Lombard Bank Malta p l c : Financial Results for the period ended 30 June 2023

Company Announcement

The following is a Company Announcement issued by Lombard Bank Malta p.l.c. pursuant to the Capital Markets Rules of the Malta Financial Services Authority.

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During a meeting held on 29 August 2023, the Board of Directors of Lombard Bank Malta p.l.c. (the 'Bank') approved the attached Group and Bank interim condensed financial statements for the six-month period commencing 1 January 2023 to 30 June 2023.

These financial statements have been reviewed by PricewaterhouseCoopers in accordance with ISRE 2410 - 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' and are, together with the attached Directors' Report for the period ended 30 June 2023, also available on the Bank's website at https://www.lombardmalta.com/en/financial-results.

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Helena Said

Company Secretary

29 August 2023

[Ref. LOM 290]

HALF-YEARLY RESULTS FOR 2023: HIGHLIGHTS

• Group Profit Before Tax was €5.4m (H1 2022: €17.2m).
• Profit Attributable to Equity Holders was €3.2m (H1 2022: €10.9m).
• Group Operating Income was €35.2m (H1 2022: €28.6m).
• Bank Cost-to-Income Ratio stood at 51.3% (H1 2022: 57.9%).
• Customer Deposits stood at €1,009.3m (FYE 2022: €1,008.4m).
• Loans & Advances to Customers reached €719.9m (FYE 2022: €711.6m).
• Group Total Assets stood at €1,211.2m (FYE 2022: €1,203.4m).
• Group Advances to Deposits Ratio was 71.3% (FYE 2022: 70.6%).
• Group Net Asset Value (NAV) per share stood at €1.54 (FYE 2022: €1.50).

DIRECTORS' REPORT

The Lombard Bank Group (the Group) delivered a robust financial performance in the first half of 2023 with a Profit before Tax of €5.4m. The comparable figure for 2022, €17.2m, had included a one-off significant recovery on a long outstanding non-performing loan. When adjusted for this special factor the Profit before Tax in 2022 would have been €5m.

The following is a summary of the Group's financial performance for the first half of the year. The Group achieved a Profit after Tax of €3.4m with the main drivers being higher Net Interest Income and improved operational efficiency, reflected in Earnings per Share of 4 cents for this period. The Bank maintained an adequate capital and liquidity position, with ratios above the regulatory requirements.

The demand for general banking services, including commercial and retail credit, remained consistently strong. However, to continue to progress on delivering the Bank's planned strategic initiatives, details of a forthcoming increase in the capital base, as authorised by the shareholders earlier this year, will be announced shortly.

Loans and Advances to Customers rose to €719.9m contributing to a 22% increase in gross interest revenues of €16.3m. Treasury activity was also a significant contributor to the rise in interest income, in line with increased market interest rates. Customer deposits remained stable, just above one billion euro while interest payable rose by 10% to €3.6m. These movements resulted in improved Net Interest Income of €12.7m, an increase of 25%. Advances to Deposits Ratio at 71.3% (FYE 2022: 70.6%), provided a healthy liquidity buffer, as the Bank continued to rely on a diversified funding base, which over the years has proven to be stable.

Fee and Commission Income at €2.8m decreased by 8%, indicative of a more customer-oriented tariff.

Group Employee Compensation and Benefits rose by 2% in what continued to be a tight labour market compounded by inflationary pressures. Group operating costs generally remained under control. These included a significant increase in expenses incurred by MaltaPost relating to postal delivery services, without a compensatory increase in tariffs. The need for the Malta Communications Authority, as the postal regulator, to react in a timely manner to MaltaPost's requests for fair and reasonable revisions of tariffs, remains critical.

Expected Credit Losses (ECL) as defined and determined by International Financial Reporting Standard 9 (IFRS9) resulted in a charge of €1.9m in the first half of this year compared to a release of €12.1m taken in the corresponding previous year period. As stated above, the reversal in 2022 was mainly attributable to a significant recovery on a commercial non-performing loan which had been largely provided for in previous years. The Bank will continue to closely monitor its exposures, also taking into consideration the global uncertainty, not least the geopolitical crisis, economic conditions and increasing inflationary pressures.

The outlook for rest of the year is positive, as the Bank expects to benefit from increased economic activity and customer demand as well as continued cost controls.

In this context, reference is made to previous Company Announcements regarding the Bank's intention to access the capital markets through the issue and allotment of new ordinary shares to be admitted to listing and trading on the Official List of the Malta Stock Exchange, which shares shall form part of the same class, have equal rights as, and rank pari passu with the Bank's existing shares (the 'Rights Issue').

Following the Annual General Meeting held on 22 June 2023, the Bank resumed the Rights Issue process. The Bank shall, by virtue of the Rights Issue, seek to increase its capital by circa €50 million. This will, apart from further strengthening the Bank's capital base in regulatory terms, allow the Bank to significantly grow its activities, not least by satisfying the demand for credit as well as other banking services and enable the continued implementation of the Bank's strategy.

Further information relating to the Rights Issue will be announced shortly.

29 August 2023