Lombard Bank yesterday released an Interim Directors’ Statement saying that the ongoing pandemic has negatively affected some lines of business also during the third quarter of 2020.

This has led to profit before taxes registered for the quarter being lower than those registered during the same period last year.

The statement, released through the Malta Stock Exchange, also predicted that the financial results for the year would be subdued compared to original targets.

The Bank says it suffered from pressure on interest rates, including negative interest on prime quality assets which is expected to continue giving rise to a smaller interest margin.

Income from commissions was also negatively impacted by reduced volumes as business sentiment and activity continued to be affected by the economic slowdown.

“On the other hand,” the Bank said, “while operating costs remained under control, the Bank incurred additional expenditure in ensuring that its customers and staff remained safe and always fully protected during this challenging time.”

Lombard Bank, in which the Government has a 49.01 per cent shareholding after using Individual Investor Programme (IIP) funds for an off-exchange transfer, indicated that its overall financial position remains strong, saying that “there are no indications of significant deterioration in the Bank’s assets”.

“Total assets were slightly higher when compared to the previous year while both the capital and liquidity ratios remained well in excess of the regulatory requirements.”

The Bank said that its loans and advances to customers portfolio includes facilities in respect of medium-term projects which should not be unduly impacted by the short-term economic environment. Moreover, the Bank said, the majority of the lending exposures are well secured by high quality collateral.

“Nonetheless, the Bank continues to review the levels of its impairment allowances in line with the economic situation and regulatory requirements. It is anticipated that worsening economic forecasts factored into the calculation of Expected Credit Losses may well give rise to an increase in these allowances for 2020.”

The loan to deposit ratio meanwhile hovered around a prudent 65 per cent, with customer deposits tending to grow faster than loans and advances. The Bank also participated in the COVID-19 Guarantee Scheme introduced by the Malta Development Bank.

MaltaPost p.l.c., Lombard Bank’s main subsidiary, continued its operations uninterruptedly, with only minor disruptions, mainly in deference to health and safety precautions.

“After significant logistical difficulties during the second quarter of 2020 due to unavailability of international transport facilities,” the Bank said, “delivery of postal items picked up in earnest in the third quarter so that activity, although not at full capacity, then reached an acceptable level.”

Lombard Bank said it will continue to closely monitor developments and remains committed to ensuring that the best interests of its stakeholders are given priority and safeguarded at all times.