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
3
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
4
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
5
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
7
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