Bank of Valletta p.l.c. Annual Report & Financial Statements 2017 WorldReginfo - 2e807235-3b28-4312-a40f-35f28f6ec38d WorldReginfo - 2e807235-3b28-4312-a40f-35f28f6ec38d Bank of Valletta p.l.c. Annual Report & Financial Statements 2017 i Contents and General Information CONTENTS Board of Directors and Group Company Secretary ii Chairman’s Statement iv Chief Executive Officer’s Review viii Corporate Social Responsibility xvi FINANCIAL STATEMENTS BOARD OF DIRECTORS Directors’ report 1 Taddeo Scerri (Chairman) Capital & risk management report 7 John Cassar White (up to 16 December 2016) Corporate governance statement of compliance 32 Stephen Agius Remuneration report 44 Alan Attard Nominations report 47 Paul V Azzopardi Independent auditors' report - corporate governance 48 Miguel Borg Statements of profit or loss 49 James Grech Statements of profit or loss and other Alfred Lupi comprehensive income 50 Mario Mallia Statements of financial position 51 Anita Mangion Statements of changes in equity 52 Antonio Piras Statements of cash flows 54 Joseph M Zrinzo Notes to the financial statements 55 Barbara Helga Ellul (up to 16 December 2016) Independent auditors’ report to the shareholders Mario Grima (up to 16 December 2016) of Bank of Valletta p.l.c. 127 Gabriele Simonetti (up to 16 December 2016) The group’s five year summary 133 Group financial highlights in US dollars 136 COMPANY SECRETARY Ruth Spiteri Longhurst MANAGEMENT BOARD Bank of Valletta p.l.c. BOV Centre Mario Mallia (Chief Executive Officer) Triq il-Kanun Ernest John Agius (Chief Operations Officer) Santa Venera SVR 9030 Joseph Agius (Chief Technology Officer) Malta Miguel Borg (Chief Risk Officer) Kenneth Farrugia (Chief Business Development Officer – Tel: (+356) 2275 3000 Investments) Fax: (+356) 2275 3711 Albert Frendo (Chief Business Development Officer – Credit) www.bov.com Elvia George (Chief Finance Officer) E-mail: [email protected] Rudolph Gatt (Secretary) Bank of Valletta p.l.c. Registered Office: 58, Triq San Żakkarija AUDITORS Il-Belt Valletta VLT 1130 Malta KPMG Registration Number C 2833 Bank of Valletta p.l.c. is a public limited company licensed LEGAL ADVISORS to conduct Investment Services business by the Malta Financial Services Authority. Camilleri Preziosi Bank of Valletta p.l.c. is authorised to act as a trustee by the Malta Financial Services Authority. NOTICE OF MEETING Bank of Valletta p.l.c. is an enrolled tied insurance intermediary The Annual General Meeting of the Bank will be held at the of MAPFRE MSV Life p.l.c. (MMSV). MMSV is authorised and Grand Master Suite, Hilton Malta, St Julians, on Thursday regulated by the Malta Financial Services Authority to carry on 10 May 2018 at 10.00 a.m. long term business under the Insurance Business Act 1998. WorldReginfo - 2e807235-3b28-4312-a40f-35f28f6ec38d Bank of Valletta p.l.c. ii Annual Report & Financial Statements 2017 Board of Directors Paul V Azzopardi Director and Group Company C&CP RM NED * Appointed to the Board in December 2016. Mr Azzopardi is currently Secretary the Chairman of the Compliance and Crime Prevention Committee, and Deputy Chairman of the Risk Management Committee. He set up and managed Azzopardi Financial Services between 1989 and 2006 and subsequently worked in investments in Ontario, Canada, as director and portfolio manager, managing private clients’ portfolios and investment funds. Mr Azzopardi was sponsoring and corporate stockbroker of the Bank from its initial listing on the Malta Stock Taddeo Scerri Exchange in 1992 until 2006, and also served in the same roles Chairman for the funds of BOV Asset Management Limited and several other companies. Mr Azzopardi is the author of “Behavioural Technical C NGC R NED * Analysis” and two other books on investments, and contributes regularly to the press. He lectured at the University of Malta and the Taddeo Scerri was appointed Chairman of the Bank in December School of Continuing Studies, University of Toronto. Mr Azzopardi 2016. Previously, he was a director of the Bank following his holds a first degree in accountancy from the University of Malta, appointment in April 2013. Mr Scerri currently chairs the Board’s an MBA from the University of British Columbia, is a Fellow of the Nominations and Governance Committee, the Remuneration Malta Institute of Accountants and a Certified Public Accountant. Committee and the Credit Committee. He is a qualified Mr Azzopardi is also Director of BOV Asset Management Limited accountant. Mr Scerri was the managing partner of RSM Malta (BOVAM) and BOV Fund Services Limited (BOVFS). until his retirement in 2015. He was the Chairman of the local UEFA Clubs Licencing Board and was also a member of the Malta Miguel Borg Football Association’s Finance Committee. Director Stephen Agius ED Director Appointed to the Board in July 2017. Miguel Borg joined the Bank in November 2007. Mr Borg was appointed Chief Risk Officer of A NGC NED * the Group in November 2014 and is a member of the Management Board. In his role as Chief Risk Officer, he is responsible for Appointed to the Board in December 2016. Stephen Agius overseeing the measurement and management of the Group’s is currently a member of the Nominations and Governance financial and non-financial risk. He is responsible for maintaining Committee and recently he was appointed also as a member the Bank’s relationship with regulators and supervisors. Risk of the Audit Committee. Formerly he was a member of the Risk management, compliance, anti-financial crime, legal services Management Committee. Mr Agius works as a Chief of Information and credit risk sanctioning departments report to the Chief Risk and Development with the national telecom regulatory authority. Officer. Mr Borg is a Director of BOVAM and chairs the Risk For five years, Mr Agius served as member of the Board of Directors and Regulatory Committee of BOVAM. He is a member of the of Enemalta p.l.c. and Engineering Resources Limited. Prior to his Bank’s Asset and Liability Committee and the Risk Committee of current role, Mr Agius occupied various positions where he was MAPFRE MSV Life p.l.c. Mr Borg is also Chairman of the Central responsible for a number of large scale projects, both locally and Co-Operative Fund. Mr Borg holds a Masters in Economics from abroad, in areas related to enterprise resource planning, billing, the University of Malta and lectures at the University of Malta. integration, business intelligence and data warehousing, and process modelling. Mr Agius is also a visiting senior lecturer at the University of Malta where he lectures ‘Big Data Analytics for James Grech Marketing Professionals’ and ‘Digital Marketing Strategy’. He Director studied computer science and information systems and gained an honours Bachelor degree from the University of Greenwich UK, C RM NED followed by an MBA in e-Business from the University of Malta. Mr Grech was appointed to the Board in December 2014. He is the Executive Head of the Foreign Bank Relationships department and Alan Attard a member of the Bank’s Asset and Liability Committee. Recently, he was appointed as member of the Credit Committee and of the Risk Director Management Committee. He was formerly a member of the Audit Committee and the Compliance and Crime Prevention Committee. C&CP RM NED He also serves as a member on the European’s Banking Federation Correspondent banking taskforce and also as Chairman of the Board Appointed to the Board in December 2016. Mr Attard is currently of Trustees of the BOV Employees’ Foundation. Professionally, Mr a member of the Compliance and Crime Prevention Committee Grech’s career commenced as a management accountant with a and he was recently also appointed as a member of the Risk local accounting firm. He then joined the Bank in 1998 and occupied Management Committee. He was previously a member of the senior managerial positions at various branches and departments Bank’s Anti-Financial Crime Committee. He joined the Bank in within the Bank. He was a BOV Board Director between 2004 1987. For the past thirteen years, he has held various managerial till 2008. Mr Grech is a director of other local companies and a positions including serving as branch manager of several recognised member of the Institute of Directors – UK. Mr Grech branches. At present, Mr Attard is the branch manager of BOV’s holds an Honours degree in Management and a Masters in Floriana branch which is classified as one of the Bank’s premier Business Administration from Henley Management College, UK. His branches. In July 2015, he was elected as trustee on the Board of dissertation focused on the effectiveness of Board performance and Trustees of the BOV Employees’ Foundation and has since served Corporate Governance. He has lectured on Financial Services at the as secretary to said Board. He is also a member of the Board of Malta College of Arts, Science and Technology, and on Corporate Directors of the Malta Ten Pin Bowling Association. Governance at the University of Malta. WorldReginfo - 2e807235-3b28-4312-a40f-35f28f6ec38d Bank of Valletta p.l.c. Annual Report & Financial Statements 2017 iii Alfred Lupi Antonio Piras Director Director A C C&CP NED * A R NED * Appointed to the Board in December 2015. Mr Lupi currently chairs Appointed to the Board in December 2016. Mr Antonio Piras is the Audit Committee and the Ethics Committee. He is also a member currently the Deputy Chairman of the Remuneration Committee and of the Credit Committee, and the Compliance and Crime Prevention he was recently appointed as a member of the Audit Committee. Committee. He is a professional accountant with an economics He was previously a member of the Risk Management Committee. degree and currently engaged in management consultancy. Mr Lupi Mr Piras occupies the role of Director of the Board of Lacobucci was Chief Financial Officer in two major companies and the Executive Aerospace HF SpA and until recently was Vice Chairman of Eurofidi Chairman of Pavi Shopping Complex p.l.c.