HEAD OFFICE 67, Republic Street, Valletta VLT 1117 MALTA. Tel: 25581117 Fax: 25581151 e-mail:
[email protected] www.lombardmalta.com ANNUAL REPORT 2013 Contents Chairman’s Statement to the Members 3 Chief Executive Officer’s Review of Operations 5 Directors’ Report 9 Statement of Compliance with the Code of Principles of Good Corporate Governance 13 Remuneration Report 21 Company Information 23 Independent Auditor’s Report to the Members of Lombard Bank Malta p.l.c. 26 Financial Statements: Statements of Financial Position 30 Income Statements 32 Statements of Comprehensive Income 33 Statements of Changes in Equity 34 Statements of Cash Flows 38 Notes to the Financial Statements 39 Additional Regulatory Disclosures in terms of Appendix 2 of Banking Rule BR/07 131 Five Year Summaries 155 Chairman’s Statement to the Members Notwithstanding the challenging operating environment Preserving the Bank’s financial strength in the best interests prevailing during 2013, Lombard Bank Malta p.l.c. (the of all stakeholders remained the primary concern of the ‘Bank’) turned in a satisfactory performance. Domestic market Board of Directors during the year under review. The capital conditions were characterised by increased competition for base was further strengthened, with a capital adequacy ratio customer deposits in a generally low-interest rate setting of 19%, compared to a regulatory minimum of 8%, while and by subdued credit growth, such that interest margins shareholders’ funds increased to €77.8 million. This strong remained under pressure throughout. This was compounded capital position continued to be accompanied by a high by the impact of a regulatory regime that has become more level of liquidity, reflected in two important indicators: the stringent with regard to the grading of loans, provisioning liquidity ratio, which at 87.4% was well above the required and dividend distribution.