility of market rates or prices such as interest rates,
credit spreads, foreign exchange rates and equity prices.
Accordingly, market risk for the Bank consists of three elements:
- Interest rate risk, which is the risk of losses because of changes in interest rates;
- Exchange rate risk, which is the risk of losses on the Bank’s positions in foreign currency because of
changes in exchange rates; and
- Equity price risk, which is the risk of losses because of changes in investment prices.
3.1 Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market
interest rates. The Bank’s operations are subject to the risk of interest rate fluctuations to the extent that
interest-earning assets and interest-bearing liabilities mature or reprice at different times or at different
amounts. The Bank accepts deposits from customers at both fixed and floating rates and for varying
maturity periods. This risk is managed through the matching of the interest resetting on repricing dates on
assets and liabilities as much as it is practicable. The Bank monitors on a continuous basis the level of
mismatch of interest rate repricing taking cognisance of the terms of the Bank’s principal assets, comprising
loans and advances to customers, that are repriceable at the Bank’s discretion. Accordingly, the Bank is in
a position to manage the interest rate terms of its financial assets and simultaneously modify the interest
terms of its liabilities. The Bank seeks to manage its net interest spread, taking cognisance of the cost of
capital, by investing funds in a portfolio of loans and advances and securities with a longer tenure than the
funding liabilities (therefore normally giving rise to a negative maturity gap position) through the effective
management of shorter term deposit liabilities with a view to securing steady base deposits with differing
terms over the medium to longer term.
Interest rate risk is managed principally through monitoring interest rate gaps and by having pre-approved
limits for repricing bands which are set by ALCO. ALCO is the monitoring body for compliance with these
limits and is assisted by Treasury through its day-to-day operational activities. The management of interest
rate risk against interest rate gap limits is supplemented by monitoring the sensitivity of the Bank’s financial
assets and liabilities to interest rate movements.
Accordingly, the Bank’s ALCO is primarily responsible for the interest rate risk management process and for
monitoring actively the interest rate risk measures utilised by the Bank. Reporting of interest rate risk
measures exposures vis-à-vis limits flows to the ALCO and Board on a regular systematic basis. The Bank’s
independent Risk Management Function provides oversight in respect of the interest rate risk management
process ensuring that it is designed in an appropriate manner and is functioning properly.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
212
3. Market risk (continued)
The Bank’s repricing gaps at 31 December 2023 are disclosed in the tables within note 2.4.1 to the financial
statements. The measures applied for the monitoring of the fair value sensitivity of the fixed rate
instruments and the cash flow sensitivity for variable rate instruments are disclosed within notes 2.4.3 and
2.4.4 to the financial statements.
3.2 Currency risk
The Bank takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates
on its financial position and cash flows. Foreign exchange risk is the risk to earnings and value caused by a
change in foreign exchange rates. Foreign exchange risk arises when financial assets or liabilities are
denominated in currencies which are different from the Bank’s functional currency.
The Bank manages this risk principally by ensuring that its foreign currency denominated liabilities are
matched with corresponding assets in the same currency.
Accordingly, foreign currency liabilities are utilised to fund assets denominated in the same foreign currency
thereby matching asset and liability positions as much as is practicable. This mechanism is reflected in the
figures reported in the table below which presents this matching process.
The Bank’s foreign exchange risks are managed actively and monitored by the Treasury Function, which
process ensures that the Bank maintains its exposure to foreign currencies within prescribed limits set by
the Bank’s ALCO. ALCO sets limits on the level of exposure by currency and in aggregate for both overnight
and intra-day positions which are monitored on a real-time basis. Reporting of exposures vis-à-vis limits
flows to the ALCO and Board on a regular systematic basis. The Bank’s independent Risk Management
Function is responsible for assuring that the foreign exchange risk management process is designed in an
appropriate manner and is functioning effectively.
The Bank enters into forward foreign currency exchange contracts with customers in the normal course of
its business. Generally, it is the Bank’s policy to cover these contracts by other forward positions. As a result,
the Bank is not open to any significant exchange risk in respect of derivative contracts. The Bank also takes
a deposit margin of the nominal value from the customer thereby reducing its credit risk should the client
default. The Bank had no open forward foreign currency contracts at the end of the reporting period.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
213
3. Market risk (continued)
The following table summarises the Bank’s net exchange position by currency taking into account the Bank’s
financial assets and liabilities as well as off-balance sheet instruments exposing the Bank to foreign
exchange risk.
Bank
Total
EUR
GBP
USD
Other
€ 000
€ 000
€ 000
€ 000
€ 000
At 31 December 2023
Financial assets
Balances with Central Bank of Malta,
treasury bills and cash
146,308
124,136
220
21,932
20
Financial investments measured at FVOCI
206,220
192,214
4,915
9,091
-
Financial investments measured at
amortised cost
8,285
8,285
-
-
-
Loans and advances to banks
33,605
6,563
4,099
20,136
2,807
Loans and advances to customers
758,304
749,956
7,201
1,143
4
Other assets
7,906
7,509
91
305
1
Total financial assets
1,160,628
1,088,663
16,526
52,607
2,832
Financial liabilities
Amounts owed to banks
145
145
-
-
-
Amounts owed to customers
1,021,254
949,930
16,400
52,128
2,796
Other liabilities
25,749
25,509
142
87
11
Total financial liabilities
1,047,148
975,584
16,542
52,215
2,807
Net currency exposure in financial
assets/liabilities
113,079
(16)
392
25
Commitments and contingent liabilities
272,734
271,027
1,164
543
-
3.3 Equity price risk
The exposure of the Bank to this risk is not significant given the low holdings of equity instruments by the
Bank, which are not deemed material in the context of the Bank’s statement of financial position. Such
holdings are limited to locally quoted equity instruments issued by local well-known corporate issuers.
Frequent management reviews are carried out to obtain comfort on the high quality of the portfolio.
4. Liquidity risk
4.1 Management of liquidity risk
Liquidity risk is defined as the risk of losses due to:
- the Bank’s funding costs increasing disproportionately;
- lack of funding preventing the Bank from establishing new business; and
- lack of funding ultimately preventing the Bank from meeting its obligations.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
214
4. Liquidity risk (continued)
Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. The Bank
is exposed to daily calls on its available cash resources from overnight deposits, current and call deposits,
maturing term deposits, loan drawdowns and guarantees.
The objective of the Bank’s liquidity and funding management is to ensure that all foreseeable funding
commitments and deposit withdrawals can be met when due. It is the Bank’s objective to maintain a
diversified and stable funding base with the objective of enabling the Bank to respond quickly and smoothly
to unforeseen liquidity requirements.
The Bank manages this risk by ensuring that its assets and liabilities are matched in terms of maturities as
much as is practicable. However, the Bank ought to manage its net interest spread by investing funds in a
portfolio of assets with a longer term than the liabilities funding them. To mitigate exposures arising in this
respect, the Bank holds significant liquid assets in the form of Malta Government treasury bills, money
market placements and other short-term instruments for managing liquidity risk to support payment
obligations and contingent funding in a stressed market environment.
The Bank maintains internal liquidity buffers established by ALCO made up of cash and financial assets
which are also eligible for collateral against borrowing from the European Central Bank. In order to ensure
that maturing funds are always available to meet unexpected demand for cash, the Board sets parameters
within which maturities of assets and liabilities may be mismatched in line with the stance referred to
previously. Unmatched positions potentially enhance profitability, but also increase risks. The Bank’s ALCO
focuses on the entity’s management process with respect to market and funding liquidity risks. ALCO
maintains ongoing oversight of forecast and actual cash flows, by monitoring the availability of funds to
meet commitments associated with financial instruments. ALCO is supported by the Bank’s Executive Team
and Treasury Function in this respect, at operational level. ALCO monitors the Bank’s Liquidity Gap analysis
on a monthly basis. The Bank’s liquidity management process comprises management of day-to-day
funding, by monitoring future cash flows to ensure that requirements can be met and that funds are
replenished as they mature or are borrowed by customers. This implies a structured ongoing analysis of the
contractual maturity of the financial liabilities and the expected collection date of the financial assets. The
Bank’s liquidity management focuses on maintaining a portfolio of highly marketable assets, subject to pre-
established limits, that can easily be liquidated in case of any unforeseen interruption to cash flow; and
monitoring the liquidity ratios of the Bank against internal and regulatory requirements. In this respect, the
Bank’s advances-to-deposit ratio of 74.3% at the end of the reporting period reflects management’s
prudent stance in the context of liquidity management. Also, the Liquidity Coverage ratio at 31 December
2023 is 301.8%, which is significantly higher than the prudential parameters set by Regulation.
Reporting of measures of liquidity risk and liquidity ratios vis-à-vis internal limits flows to the ALCO and
Board on a regular basis. The Bank’s Risk Management Function provides oversight in respect of the
liquidity risk management process ensuring that it is functioning effectively.
The Bank also monitors the level and type of undrawn lending commitments and the impact of contingent
liabilities such as guarantees as part of the liquidity management process previously referred to.
As at 31 December 2023, the Bank had outstanding guarantees on behalf of third parties amounting to
€11,286,000 (2022: €10,886,000), which are cancellable upon the request of the third parties. The Bank’s
liquidity exposures arising from these commitments and contingencies are expected to expire principally
within a period of twelve months from the end of the reporting period.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
215
4. Liquidity risk (continued)
4.2 Asset Encumbrance
The disclosure on asset encumbrance is a requirement introduced in Banking Rule BR/07 transposing the
provisions of the EBA Guidelines on Disclosure of Encumbered and Unencumbered Assets
(EBA/GL/2014/03).
The objective of this disclosure is to facilitate an understanding of available and unrestricted assets that
could be used to support potential future funding and collateral needs. An asset is defined as encumbered
if it has been pledged as collateral against an existing liability, and as a result is no longer available to the
Bank to secure funding, satisfy collateral needs or be sold to reduce the funding requirement.
The disclosure is not designed to identify assets which would be available to meet the claims of creditors
or to predict assets that would be available to creditors in the event of a resolution or bankruptcy.
In accordance with the EBA ‘Guidelines on Disclosure of Encumbered and Unencumbered Assets’, the
amounts disclosed in the table below represent median values, being the rolling quarterly amounts over
the previous 12 months.
Carrying
amount of
encumbered
assets
Fair value of
encumbered
assets
Carrying amount
of unencumbered
assets
Fair value of
unencumbered
assets
€ 000
€ 000
€ 000
€ 000
At 31 December 2023
Assets of the reporting institution
10,120
10,120
1,182,425
1,182,425
Loans on demand
1,100
1,100
142,111
142,111
Equity instruments
-
-
7,681
7,681
Debt securities
7,782
7,782
211,324
211,324
Loans and advances
438
438
734,743
734,743
Other assets
800
800
86,566
86,566
The Bank does not encumber any of the collateral received. Moreover, as at 31 December 2023, the Bank
did not have any outstanding liabilities associated with encumbered assets and collateral received.
The Bank undertakes encumbrance by pledging debt securities against the provision of credit lines by the
Central Bank of Malta and in favour of the Depositor Compensation Scheme.
5. Operational risk
Operational risk is the risk of loss resulting from the lack of skilful management or good governance within
the Bank and the inadequacy of internal control, which might involve internal operations, staff, systems or
external occurrences that in turn affect the income and capital funds of financial institutions. The Bank has
adopted an operational risk management framework and procedures, which provide for the identification,
assessment, management, monitoring and reporting of the Bank’s operational risks. Operational risk is also
addressed through proper insurance cover.
Operational risk management relies on a framework of policies and procedures implemented by the
different operational functions within the Bank through transaction processing and business execution.
Regular reporting of operational risk events to the Board of Directors is carried out as required. The
implementation of such policies and procedures by the Bank’s operational functions is overseen by the Risk
Management Function.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
216
5. Operational risk (continued)
The Bank currently uses the Basic Indicator Approach to assess the operational risk capital requirements
and accordingly allocates 15% of average gross income for a three year period in accordance with regulatory
requirements. The operational risk capital regulatory requirement as at 31 December 2023 amounted to
€4,464,000.
6. Capital risk management
The Bank is a licensed credit institution and must therefore comply with the capital requirements under the
relevant capital requirements within laws and regulations. Maltese law and regulations on capital adequacy
are naturally based on EU capital requirements.
The prudent and efficient management of capital remains one of the Bank’s top priorities. The Bank must
have sufficient capital to comply with regulatory capital requirements. The purpose of the Bank’s capital
management is to ensure an efficient use of capital in relation to risk appetite as well as business
development. Capital management is managed primarily through the capital planning process that
determines the optimal amount and mix of capital that should be held by the Bank, subject to regulatory
limits.
Capital adequacy and the use of regulatory capital are monitored regularly by the Bank’s management,
employing techniques based on the guidelines developed by the Basel Committee, European Union
Regulations and Directives, as implemented by the MFSA for supervisory purposes. The Bank’s capital
management is based on the regulatory requirements established within the CRR and by local regulations
which are modelled on the requisites of the CRD rules.
The Bank’s Executive Team and ALCO are predominately responsible for the Bank’s capital risk management
process. Capital adequacy ratios together with the level and quality of Own funds are reported on a regular
basis to the Board and the ALCO by the Finance Function.
6.1 Own funds
Own funds represent the Bank’s available capital and reserves for the purposes of capital adequacy. Capital
adequacy is a measure of the financial strength of a bank, expressed as a ratio of its capital to its assets.
The Bank adopts processes to ensure that the minimum regulatory requirements are met at all times,
through the assessment of its capital resources and requirements given current financial projections.
During the year ended 31 December 2023, the Bank’s OCR continued to be met at all times. The Bank’s P2G
was also met at all times with the exception of short periods during the fourth quarter of financial year
2023 resulting from a decline in the fair-value of fixed-income securities. Following the Rights Issue, the
P2G was also met at year end.
In July 2013, the European Banking Authority (EBA) issued its final draft Implementing Technical Standards
(ITS) on Own funds disclosures. The disclosure requirements of these technical standards have been
integrated within the Bank’s disclosures set out below.
The Bank’s capital base comprises Common Equity Tier 1 (CET1) capital, which includes the following items:
• ordinary share capital;
• share premium;
• retained earnings;
• revaluation and other reserves; and
• other regulatory adjustments relating to items that are included in equity but are treated differently
for capital adequacy purposes including deductions relating to amounts pledged in favour of the
Depositor Compensation Scheme.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
217
6. Capital risk management (continued)
(a) Share capital
The Bank’s share capital as at 31 December 2023 is analysed as follows:
2023
No. of
shares
000s
€ 000
Authorised
Ordinary shares of €0.125 each
300,000
37,500
Issued
Ordinary shares of €0.125 each
154,572
19,322
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at meetings of the Bank. All shares rank equally with regard to the Bank's
residual assets.
The following table describes the terms and conditions of the ordinary share capital issued by the Bank.
Capital Instruments
Ordinary share capital and
share premium
Unique Identifier
MT0000040106
Governing law(s) of the instrument
Maltese Law
Regulatory treatment
Transitional CRR rules
Common Equity Tier 1
Post-transitional CRR rules
Common Equity Tier 1
Eligible at solo/(sub)-consolidated/ solo&(sub-) consolidated
Solo
Amount recognised in regulatory capital
€19,321,533
Nominal amount of instrument
€19,321,533
Nominal amount of each share
€0.125
Accounting classification
Share capital
Issuer call subject to prior supervisory approval
No
Position in subordination hierarchy in liquidation
Subordinated to creditors
and depositors
Non-compliant transitioned features
No
(b) Share premium
The share premium represents the amounts at which ordinary shares were issued in excess of their nominal
value, normally arising as a result of rights issues approved by the shareholders during the Annual General
Meetings. The amount is not distributable by way of dividend to shareholders.
(c) Retained earnings
The retained earnings represent earnings not paid out as dividends.
Retained earnings form part of Own funds only if those profits have been verified by the Bank’s
independent external auditor. The Bank has demonstrated to the satisfaction of the competent authority
that any foreseeable charge or dividend has been deducted from the amount of those profits.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
218
6. Capital risk management (continued)
(d) Property revaluation reserve
This represents the surplus arising on the revaluation of the Bank's freehold property net of related
deferred tax effects. The revaluation reserve is not available for distribution.
(e) Investment revaluation reserve
This represents the cumulative net change in fair values of assets measured at FVOCI held by the Bank, net
of related deferred tax effects.
The Bank’s Own funds and capital ratio calculations are set out below:
At 31 December 2023
€ 000
Common Equity Tier 1 (CET1) capital
Common Equity Tier 1 (CET1) capital: instruments and reserves
Capital instruments and the related share premium accounts
75,856
Retained earnings
109,805
Accumulated other comprehensive income (and other reserves)
(3,177)
CET1 capital before regulatory adjustments
182,484
Common Equity Tier 1 (CET1) capital: regulatory adjustments
Intangible assets
(19)
Other regulatory adjustments
(366)
Total regulatory adjustments to CET1
(385)
CET1 capital
182,099
Total risk-weighted assets
868,827
Capital ratios
CET1 capital
20.96%
Tier 1 capital
20.96%
Total capital
20.96%
Institution specific buffer requirement
7.11%
of which: capital conservation buffer requirement
2.50%
of which: countercyclical buffer requirement
0.01%
of which: sectorial systemic risk buffer requirement
0.10%
CET1 available to meet buffers in excess of the CRR 4.5% minimum requirement
16.46%
CET1 available to meet buffers
13.85%
€000
Items not deducted from own funds in accordance with Article 48 of CRR
11,381
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
219
6. Capital risk management (continued)
6.2 Capital requirements
The allocation of capital between specific operations and activities is, to a large extent, driven by
optimisation of the return achieved on the capital allocated. The amount of capital allocated to each
operation or activity is based primarily upon the regulatory capital, though in some cases the regulatory
requirements do not reflect differing risk profiles, subject to the overall level of capital to support a
particular operation or activity not falling below the minimum required for regulatory purposes. The
process of allocating capital to specific operations and activities is undertaken independently of those
responsible for the operation.
Although maximisation of the return on risk-adjusted capital is the principal basis used in determining how
capital is allocated within the Bank to particular operations or activities, it is not the sole basis used for
decision-making. Account is also taken of synergies with other operations and activities, the availability of
management and other resources, and the fit of the activity with the Bank’s long-term strategic objectives.
The Bank’s policies in respect of capital management and allocation are reviewed regularly by the Board of
Directors.
The Pillar I minimum capital requirements are calculated for credit, market and operational risks. During
the year, the Bank continued to use the Standardised Approach for credit risk, the Basic Method for foreign
exchange risk and the Basic Indicator Approach for operational risk in order to calculate the Pillar I minimum
capital requirements. For credit risk, under the Standardised Approach, risk weights are determined
according to the asset class, credit risk mitigation and external credit ratings - or by using the applicable
regulatory risk weights for unrated exposures. Capital charge for foreign exchange risk using the Basic
Method is calculated at 8% of the higher of the sum of all the net short positions and the sum of all the net
long positions in each foreign currency. The Basic Indicator Approach requires that the Bank allocates
capital for operational risk by taking 15% of the average gross income of the preceding three years.
The Total Capital Ratio is calculated using the definition of regulatory capital and risk-weighted assets. As
required by the CRR, the minimum level of the Capital Requirements Ratio stands at 8%. The Capital
Requirements Ratio expresses Own funds as a proportion of risk-weighted assets and off-balance sheet
instruments for credit risk purposes, together with notional risk-weighted assets in respect of operational
risk and market risk. Total risk-weighted assets are determined by multiplying the capital requirements for
market risk and operational risk by 12.5 (i.e. the reciprocal of the minimum capital ratio of 8%) and adding
the resulting figures to the sum of risk-weighted assets for credit risk.
The Bank’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. The impact of the level of capital on
shareholders’ return is also recognised and the Bank recognises the need to maintain a balance between
the higher returns that might be possible with greater gearing and the advantages and security afforded by
a sound capital position.
The Bank fully implemented the CRD V capital requirements with effect from January 2020. During 2023,
the Central Bank of Malta introduced an additional Sectoral Systemic Risk Buffer (sSyRB) of 1% of risk-
weighted assets (to rise to 1.5% as of March 2024) of exposures to residential real estate. As the end of
December 2023, this Buffer was also met.
Additionally, the Bank is required to maintain a capital conservation buffer of 2.5%, made up of CET1 capital,
on the risk-weighted exposures of the Bank as at 31 December 2023.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
220
6. Capital risk management (continued)
The Bank’s capital requirements and Total Capital Ratio computation are as follows:
At 31 December 2023
Exposure
value
€ 000
Risk weighted
assets
€ 000
Capital required
€ 000
Central governments or central banks
317,638
30,028
2,402
Public Sector Entities
529
106
8
Multilateral Development Banks
7,304
145
12
Institutions
59,829
17,911
1,433
Corporates
77,653
77,238
6,179
Retail
32,748
24,561
1,965
Secured by mortgage on immovable property
550,942
389,092
31,127
Exposures in default
14,952
22,428
1,794
Items associated with particularly high risk
116,114
174,172
13,934
Equity
24,994
26,340
2,107
Other items
61,571
50,957
4,077
Credit risk
1,264,274
812,978
65,038
Foreign exchange risk
51
4
Operational risk
55,798
4,464
Total capital required
868,827
69,506
Own funds
Common Equity Tier 1 capital
182,099
Total own funds
182,099
Total capital ratio
20.96%
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
221
6. Capital risk management (continued)
The following is an analysis of the Bank’s Capital Base in accordance with the CRD’s requirements:
2023
€ 000
Common Equity Tier 1 (CET1) capital
Share capital
19,322
Share premium
56,534
Revaluation and other reserves
(1,296)
Retained earnings
111,443
186,003
Adjustments:
Final dividend (note 36)
(1,638)
Depositor Compensation Scheme
(1,881)
Intangible assets
(19)
Other regulatory adjustments
(366)
Total CET1 capital
182,099
Total own funds
182,099
6.3 Other disclosures on own funds
The Bank has opted for the transitional arrangements laid down in Regulation (EU) 575/2013 Article 473a
to mitigate the impact of IFRS9 on own funds. Under Regulation (EU) 2017/2395, during the transitional
period ending 31 December 2023, the Bank would have had the option to add back a proportion of:
• the Day 1 impact as a result of the introduction of IFRS 9, being the difference between IFRS 9 expected
credit losses (‘ECLs’) on 1 January 2018 and IAS 39 provisions determined at 31 December 2017; and
• on difference in the IFRS 9 ECLs determined at reporting date and the ECLs determined on ‘day 1’ of
the introduction of IFRS 9 (being 1 January 2018 for the Bank) for ‘Stage 1’ (12-months ECLs) and ‘Stage
2’ (lifetime ECLs) assets.
The factors used to adjust the above ECLs declines across the transitional period starting at 100% during
the financial year ended 31 December 2020 to 25% in the final transitional financial year ended 21
December 2024. The above treatment is in accordance with the requirements laid down in paragraph 2 and
paragraph 4 of Regulation (EU) 2017/2395.
In line with Section 2 of the EBA ‘Guidelines on uniform disclosures under Article 473a of Regulation (EU)
No 575/2013 as regards transitional arrangements for mitigating the impact of the introduction of IFRS 9
on own funds’, the Bank is required to disclose a comparison of the institutions’ own funds, Common Equity
Tier 1 capital, Tier 1 capital, risk-weighted assets, Common Equity Tier 1 capital ratio, Tier 1 capital ratio,
total capital ratio and leverage ratio with and without the application of transitional arrangements for IFRS
9 or analogous ECLs.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
222
6. Capital risk management (continued)
The comparison of Bank’s own funds and capital and leverage ratios with and without the application of
transitional arrangements for IFRS 9 or analogous ECLs, and with and without the application of the
temporary treatment in accordance with Article 473a of the CRR is presented below:
At 31 December 2023
€ 000
Available capital
CET1 capital
182,099
CET1 capital as if IFRS 9 or analogous ECLs transitional arrangements had not been applied
182,099
Tier1 capital
182,099
Tier 1 capital as if IFRS 9 or analogous ECLs transitional arrangements had not been applied
182,099
Total capital
182,099
Total capital as if IFRS 9 or analogous ECLs transitional arrangements had not been applied
182,099
Risk-weighted assets
Total risk-weighted assets
868,827
Total risk-weighted assets as if IFRS 9 or analogous ECLs transitional arrangements had not
been applied
868,827
Capital Ratios
CET1 (as a percentage of risk exposure amount)
20.96%
CET1 (as a percentage of risk exposure amount) as if IFRS 9 or analogous ECLs transitional
arrangements had not been applied
20.96%
Tier 1 (as a percentage of risk exposure amount)
20.96%
Tier 1 (as a percentage of risk exposure amount) as if IFRS 9 or analogous ECLs transitional
arrangements had not been applied
20.96%
Total capital (as a percentage of risk exposure amount)
20.96%
Total capital (as a percentage of risk exposure amount) as if IFRS 9 or analogous ECLs
transitional arrangements had not been applied
20.96%
Leverage ratio
Leverage ratio total exposure measure
1,285,729
Leverage ratio
14.16%
Leverage ratio as if IFRS 9 or analogous ECLs transitional arrangements had not been applied
14.16%
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
223
6. Capital risk management (continued)
6.4 Internal Capital Adequacy Assessment Process (ICAAP)
The Bank considers the Internal Capital Adequacy Assessment Process (ICAAP) embedded in Pillar II as a
tool that ensures the proper measurement of material risks and capital and allows for better capital
management and improvements in risk management. Therefore, it facilitates a better alignment between
material risks and regulatory capital in order to have better capital deployment and improvements in the
risk management and mitigation techniques adopted by the Bank. The ICAAP as required by the MFSA
Banking Rule BR/12: The Supervisory Review Process of Credit Institutions authorised under the Banking
Act, 1994, is performed on an annual basis.
Therefore, ICAAP is a process that the Bank utilises to ensure that:
- there is adequate identification, measurement, aggregation and monitoring of the Bank’s risks;
- adequate internal capital is held by the institution in relation to its risk profile; and
- the Bank uses sound risk management systems and there is the intention to develop them further.
The Board and the Bank’s Senior Management take overall responsibility for the conceptual design and
technical details of the ICAAP document. Apart from the responsibility for the conceptual design, the Board
discussed, approved, endorsed and delivered the yearly ICAAP submission. The Bank’s independent Risk
Management Function is involved in the ICAAP with a view to ensuring that the process reflects and takes
cognisance of the Bank’s risk management activities and processes.
The ICAAP is an ongoing process which starts with defining risk strategy followed by identifying, quantifying
and aggregating risks, determining risk-bearing ability, allocating capital, establishing limits and ongoing
risk monitoring. The individual elements of the process are performed with varying regularity. All the
activities described are examined at least once a year to ensure that they are up to date, adequate and also
adjusted to current underlying conditions when necessary.
The process involves a quantitative assessment of individual types of risk and an assessment of the existing
methods and systems for monitoring and managing risk (qualitative assessment). The risk assessment
concept is based on a scoring procedure, thus providing a comprehensive overview of the risk situation of
the Bank.
The basis for the quantitative implementation of the ICAAP is the risk-bearing capacity calculation which
demonstrates that adequate capital is in place at all times to provide sufficient cover for risks that have
been entered into and which also ensures such cover is available for the future. The Bank’s ICAAP is based
upon a ‘Pillar I Plus’ approach whereby the Pillar I capital requirement for credit, market and operational
requirements are supplemented by the capital allocation for other material risks not fully addressed within
Pillar I. The risks considered for ICAAP include concentration, liquidity, reputational and strategic risks,
interest rate risk in the banking book, and risks arising from the macro-economic environment.
The Bank’s ICAAP contains three-year projections as well as the capital plan, and the Board monitors that
there are adequate capital resources to support the corporate goals contained within the Bank’s plan and
the associated risks.
The Bank also covers Pillar II capital requirements through stress testing processes to forecast the Bank’s
projected capital requirements and resources in a range of stress scenarios. This enables the Bank to
guarantee that it can meet its total SREP capital requirements in a stressed environment. The results of the
ICAAP once again show that the Bank maintains a comfortable level of excess capital and substantial
liquidity that ensured the flexibility and resources needed to achieve the long-term strategic objectives of
the Bank, even in situations of market stress.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
224
7. Leverage
The leverage ratio is a regulatory and supervisory tool intended to provide a transparent and non-risk based
measurement of an institution to supplement the risk-based capital requirements.
The leverage ratio is calculated on the end of year capital position as a proportion of total exposures. Capital
is defined as Tier 1 capital in line with Article 25 of the CRR, while total exposure relates to the total on-
and off-balance sheet exposures less the deductions applied to Tier 1 capital.
During 2016, the European Commission published a Proposal to amend Regulation 575/2013 (CRR), which
included the introduction of a 3% leverage ratio as a binding Pillar I requirement by 2018. The Bank complies
with a 3% leverage ratio based on fully-transitioned Basel III standards.
The following table represents the Bank’s estimated leverage ratio determined in accordance with the
requirements stipulated by Implementing Regulation EU 2016/200.
At 31 December 2023
Tier 1 Capital
€ 000
Tier 1 capital
182,099
Leverage ratio total exposure measure
1,285,729
Leverage ratio
14.16%
The table shown hereunder represents the amounts making up the leverage ratio exposures.
At 31 December 2023
Tier 1 Capital
€ 000
On-balance sheet exposures (excluding derivatives and SFTs)
On-balance sheet items (excluding derivatives and SFTs, but
including collateral)
1,237,218
Asset amounts deducted in determining Tier 1 capital
(385)
On-balance sheet exposures (excluding derivatives and SFTs)
1,236,833
Off-balance sheet exposures
Off-balance sheet exposures at gross notional amount
272,763
Adjustments for conversion to credit equivalent amounts
(223,867)
Off-balance sheet exposures
48,896
The following table provides a reconciliation of accounting assets and leverage ratio exposures.
At 31 December 2023
Tier 1 Capital
€ 000
Total assets as per published financial statements
1,236,320
Adjustment for off-balance sheet items
48,896
Other adjustments
513
Leverage ratio total exposure measure
1,285,729
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
225
7. Leverage (continued)
The table below shows the different on-balance sheet exposures in relation to the calculation of the
leverage ratio.
At 31 December 2023
Tier 1 Capital
€ 000
Total on-balance sheet exposures (excluding derivatives and SFTs), of
which:
Exposures treated as sovereigns
317,638
Multilateral Development Banks
7,304
Institutions
59,563
Secured by mortgages on immovable property
532,703
Retail
29,655
Corporates
71,903
Exposures in default
14,952
Other exposures
203,115
1,236,833
The leverage ratio is a regulatory and supervisory instrument used by the Regulator to limit the build-up
of excessive leverage. The leverage ratio at 31 December 2023 stood at 14.16%.
At this level, the Bank is currently not at risk in curtailing excessive leverage and is expected to remain
well above the mandatory requirement. Board limits to the leverage ratio are set and reviewed annually
and the ratio is monitored at every Audit & Risk Committee to ensure that it remains above the tolerance
limit set by the Board of Directors. This limit supports the Bank’s attitude towards finding a suitable
balance between risk and returns provided to shareholders.
8. Remuneration policy
Information on the Bank’s remuneration policy and practices is disclosed in the Remuneration Report
within the Annual Report located on page 56.
9. Other Directorships
In terms of Article 91 of Directive 2013/36/EU (CRD V), directors of an institution that is significant in
terms of its size, internal organisation and the nature, scope and complexity of its activities shall not hold
more than one of the following combinations of directorships at the same time:
(a) one executive directorship with two non-executive directorships;
(b) four non-executive directorships.
According to the ‘Guide to banking supervision’ issued by the European Central Bank in November 2014,
a credit institution will be considered significant if any one of the following conditions is met:
- the total value of its assets exceeds €30 billion or – unless the total value of its assets is below €5
billion – exceeds 20% of national GDP;
- it is one of the three most significant credit institutions established in a Member State;
- it is a recipient of direct assistance from the European Stability Mechanism; or
- the total value of its assets exceeds €5 billion and the ratio of its cross-border assets/liabilities in
more than one other participating Member State to its total assets/liabilities is above 20%.
Lombard Bank Malta p.l.c.
Additional Regulatory Disclosures for the year ended 31 December 2023
226
9. Other Directorships (continued)
Lombard Bank Malta p.l.c. does not meet any of the above criteria, and therefore is currently not
considered significant by banking supervisors. Accordingly, the Bank is exempt from the requirements of
Article 91 of CRD V.
The Bank is not disclosing the number of directorships held by the members of the Bank’s Board of
Directors on the basis of materiality in terms of Article 432 of the CRR.
10. Recruitment and Diversity policy
The Bank is aware that a vigorous and professional approach to recruitment and selection of prospective
staff members within the Bank helps it to attract and appoint those individuals having the necessary skills
and attributes compatible with achieving the Bank’s overall objectives. Thus, the Bank ensures that
appointments at all levels are based on each individual’s knowledge, skills, expertise and merit, as
required by laws, rules, regulations, etc. and in line with policy.
The Bank undertakes a rigorous selection process for all prospective staff members bearing in mind the
key activities, tasks and skills required. As part of the selection process, multiple interviews are conducted,
during which the individual’s knowledge, experience, skills and competence are evaluated.
The Bank continues to promote diversity with no discrimination as to gender, race, family, disability,
sexual orientation, identity or preference, etc.
Bearing its objectives in mind, the Bank, particularly by virtue of the Board appointed Suitabilities &
Evaluations Committee, endeavours to have a Board of Directors composed of members possessing
diverse skills and expertise that allow the Board to create value for shareholders by ensuring that the
specific risks pursued by the Bank as well as risks that are intrinsic to banking business are appropriately
managed and mitigated within the Bank’s risk appetite.
227
Five Year Summary
Statements of Financial Position
Group
2023
2022
2021
2020
2019
€ 000
€ 000
€ 000
€ 000
€ 000
Assets
Balances with Central Bank of Malta,
treasury bills and cash
147,043
139,234
126,279
169,687
182,348
Cheques in course of collection
1,880
1,053
530
666
1,214
Financial investments
216,770
220,815
227,135
161,424
111,731
Loans and advances to banks
38,139
27,615
78,279
96,985
121,060
Loans and advances to customers
758,304
711,612
642,893
621,129
552,043
Investments in associates
3,292
2,607
3,006
1,932
1,684
Intangible assets
2,192
2,121
2,145
2,050
2,000
Property, plant and equipment
66,511
66,375
65,346
50,928
43,348
Assets classified as held for sale
703
703
661
134
134
Current tax assets
643
575
2,691
1,156
193
Deferred tax assets
11,694
10,889
7,034
10,117
9,801
Inventories
1,391
1,271
1,324
1,274
1,468
Trade and other receivables
11,369
13,243
10,787
9,136
5,625
Accrued income and other assets
5,203
5,302
4,536
4,337
9,648
Total assets
1,265,134
1,203,415
1,172,646
1,130,955
1,042,297
Equity and liabilities
Equity
Share capital
19,322
11,341
11,192
11,044
11,044
11
1111
Share premium
56,534
18,530
18,530
18,530
18,530
Property revaluation reserve
13,109
13,087
13,040
6,383
6,384
Investment revaluation reserve
(13,349)
(12,733)
5,180
7,181
7,978
Reserve for General Banking Risks
-
2,903
2,903
2,903
2,903
Other reserves
1,660
1,382
2,545
2,510
2,567
Retained earnings
113,107
101,700
83,910
77,470
69,722
Equity attributable to equity holders
of the Bank
190,383
136,210
137,300
126,021
119,128
Non-controlling interests
8,409
8,090
8,470
7,741
7,674
Total equity
198,792
144,300
145,770
133,762
126,802
Liabilities
Amounts owed to banks
145
535
1,224
5,602
5,871
Amounts owed to customers
1,019,075
1,008,431
977,143
941,110
864,993
Provisions for liabilities and other charges
1,403
1,688
2,113
2,632
3,236
Current tax liabilities
1,556
-
809
844
1,128
Deferred tax liabilities
4,099
4,099
4,099
6,448
6,832
Other liabilities
28,762
33,347
30,649
29,665
21,949
Accruals and deferred income
11,302
11,015
10,839
10,892
11,486
Total liabilities
1,066,342
1,059,115
1,026,876
997,193
915,495
Total equity and liabilities
1,265,134
1,203,415
1,172,646
1,130,955
1,042,297
Memorandum items
Contingent liabilities
14,315
13,611
13,195
10,851
11,671
Commitments
257,415
202,396
195,848
200,870
225,826
228
Five Year Summary
Income Statements
Group
2023
2022
2021
2020
2019
€ 000
€ 000
€ 000
€ 000
€ 000
Interest receivable and similar income
33,698
29,020
25,725
24,898
25,285
Interest expense
(7,837)
(6,744)
(6,169)
(6,026)
(5,605)
Net interest income
25,861
22,276
19,556
18,872
19,680
Other operating income
44,820
37,605
43,856
41,731
40,474
Other operating charges
(54,578)
(48,049)
(51,836)
(46,107)
(44,311)
Net movement in expected credit losses
(1,261)
16,243
1,464
(3,973)
(549)
Share of (loss)/profit of investment
accounted for using equity method
(315)
(399)
(402)
(151)
-
Profit before taxation
14,527
27,676
12,638
10,372
15,294
Income tax expense
(4,909)
(10,050)
(4,759)
(3,230)
(5,424)
Profit for the year
9,618
17,626
7,879
7,142
9,870
Attributable to:
Equity holders of the Bank
9,064
17,530
7,481
6,640
9,320
Non-controlling interests
554
96
398
502
550
Profit for the year
9,618
17,626
7,879
7,142
9,870
229
Five Year Summary
Statements of Cash Flows
Group
2023
2022
2021
2020
2019
€ 000
€ 000
€ 000
€ 000
€ 000
Net cash flows (used in) / generated
from operating activities
18,179
(36,281)
31,632
14,475
53,125
Cash flows from investing activities
Dividends received
203
141
81
105
211
Interest received from investments
4,675
3,485
3,012
2,198
2,325
Proceeds from maturity/disposal
-
of investments
9,903
5,220
6,760
16,468
8,163
Purchase of investments
(8,359)
(27,518)
(75,270)
(67,862)
(15,905)
Purchase of property, plant
and equipment
(2,657)
(3,709)
(7,601)
(8,942)
(3,345)
Investments in associates
(1,000)
-
-
-
-
Proceeds from disposal of property,
plant and equipment
-
-
-
18
-
Purchase of investment in associate
-
-
(1,500)
(399)
-
Net cash inflow arising from acquisition
of subsidiary
-
-
833
-
-
Net cash flows used in investing
activities
2,765
(22,381)
(73,685)
(58,414)
(8,551)
Cash flows from financing activities
Proceeds from rights issue of ordinary
shares
45,733
-
-
-
-
Dividends paid to equity holders
of the Bank
-
(873)
(862)
-
(1,436)
Dividends paid to non-controlling
interests
(299)
(429)
(429)
(427)
(429)
Principal element of lease payments
(491)
(478)
(523)
(409)
-
Net cash flows used in financing
activities
44,943
(1,780)
(1,814)
(836)
(1,865)
Independent auditor’s report
To the Shareholders of Lombard Bank Malta p.l.c.
Report on the audit of the financial statements
Our opinion
In our opinion:
· The Group financial statements and the Parent Company financial statements (the “financial statements”) of Lombard Bank Malta p.l.c. (“the Bank”) give a true and fair view of the Group and the Bank’s financial position as at 31 December 2023, and of their 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).
Our opinion is consistent with our additional report to the Audit & Risk Committee.
What we have audited
Lombard Bank Malta p.l.c.’s financial statements comprise:
· the Consolidated and Parent Company statements of financial position as at 31 December 2023;
· the Consolidated and Parent Company income statements and statements of comprehensive income for the year then ended;
· the Consolidated and Parent Company statements of changes in equity for the year then ended;
· the Consolidated and Parent Company statements 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.
Independence
We are independent of the Group and 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 and its subsidiaries 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 and its subsidiaries, in the period from 1 January 2023 to 31 December 2023, are disclosed in note 33 to the financial statements.
Our audit approach
Overview
|
|
· Overall group materiality: €649,000, which represents approximately 5% of the past 3-years average consolidated profit before tax adjusted for non-recurring items. |
|
· The audit procedures carried out covered all the components within the Group namely Lombard Bank Malta p.l.c. (the Parent Company) and its subsidiaries Redbox Limited, Lombard Capital Asset Management Limited and Lombard Select SICAV p.l.c.. The Group also includes Maltapost p.l.c. which is a subsidiary of Redbox Limited (which is fully owned by Lombard Bank Malta p.l.c.) and Tanseana Limited, Ciabro Limited formerly known as Ciantar Brothers Limited and PostaInsure Agency Limited, by virtue of Maltapost p.l.c.’s controlling shareholding in these three entities.
The Parent Company and its subsidiaries are based in Malta.
|
|
|
· Credit loss allowances in respect of loans and advances to customers of Lombard Bank Malta p.l.c. |
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Materiality
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 consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated 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 group materiality |
€649,000 |
|
How we determined it |
Approximately 5% of the last 3-years average consolidated profit before tax adjusted for non-recurring items |
|
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 Group is most commonly measured by users, and is a generally accepted benchmark. We chose an average of the past 3 years, adjusted for non-recurring items, as it was determined more appropriate in view of the fluctuations in results. We chose 5% which is within the range of quantitative materiality thresholds that we consider acceptable. |
We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit above €65,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Key audit matters
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 of Lombard Bank Malta p.l.c. Credit loss allowances in respect of loans and advances to customers represent management’s best estimate of Expected Credit Losses (‘ECLs’) within the loan portfolios at the end of the reporting period. The development of the models designed to estimate ECLs on loans measured at amortised cost 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 macro-economic uncertainties driven by the conflict in Eastern Europe and the escalating tension in the Middle East, have resulted in supply chain disruptions and significant inflationary pressures. These conditions 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. Credit loss allowances relating to loans and advances in the Bank’s Personal and Corporate and commercial portfolios are determined at an instrument level. In general, the Bank calculates ECLs by multiplying three main components: probability of default (PD), loss given default (LGD) and exposure at default (EAD): i. Probability of default (“PD”): the likelihood of a borrower defaulting on its financial obligation either over the next 12 months or over the remaining lifetime of the obligation. ii. Loss given default (“LGD”): the expected losses taking into account, among other attributes, the mitigating effect of collateral value (if any) at the time it is expected to be realised and the time value of money. The LGD modelling methodology utilises historical experience, which might result in limitations in its reliability to appropriately estimate ECLs especially during periods characterised by economic conditions such as those currently experienced as a result of supply chain disruptions and global inflationary pressures. iii. Exposure at default (“EAD”): the expected exposure in the event of a default (including any expected drawdowns of committed facilities). When applicable, the Bank also applies overlays based on expert judgement where management’s view is that the calculated ECLs based on these key inputs do not fully capture the risks within the Bank’s loan portfolios. For non-defaulted (Stage 1 and 2) loans and a number of defaulted (Stage 3) loans which are not individually significant, the Bank uses internally developed statistical models. For non-defaulted (Stages 1 and 2) exposures, PDs are estimated using historical model development data based on the Bank’s own experience as available at the reporting date. For exposures secured by immovable properties, LGDs are driven by the adjusted loan-to-value ratio of the individual facilities and takes into account other assumptions, including market value haircut (which includes costs to sell), time to sell and the impact of discounting the collateral from the date of realisation back to the date of default. The maximum period considered when measuring ECLs is the maximum contractual period over which the Bank is exposed to credit risk. For individually significant defaulted (Stage 3) exposures, discounted cash flow models are utilised in order to estimate ECLs. Internal credit risk management practices are used to determine when a default has occurred, considering quantitative and qualitative factors where appropriate. Judgement is required to determine when a default has occurred and then to estimate the expected future cash flows related to the loan, which are dependent on parameters or assumptions such as the valuation of collateral (including forced sale discounts and assumed realisation period) or forecasted operating cash flows. The Bank is required to assess multiple scenarios in this respect, which scenarios will have probabilities attached. The current inflationary pressures and the interest rate environment experienced locally have increased the level of uncertainty around judgements made in determining the timing of defaults and in respect of staging. In this respect, these economic conditions might be reasonably expected to impact the affordability of repayments attributable to exposures within the personal portfolio in view of rising cost of living and the impact of changes in market interest rates. Moreover the current macro-economic scenario, could create additional pressures on the business of the Bank’s borrowers in the corporate and commercial portfolio. Under IFRS 9, the Bank is required to formulate and incorporate multiple forward-looking economic conditions, reflecting management’s view of potential future economic variables and environments, into the ECL estimates. A number of macro-economic scenarios based on the selected macro-economic variables are considered to capture non-linearity across credit portfolios. The complexity attributable to this factor requires management to develop multiple macro-economic scenarios involving the use of significant judgements. The current economic conditions and the macro-economic uncertainty induced by fluctuations in market interest rates, together with geopolitical uncertainties attributable to the ongoing conflicts within Eastern Europe and the Middle East have significantly impacted macro-economic variables, increasing the uncertainty around judgements made in determining the severity and likelihood of macro-economic 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 accounting records. The ECL models are based on a general-purpose application which requires extensive manual handling of data. This increases risk around the accuracy and completeness of data used to determine assumptions and to operate the ECL models. In some cases, data is unavailable and reasonable alternatives have been applied to allow calculations to be performed. Since the estimation of ECLs is subjective in nature and inherently judgmental, 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 macro-economic conditions currently experienced, which have significantly increased the level of estimation uncertainty in respect of the calculation of credit loss allowances. We focused on credit loss allowances due to the subjective nature of specific data inputs into the calculation of ECLs and the subjective judgements involved in both timing of recognition of impairment and the estimation of the size of any such impairment.
Accordingly, summarising the key areas relevant to the Bank’s measurement of ECLs would include:
· Allocation of assets to stage 1, 2, or 3 using criteria in accordance with IFRS 9;
· Accounting interpretations and modelling assumptions used to build the models that calculate the ECL;
· Completeness and accuracy of data used to calculate the ECL;
· Inputs and assumptions used to estimate the impact of multiple macro-economic scenarios; and
· Measurement of individually assessed provisions including the assessment of multiple scenarios.
Relevant references in the Annual Report and Financial Statements:
· Accounting policy: note 1.7
· Credit risk management: note 2.2;
· Accounting estimates and judgements: note 3.2;
· Note on Loans and advances to customers: note 8; and
· Net movement in expected credit losses: note 32.
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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 model enhancements were evaluated and tested. Discussions with the Audit & Risk Committee and management were held on: · inputs, assumptions and adjustments to ECL, 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-looking economic scenarios, including the severity and magnitude of modelled downside scenarios, particularly in the context of the estimated impact of the macro-economic developments driven by the global inflationary pressures and the ensuing interest rate environment, together with geopolitical uncertainties attributable to the ongoing military conflict in Eastern Europe and the escalation of the Middle East conflict; and · individually significant loan impairments. 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. ECL calculation for non-defaulted loan exposures and a number of defaulted loans which are not individually significant We understood and critically assessed the models used for ECL estimation for the Bank’s loan portfolio. Since modelling assumptions and parameters are based on historic data, we assessed whether historic experience was representative of current circumstances and of the recent losses incurred 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 macro-economic variables. Model calculations were also tested independently. Substantive procedures were performed as follows: · 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 macro-economic environment. · Tested a sample of loans to independently review the borrower’s financial performance and ability to meet loan repayments and assess the appropriateness of the credit rating assigned by management, taking into consideration the impact of the current macro-economic conditions on the repayment capabilities of the sampled borrowers. · Challenged the criteria used to allocate an asset to stage 1, 2 or 3 in accordance with IFRS 9 and tested a sample of assets in stage 1, 2 and 3 to verify that they were allocated to the appropriate stage. · Tested the completeness and accuracy of the critical data extracted from the underlying systems, that is utilised within the models for the purposes of the year end ECL calculation. · Risk based testing of models, including a review of the continuing appropriateness of model assumptions. We tested the assumptions, inputs and formulas used in ECL models on a sample basis. This included assessing the appropriateness of model design and formulas used, and recalculating PDs, LGDs and EADs on a sample basis, through the involvement of subject matter experts. · We assessed the reasonableness of modelled PDs through a comparison of historically predicted and observed default rates and the reasonableness of modelled LGDs taking cognisance of the potential impacts of the current macro-economic environment. · We also assessed the reasonableness of market value haircuts and time to sell assumptions used as inputs in the light of the current economic climate. · Tested the multiple macro-economic scenarios and variables to assess their reasonableness. We assessed the appropriateness of changes effected during the year to factor the impact of the current macro-economic environment. We assessed whether the severity of the forecasted macro-economic variables was appropriate in view of the elevated level of uncertainty related to the current economic conditions, which are characterised by significant inflationary pressures and higher levels of interest rates. We challenged the correlation between economic factors and ECL allowances and the impact of these macro-economic factors on the ECL. Our testing of models and model assumptions did not highlight material differences.
Based on the evidence obtained, we found the model assumptions and data used within the models to be reasonable.
ECL calculation for defaulted individually significant loan exposures For defaulted exposures within the loan portfolio, the appropriateness of the methodology and policy used to calculate ECLs was independently assessed. We understood and evaluated the processes for identifying default events within loan portfolios, as well as the impairment assessment process. Substantive procedures were performed in respect of identification of defaults as follows: · Assessed critically the criteria used by management for identifying borrowers whose financial performance is expected to be particularly susceptible to the potential impact of the economic pressures being experienced and for determining whether a UTP/default event had occurred by testing a sample of loans with characteristics that might imply a default event had occurred (for example a customer experiencing financial difficulty or material sector disruption) to challenge whether default events had actually occurred and to assess whether default events had been identified by management in a timely manner. · Selected a sample of performing loans which had not been identified by management as potentially defaulted, to form our own judgement as to whether that was appropriate and to further challenge whether all relevant events had been identified by management. Substantive procedures were performed on defaulted exposures in respect of the estimation of the amounts of the respective ECL provisions, as follows: · Reviewed the credit files of a selected sample of loans to understand the latest developments at the level of the borrower and the basis of measuring the ECL provisions and considered whether key judgements were appropriate taking cognisance of the current macro-economic environment. · Challenged the severity of scenarios being applied for these exposures, together with their respective probability weights by forming an independent view of the recoverability of the selected loan exposures under different scenarios, assigning probabilities independently and comparing the outcomes to that of the Bank. · Tested key inputs to and reperformed the impairment calculation used to derive expected cash flows under different scenarios. · Assessed the appropriateness of a sample of property valuations securing impaired loans through the use of experts.
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. |
How we tailored our group audit scope
The Group is composed of eight components. These include Lombard Bank Malta p.l.c. (the parent company), and its subsidiaries Redbox Limited, Lombard Select SICAV p.l.c. and Lombard Capital Asset Management Limited. The Group also includes Maltapost p.l.c. which is a subsidiary of Redbox Limited (which is fully owned by Lombard Bank Malta p.l.c.) and Tanseana Limited, Ciantar Brothers Limited and PostaInsure Agency Limited, by virtue of Maltapost p.l.c.’s controlling shareholding in these three entities.
MaltaPost p.l.c. has been determined to be a financially significant entity.
We tailored the scope of our audit in order to perform sufficient work on all components to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates, and local statutory requirements.
The Group audit team performed all of this work by applying the Group overall materiality, together with additional procedures performed on the consolidation. This gave us sufficient appropriate audit evidence for our opinion on the Group financial statements as a whole.
Other information
The directors are responsible for the other information. The other information comprises all of the information in the Annual Report and Financial Statements 2023 (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 and will 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, 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.
Responsibilities of the directors and those charged with governance for the financial statements
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 Group’s and 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 Group or the Bank or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’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 Group’s and 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 Group’s or 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 Group or 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.
· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
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 Lombard Bank Malta p.l.c. 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 consolidated financial statements and the relevant mark-up requirements therein, 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 consolidated financial statements and the relevant electronic tagging therein, 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 accordance with the requirements of the ESEF RTS.
· Obtaining the Annual Financial Report and performing validations to determine whether the Annual Financial Report has been prepared in accordance with the requirements of the technical specifications of the ESEF RTS.
· Examining the information in the Annual Financial Report to determine whether all the required taggings therein have been applied and whether, in all material respects, they are in accordance with the requirements of the ESEF RTS.
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 all material respects, in accordance with the requirements of the ESEF RTS.
Other reporting requirements
The Annual 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.
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Area of the Annual Report and Financial Statements 2023 and the related Directors’ responsibilities |
Our responsibilities |
Our reporting |
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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 Company 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.
With respect to the information required by paragraphs 8 and 11 of the Sixth Schedule to the Act, our responsibility is limited to ensuring that such information has been provided. |
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 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 Company has complied with the provisions of the Code, presenting the extent to which the Company 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 Company 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 Company’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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Remuneration report The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare a Remuneration report, including the contents listed in Appendix 12.1 to Chapter 12 of the Capital Markets Rules. |
We are required to consider whether the information that should be provided within the Remuneration report, as required in terms of Appendix 12.1 to Chapter 12 of the Capital Markets Rules, has been included. |
In our opinion, the Remuneration report has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority. |
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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 10 April 2010. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 14 years.
Fabio Axisa
Principal
For and on behalf of
PricewaterhouseCoopers
78, Mill Street
Zone 5, Central Business District
Qormi
Malta
26 April 2024