ANNUAL REPORT &
FINANCIAL STATEMENTS
2022
TABLE OF CONTENTS
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Page
Chairman’s Statement
1
CEO’s Review
3
Board of Directors
7
Executive Management
12
Financial Statements and Other Information
Directors’ Report
16
Remuneration Report
38
Corporate Governance Report
46
Statements of Profit or Loss
61
Statements of Comprehensive Income
62
Statements of Financial Position
63
Statements of Changes in Equity
64
Statements of Cashflows
66
Notes to the Financial Statements
67
Five-Year Summaries
176
Independent Auditor’s Report
182
Our Presence
190
CHAIRMAN’S STATEMENT
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APS Bank plc 1
Welcome
It is a pleasure to be addressing you, our shareholders, through this Annual Report. On behalf of the
Board of Directors and the Management team, I would like to express our thanks and gratitude for the
very strong support shown in our Initial Public Offering (IPO) in June 2022. The strong take-up of the
Bank’s issued share capital reflects the investor communities’ confidence in the APS brand. For this, I
reiterate my thanks.
Backdrop to the year under review
Following Russia’s invasion of Ukraine in February 2022, the global and EU economies were exposed
to a complex set of variables involving an energy crisis with continued stresses in global supply chains
resulting in hikes in prices for many goods and services. Global central banks broke the decade long
experience of a zero-interest rate environment by embarking on interest rate increases in a bid to fight
inflationary pressures which have not been seen in many, many years. The challenge and the main
objective for central banks and for Governments across the globe have been the taming of inflation
without stunting economic growth.
Performance
APS Bank solo performance registered a profit before tax of €28.9 million (versus prior year of €23.7
million) with a Group profit before tax figure of €15.7 million (versus prior year of €24.1 million). The
Bank’s solo performance was dampened by market losses arising out of the Investment activities and
Subsidiaries’ value in the Bank’s books. The dilution in Group profits arises predominantly out of
unrealised investment losses with minimal credit losses experienced. Expected Credit Losses relating
to the Bank’s lending activity in its widest sense, remain unremarkable. The Chief Executive Officer’s
(CEO) report will address the Bank’s performance in more detail. The Bank’s operations will contribute
circa € 10 million in tax payments to the Inland Revenue.
The Bank’s capital position was strengthened by the IPO in June 2022. The Bank’s current level of
capital is strong with a Tier 1 capital of 15.2% (versus prior year of 12.8%) and a Total Regulatory Capital
of €284.1 million up on prior year of €231.3 million. The Board of Directors believes that the Bank's
return on average equity of 8.3% for 2022, up from 7.7% in 2021 is a result that evidences the strength
and sustainability of a robust business model that permits us to grow our core business and support
our published dividend policy.
Apart from the financial results reported, the Bank’s non-Financial performance also continues to be a
very strong one, with sustained touchpoints with society in general, and more specifically through the
established annual event, the Malta Sustainability Forum. The Bank’s extensive Corporate Social
Responsibility (CSR) activities will be reported elsewhere in this Annual Financial Statements report.
The Bank’s commitment to support all cohorts of our society will continue to be a hallmark of our brand.
Rewarding Shareholders
The Board is recommending a gross dividend to shareholders of €9.8 million up from €4.6 million in
2021 equating to a 2022 dividend per share of 2.68 €cents gross or 1.74 €cents net per share. We firmly
believe that shareholders need to participate in the success achieved by the Bank. This dividend
distribution reflects the strong performance of the Bank despite the many challenges faced in both
local and international economic contexts. All regulatory approvals for the payment of this scrip
dividend have been obtained.
Corporate governance
The Board of Directors met 17 times during the year under review. Strategic focus, sustainable business
planning and a strong oversight stance continue to be the guiding principles of your Board. Discussions
and decisions are based on a wealth of experience, diversity, competence, and a forward-looking
mindset, enabling the Board to guide, lead and challenge the Management team in the pursuit of a
successful and compliant outcome. The tried and tested corporate governance structure of the Bank
continues to function effectively not only through the Board meetings but also through the seven Board
Committees that are chaired and led by Directors with the contribution of members of the Management
function.
CHAIRMAN’S STATEMENT
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APS Bank plc 2
Corporate governance (continued)
On behalf of the Board, I would like to thank Mr Victor Gusman for his ten-year contribution to the
success of the Bank. During this time, Mr Gusman has added value to the Board’s discussions and
decisions via his considerable business acumen and his knowledge of the Bank. We wish Mr Gusman a
long and happy retirement. I would also like to welcome Mr Joseph Rapa to the Board. Mr Rapa’s
appointment will broaden and deepen expertise in risk management, internal controls and finance
strategy. I am certain that Mr Rapa will add value to the workings of the Board.
Future focus
The latest growth rates for Malta and the Eurozone region published by the International Monetary
Fund forecast growth rates for 2023 of circa 3% and circa 1% respectively. National Debt to Gross
Domestic Product ratio for Malta is forecast at circa 58% for 2022 reaching circa 61% in 2024. The
recent International Monetary Fund recommendations include an exit strategy for Government
subsidies in relation to energy costs via reforms that continue to protect vulnerable members of society.
The environment that we operate in continues to be a challenging one with complex economic and
financial variables, specific demands by the commercial community and the ongoing need to continue
to service and anticipate retail clients’ needs.
The work of the Board is structured on a forward-looking strategic plan that focuses on sustainable
growth in a compliant manner. Refining a resilient business model, putting the customer first and
accelerating transformation are some of our prioritised strategic objectives. The Board’s agenda is
geared to deliver long term value not only for the benefit of shareholders, but in line with the
stakeholders’ philosophy, the Bank targets all constituent parts of our economy, customers, employees,
National economic wellbeing and helping the vulnerable sections of our community. In addition, your
Board will continue to be guided by a robust set of values and principles.
The very recent outcome of the Financial Intelligence Analysis Unit’s (FIAU) report on the Bank’s anti-
money laundering and combating of financial crime structures and systems, which also acknowledges
the ongoing remedial actions made by the Bank over the past years, gives us the confidence that we
are in a very strong position to fully comply with all regulatory requirements in the immediate future.
We cannot discuss future direction without referring to the ongoing and time-critical importance of
Environmental, Social and Governance (ESG) issues that feed into a sustainable business strategy. Your
Board and the Management team are fully aware of our responsibility to aim for carbon neutrality,
acting not only in line with regulations but also beyond these requirements. A fuller detailed report on
the direction of travel that the APS Group is embarked upon can be found in another section of our
Annual Financial Statements Report for this year.
Acknowledgements
2022 has been yet another successful year notwithstanding the challenges that manifested themselves
in all areas that the Bank operates in. I would like to sincerely thank my colleagues on the Board, the
Management team tirelessly led by our CEO, Marcel Cassar, and all the employees for their
contributions. I am very proud to be part of this successful team.
Finally, I would like to sincerely reiterate my thanks to you all, our shareholders, for your support and
backing.
Martin Scicluna
9 March 2023
CEO’S REVIEW
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APS Bank plc 3
What looked like a promising start to the year on the back of a post-pandemic economic rebound soon
came to face a new series of shocks. Prominently, the Russian invasion of Ukraine and the amplified
supply chain challenges in both energy and food prices fuelled inflationary pressures and resultant
interventions from monetary authorities. As geopolitical tensions continued to heighten the risk of a
recession with cross-border implications, central banks started raising interest rates after a decade
characterised by low, zero or below. One can say that the negative global performance of most of 2022,
the worst since the financial crisis of 2008, is stretching the resilience of even the strongest nations.
Such international developments are felt also in our widely open economy through higher costs of
inputs and imported goods, being partly cushioned by Government subsidies which however contribute
to a build-up in public debt. In this difficult environment, Malta is experiencing higher economic growth,
milder inflation and lower unemployment than its EU counterparts, aided in no small way by a stronger
than expected tourism recovery and buoyant property market. The lifting of the FATF grey listing in
June also helped create a more benign outlook for the Maltese economy. But the challenges of
sustainable progress, weighing under demographic and over-development pressures, plus the search
for new segments of economic activity and expanding the human capital capability, are not to be under-
estimated.
Navigating through these choppy waters we again delivered excellent results and the best Bank solo
performance ever. This is thanks to a highly structured and comprehensive business planning process
that looks over a 3-year horizon, rolled over annually to remain responsive to emerging trends and
changes in the business and market environment. Apart from looking at the financial and operating
performance of 2022, as usual this Review touches briefly on how we tackled key strategic objectives
to deliver these successful results.
Robust operating fundamentals contrasted by investment market turbulence
In 2022, APS Bank plc posted €15.7 million pre-tax profit at Group level (2021: €24.1 million) and €28.9
million pre-tax profit at Bank level (2021: €23.7 million). These contrasting outcomes evince the trend
already emerging clearly in the first half of the year, as global markets were confronted by persistent
economic instability and rising inflationary pressures. Notwithstanding these challenges, the Bank
delivered strong operating results, offset only by the unrealised negative market trends at Group level.
Net interest income remained a key driver of the revenue mix, growing by 17.6% from €55.4 million in
2021 to €65.1 million in 2022.
An overall expansion of the Group’s home finance and commercial loan books, and in the fixed-income
portfolio, were the main contributors to the growth in interest revenue, as spreads on the syndicated
loan book also improved. Interest income grew by 15.5% from €69.1 million in 2021 to €79.9 million in
the year under review. On the other hand, interest expense of €14.8 million increased by 7.2% on the
€13.8 million of 2021, demonstrating the Group’s efficient management of its asset-liability mix and cost
of funding in a period which saw interest rates move higher in years.
Net fee and commission income for the period was €6.9 million, marginally lower than the €7.0 million
in 2021. While the general growth in local and foreign banking activities, card related commissions and
enlarged customer base brought new sources of fee-based banking income, this was offset by
reductions in investment services fees, negatively impacted by the ongoing market volatility. Net gains
on foreign exchange services also increased, from €0.4 million in 2021 to €1.3 million in 2022. In line with
the trend of the first half of the year, albeit at a slower pace in 4Q, the Group’s results from financial
instruments ended in red territory of €10.3 million. This was mainly due to the high economic uncertainty
and instability of financial markets which negatively impacted the investment in APS Funds SICAV,
consolidated at the level of the Group but not mirrored at the level of the Bank.
CEO’S REVIEW
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APS Bank plc 4
Robust operating fundamentals contrasted by investment market turbulence (continued)
Operating expenses for the year grew by 15.9% to €47.0 million compared to €40.6 million in 2021. The
main contributor to the increase is, as expected, ‘employee compensation and benefits’ which grew by
19.4% to €26.1 million (2021: €21.8 million). The Group’s investment in human capital is intensive and
continuous with no stone left unturned to attract and retain the best talent, and to motivate, re-skill and
up-skill staff in the face of a great attrition that has now become a global phenomenon. This is reflected
in higher salaries at all levels, different benefits schemes (including the introduction of an Employee
Share Incentive Plan (ESIP) in 2022) as well as investment in staff training, continuing education and
well-being.
Increases were recorded across the board in other operating overheads, resulting not least from general
inflation; these included regulatory and compliance costs, insurance, security and the ongoing
investment in technology infrastructure, channels and digitisation, seeking the right balance between
more efficiency and more sustainability (ESG/CSR) initiatives. As a result, the Group’s cost-to-income
ratio deteriorated from 64.3% in 2021 to 72.7% in 2022, in large part also due to the revenue drop
resulting from the unrealised deterioration in fair value instruments. Conversely, the Bank’s cost-to-
income ratio improved from 2021’s 64.1% to 61.5% in 2022.
This year too, impairments against expected credit losses resulted in a writeback of €0.3 million,
reflecting the performance of customer loans and advances and the Group’s high credit underwriting
standards and attitude to risk while still growing the book and actively pursuing new business
opportunities.
As at the end of the reporting period, Group total assets stood at €3.11 billion, a year-on-year growth of
11.3% on the €2.79 billion at the end of 2021. Loans and advances to customers grew by 15.1% to €2.22
billion while the fixed income portfolio, held mainly for liquidity and income diversification purposes,
grew by 40.1% to €459.6 million, as improved yield pick-up opportunities were created especially in 3Q
and 4Q of the year. These quarters also saw significant activity on the syndicated loans and trade
finance desks which had an overall very busy year whilst cash and reserves with the Central Bank of
Malta dropped further to close the year at €85.9 million, reflecting active liquidity management and the
Group’s support of Government borrowing programmes. Corresponding to the increase in the Group’s
asset base, amounts owed to customers grew by 11.5% or €278.9 million, to reach €2.71 billion, despite
4Q pressures arising from competing debt instrument issues in the local market.
Total equity amounted to €261.5 million, compared to December 2021’s €220.8 million. As cautiously
anticipated earlier in the year, market movements resulting from rising interest rates have had a direct,
negative impact on reserves (through ‘other comprehensive income’). These corrections, albeit
unrealised and expected to reverse fully over time, were amply compensated by the €66 million equity
capital raised from the successful IPO of June which was hugely oversubscribed within hours of
opening. The same IPO has had the effect of boosting the Bank’s capital adequacy ratio (CAR) and
CET1 ratio to 18.8% and 15.2% respectively by the end of 3Q, a level which was maintained also at year-
end.
CEO’S REVIEW
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APS Bank plc 5
Robust operating fundamentals contrasted by investment market turbulence (continued)
More numbers and statistics can be found in the ‘Financial Statements’ section of the Annual Report
and in the graphics accompanying this Review. This Review does not delve into performance indicators
in any detail, nor does it repeat the information which is now contained in the Directors’ Report and the
Group communicates on a very regular level across the various types of media. But the focus now turns
on three of the carefully formulated strategic objectives for 2022 and touches very briefly on how we
worked to achieve them.
Refining the business model to withstand the resilience test
Being preoccupied with keeping the customer always central to our activities, we embarked on various
initiatives aimed at enriching the relationship by enlarging and improving our product suite. Having
established investment services as a key area of focus for non-banking, low-capital-consuming income
we refined our target cohorts for the offering of our Pension Plans to reflect better the changing country
demographics – albeit with 2022 turning out to be a turbulent year for investors. At the same time, we
maintained our keen interest, and competitive edge, on the social front with the various schemes in
operation, mainly in partnership with Government.
We continued to improve our customer intelligence and data surveys as these are the cornerstone of
our product proposition strategy. Whether traditional offerings like home finance, commercial loans,
deposits or our investment and wealth management recommendations, or new ideas in the
‘sustainability’ space, our products engine continued being refined both in terms of resources, analytics,
intelligence and centralisation of processes. Further strengthening and re-organisation of various
operational units also took place, drawing efficiencies in tasks and procedures. Efforts were intensified
on scaling up channels ranging from the network to Contact Centre which with a 12x7 offering is now
closer to the description of a virtual branch.
Developing corporate culture and embracing new ways of working
At APS Bank, ‘Culture’ is a concept that cuts across the Group and fuses our corporate philosophy into
one uniform, overarching message. It is rooted in a sense of engagement with our ‘family’ of staff,
customers, business partners and now, thousands of shareholders and bondholders, and transmitted to
the rest of the market as one culture. All of this is also reflected in our marketing, CSR and, increasingly,
CEO’S REVIEW
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APS Bank plc 6
Developing corporate culture and embracing new ways of working (continued)
ESG campaigning. In an environment that can be best described as a ‘war for talent’, we succeeded in
strengthening various functions and positions, supporting growth and bringing in specialist skills while
offering a well-defined vision, excellent career prospects and employment conditions.
We also continued to provide generous programmes to promote the wholesome development of our
employees, including coaching, training and education opportunities, family-friendly work
arrangements and incentives that go beyond your normal reward structures. Amongst the many events
and initiatives, worthy of highlighting are the highly organised Staff Townhalls, regular offsites at various
management levels, professional staff surveys, talks, breakfasts, new website and enhanced social
media presence, while it was heartening to see both the Social Activities and Sports Committees back
to organising well-attended events for staff and their families.
Harvesting innovation and accelerating transformation
The year under review saw the continuation and acceleration of a growing pipeline of projects that are
driving the Bank’s transformation across many areas. Scrupulous analyses, well-curated proposals and
detailed budgets support the millions of euros of investment in projects that range from backbone
technology to more visible, customer interfacing solutions. The flow that drives the Bank’s
transformation programme is continuous: from smaller scale projects for peripheral systems and
initiatives, to upgrades of existing core technologies, to implementations that are mandated by
regulatory authorities or providers of payment systems infrastructures. Further enhancements were
also carried out to ‘myAPS’ permitting customers more convenience and versatility to bank seamlessly
over the internet and smart phones.
The Bank remained at the forefront in the use of virtual technology that now drives the new ways of
working and communicating, responding to the needs of both staff and customers. 2022 also saw
further rolling out of Robotic Process Automation (RPA) in various areas of operations, and more use
of AI such as the introduction of the APS Virtual Agent AVA, all of which facilitate the automation of
routine tasks and improve efficiency. Worthy of note is the momentum now gained at the Marsa
Digitisation and Documentation Centre, which is the nerve centre of the bank-wide digitisation project.
Concluding remarks
In last year’s Review I had remarked that 2022 was to be a landmark year for APS Bank as we planned
to approach the market to raise equity capital for the first time in our 100+ year history. It was a long-
awaited step that we saw not as some trophy but an integral part of the plan to grow the Bank also
through the diversification of its shareholder base. And what a resoundingly successful, record-breaking
IPO it was! If any confirmation was needed about the leading economic and societal role which the
Bank and Group have assumed in recent years, that was it. We believe to have the vision and tenacity
to fulfil the responsibility of not just widening our product range, technology model and serving the
market, but increasingly of being a mainstay of support for Maltese businesses and families.
2022 saw policy makers and central bankers across borders persist in fighting inflation notwithstanding
the implications for the capital markets and potentially, loan quality. In the Eurozone alone, since July
the ECB increased its deposit rate progressively to 2.50% from -0.5%, making it the largest and fastest
increase in rates in the monetary union’s history. As banks adapt their models to the reality of higher
interest rates, we shall manage this new scenario with the concerns of all our customers in mind. Despite
the fair value impacts which such increases have had on our investment portfolios, we remain
comfortable that they are underpinned by sound credit quality and that the slide in valuations will
continue to be clawed back over the coming financial periods. Above all, we look forward to more
exciting times for the APS Group encouraged by strong customer confidence in our model and as
opportunities to gain further market share continue to unfold.
Marcel Cassar
9 March 2023
BOARD OF DIRECTORS
APS Bank plc 7
1. Martin Scicluna
Chairman of the Board, Non-Executive Director
Appointed to the Board in November 2013 and as Chairman in September 2021.
Committee Memberships: Nominations and Remuneration Committee (Chair)
Bio: Martin held a number of managerial appointments in Mid-Med Bank between 1976 and 1996,
following which he joined Midland Bank plc which later become HSBC Bank Malta plc. From 2006 to
2012, he served on several boards for HSBC Malta-regulated subsidiaries and on its Audit Committee.
Since 2012, he has held directorships in asset management and insurance companies licensed in Malta.
Martin has also been actively engaged in various areas of voluntary work for the last 40 years, including
scouting, the preservation of the built and natural environment, and financial services education. He
has served on the Boards of Administration, in a voluntary capacity, of non-governmental organisations
such as Din l-Art Ħelwa (Malta’s ‘National Trust’) and the HSBC Malta Foundation.
Martin is an Associate of the Chartered Institute of Bankers, holds a Diploma in Financial Studies and
was elected Fellow of the Institute of Financial Services in 1999.
Significant Appointments: Chairman – Accredited Insurance (Europe) Limited;
Non-Executive Director - Merck Capital Asset Management
Limited;
Non-Executive Director, Member of Investments Committee -
Thybo Malta Limited.
2. Victor E. Agius
Non-Executive Director
Appointed to the Board in October 2018.
Committee Memberships: Board Credit Committee (Chair)
Environmental, Social and Governance Committee (Chair)
Risk Committee (Member)
Bio: Victor has an extensive career in financial services and investment banking, which includes 23
years at the World Bank Group in Washington DC, three years at the European Bank for Reconstruction
and Development in London and 17 years with the Council of Europe Development Bank in Paris. Past
appointments include senior directorship positions and extensive mission leadership responsibilities to
over 60 countries in Africa, East Asia, Middle East and North Africa, Europe and in Former Soviet
Republics.
Victor graduated with a BA (Hons) in Economics from the University of Malta, holds an MBA from the
Manchester Business School and completed Senior Finance and Banking Executive programmes at the
Wharton School of Finance and at the Stanford Graduate School of Business.
Significant Appointments: None
3. Joseph C. Attard
Non-Executive Director
Appointed to the Board in July 2018.
Committee Memberships: Technology and Innovation Committee (Chair)
Board Credit Committee (Member)
Audit Committee (Member)
Bio: Joseph has over 25 years of local and international experience in the information and
communication technology (ICT) sector. Between 2007 and 2015, he was the Chief Technology Officer
of Emirates International Telecommunications LLC and subsequently Chief Technical Officer of GO plc
up till 2020. Since 2002, he has regularly lectured at University College London on ICT-related topics.
BOARD OF DIRECTORS
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APS Bank plc 8
3. Joseph C. Attard (continued)
He holds a BSc (Hons) in Electrical Engineering from the University of Malta, an MSc in Operational
Telecommunications from the University of Coventry (UK) and a PhD in Telecommunications
Engineering from University College London (UK).
Significant External Appointments: None
*Rotated out from Risk Committee (Member) on 31 December 2022 and appointed to the Audit
Committee (Member) as from 1 January 2023.
4. Franco Azzopardi
Non-Executive Director
Appointed to the Board in September 2008.
Committee Memberships: Audit Committee (Chair)
Risk Committee (Member)
Technology & Innovation Committee (Member)
Bio: Franco spent 27 years up until 2007 working in public practice, ten years of which were with
Deloitte Haskins and Sells, and later in a firm he co-founded in 1990. He is the former CEO of a leading
logistics company in Malta. He is today a professional director and a registered fellow member of the
UK Institute of Directors. He serves on Boards of Directors, and Audit and Risk Committees of regulated
companies in various sectors including banking, insurance and payments. Franco also personally
contributed towards the development of the Malta Institute of Accountants.
Franco is a Certified Public Accountant with an MSc in Finance from University of Leicester. He is a
Fellow of the Malta Institute of Accountants, having served on the Council from 2007 until 2019. He
was also elected president of the institute for the term 2015-2017.
Significant External Appointments: Former Director and CEO - Express Trailers Limited;
Former Non-Executive Director, Audit Committee (C),
Member of Risk Committee, Member of Investments
Committee - Atlas Insurance PCC Limited;
Non-Executive Director, Audit Committee (C), Member of
Remuneration Committee - RS2 Software plc;
Non-Executive Director, Audit Committee (C) - Grand
Harbour Marina plc.
*Rotated out from the Risk Committee (Member) on 31 December 2022.
5. Juanito Camilleri
Non-Executive Director
Appointed to the Board in September 2021.
Committee Memberships: Risk Committee (Chair)
Audit Committee (Member)
Environmental, Social and Governance Committee (Member)
Bio: Juanito was successively CEO at GO mobile and at Melita Cable plc, then served as Rector of the
University of Malta from 2006 to 2016. Between September 2014 and January 2017, he served as Non-
Executive Director of HSBC Bank Malta plc, and for a period was also Chairman of its Risk Committee.
Over the years, Juanito served as a Non-Executive Director and consultant on the boards of several
public and private entities. Juanito is the Chairman and Resident Professor at the Centre for
Entrepreneurship and Business Incubation at the University of Malta, serves as a Non-Executive
member of the Board of Governors of St Edward’s College and is the owner of Ta’ Betta Wine Estates
and St Anne’s Clinic.
BOARD OF DIRECTORS
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APS Bank plc 9
5. Juanito Camilleri (continued)
He holds a BSc (Hons) in Computer Science from the University of Kent at Canterbury and a PhD in
Theoretical Computer Science from the University of Cambridge.
Significant Appointments: Non-Executive Chairman - EPIC Malta Limited;
Chairman, Resident Professor at the Centre for Entrepreneurship and
Business Incubation at the University of Malta;
Board Member – Malta University Innovation Portfolio Limited and
Non-Executive Chairman (of its two subsidiaries) - FLASC BV and
DeNovoCell Limited.
6. Laragh Cassar
Senior Non-Executive Director
Appointed to the Board in April 2016 and as Senior Independent Non-Executive Director in October
2021.
Committee Membership: Conduct Committee (Chair)
Nominations & Remuneration Committee (Member)
Bio: Laragh held the role of partner at Camilleri Preziosi between 2009 and 2015, after which she
founded the firm Camilleri Cassar Advocates where she now heads the corporate and commercial
practice group. Throughout her career, Laragh has gained extensive experience in many areas of
practice, with a particular focus on mergers and acquisitions, banking, asset management, capital
markets and corporate law restructuring. She has acted for a significant number of publicly listed
companies, structuring the offering/issuance of equity and non-equity securities as well as
subsequently advising on continuing obligations as listed entities, and is often appointed by the Faculty
of Laws of the University of Malta as supervisor and examiner of MAdv dissertations.
Laragh obtained a degree in law from the University of Malta in 2002 and a Master of Law in Banking
and Finance from the University of London in 2003.
Significant External Appointments: Partner - Camilleri Cassar Advocates;
Non-Executive Director – Hili Properties plc;
Non-Executive Director/Company Secretary – MedservRegis
plc.
7. Alfred DeMarco
Non-Executive Director
Appointed to the Board in April 2016.
Committee Memberships: Audit Committee (Member)
Board Credit Committee (Member)
Conduct Committee (Member)
Bio: Alfred is a central banker by profession with more than 40 years’ experience at the Central Bank
of Malta (CBM). He progressed through senior executive positions at the bank including that of Deputy
General Manager and Director of the Economics and External Relations Division. Alfred was a member
of the European Central Bank (ECB)’s Monetary Policy Committee, representing the CBM, from 2004
to 2015. He was appointed Deputy Governor in April 2010, a position he held until end-March 2015. He
is a member of the Kunsill Finanzjarju Djoceżan.
Alfred is an Associate of the London Institute of Banking and Finance (ACIB) and holds a BSc
Economics from the University of London.
Significant External Appointments: Non-Executive Director – Abbey Holdings Limited
Member - Kunsill Finanzjarju Djoceżan, Archdiocese of Malta
BOARD OF DIRECTORS
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APS Bank plc 10
8. Michael Pace Ross
Non-Executive Director
Appointed to the Board in November 2015.
Committee Memberships: Conduct Committee (Member)
Environmental, Social and Governance Committee (Member)
Nominations and Remuneration Committee (Member)
Risk Committee (Member)
Bio: Michael served as Director General of the National Statistics Office for six years, sitting on national
and European committees, including the European Statistical Advisory Committee, prior to his current
appointment as Administrative Secretary of the Archdiocese of Malta. He is a council member of the
Malta Employers Association (MEA). He also sits on the board of Discern, a Church research institute
on the signs of the times, and on the board of the Voluntary Solidarity Fund (Malta). In his capacity
as Administrative Secretary, he sits on the Diocesan Representative Council, the Diocesan Pastoral
Council, and the Diocesan Finance Committee. He is also an associate of the London College of Music.
He was vested as Knight in a papal equestrian order by Cardinal Edwin O’Brien in 2019.
Michael holds a BA (Hons) in Economics and Management and an MBA from the University of Malta.
Significant External Appointments: Administrative Secretary - Archdiocese of Malta;
Non-Executive Director - Amalgamated Investments SICAV
plc;
Non-Executive Director – Beacon Media Group Limited;
Company Secretary - AROM Holdings Limited.
*Appointed on the Nominations and Remuneration Committee on 1 July 2022. Rotated out from the
Risk Committee (Member) on 31 December 2022.
9. Joseph Rapa
Non-Executive Director
Appointed to the Board in January 2023.
Committee Memberships: Conduct Committee (Member)
Risk Committee (Member)
Bio: Joseph started his career in 1990 at the Economic Policy Department, Ministry of Finance, Malta.
In 2012, he was appointed Director General, responsible for leading teams providing technical,
economic and financial analysis, including advice to the ministry on macroeconomic management,
fiscal policy and on macroprudential issues. Between March 2013 and May 2022, he served as
Permanent Secretary at the Ministry for Health and was responsible for general management functions
within the ministry, with responsibilities for human resources management, strategic management,
financial budgeting/planning and management, as well as for the exercise of internal control. He
currently carries out duties of oversight over the management of EU funds in Malta, within the Ministry
for the Economy, European Funds and Lands.
Joseph holds a BA (Hons) in Public Administration from the University of Malta, and an MBA from the
Rotterdam School of Management Erasmus University.
Significant Appointments: Member - Kunsill Finanzjarju Djoceżan, Diocese of Gozo.
BOARD OF DIRECTORS
__________________________________________________________________________________________
APS Bank plc 11
Retired Director: Victor Gusman; retired on 31 December 2022.
10. Graziella Bray
Company Secretary
Appointed as Company Secretary in July 2018.
Graziella joined APS Bank in 2006. Over the years, she has performed duties in various areas of law,
regulation and compliance, including providing support to the Board, its subsidiaries and various
committees. In 2021, she was elected fellow of the Chartered Governance Institute of UK & Ireland, as
a Chartered Company Secretary and Governance Professional. She also sits on the Board of Directors
of APS Funds SICAV plc. Graziella lectures in company law, regulation and corporate governance at
the Malta Stock Exchange (MSE) Institute and as a freelance trainer.
Graziella graduated with a Doctor of Laws from the University of Malta in 2004.
EXECUTIVE MANAGEMENT
APS Bank plc 12
1. Chief Executive Officer - Marcel Cassar
Committee Memberships: Executive Committee (Chair)
Management Credit Committee (Chair)
Board Credit Committee
Conduct Committee
Environmental, Social and Governance Committee (Non-Voting)
Risk Committee (Non-Voting)
Bio: Marcel joined the Bank in 2016. His career started in 1987 with Price Waterhouse Malta followed
by MIBA/MFSC, now the MFSA (1991-1996). He was General Manager at Lombard Bank Malta plc (1996-
2004) and First Executive Vice President and Chief Financial Officer at FIMBank plc (2004-2015). He
has been a board member of the Malta Bankers’ Association, including as Chairman (2018-2020, again
since 2022), leading to a seat on the board of the Brussels-based European Banking Federation (EBF).
Marcel is a CPA, a fellow of the Malta Institute of Accountants, and holds an MBA from the University
of Wales and Manchester Business School (1995). He has lectured at FEMA and in the MA Financial
Services course, University of Malta.
2. Chief Risk Officer – Giovanni Bartolotta
Committee Memberships: Compliance Committee (Chair)
Board Credit Committee (Non-Voting)
Conduct Committee
Environmental, Social and Governance Committee (Non-Voting)
Risk Committee (Non-Voting)
Assets & Liabilities Committee
Executive Committee
Management Credit Committee
Bio: Giovanni joined the Bank in 2018. Prior to joining, he spent ten years in London working for major
global investment banks, including Kleinwort Benson, JP Morgan Chase & Co and Bear Stearns
International. He then moved to Malta where he spent 14 years at FIMBank plc, as Executive Vice
President and Global Head of Risk. Giovanni is responsible for leading and overseeing the second line
of defence of the Bank, through the fostering of an appropriate risk culture within the institution and
implementing effective risk management and compliance frameworks, within the boundaries of the risk
appetite set by the Board.
He holds a BA in Economics from SDA Bocconi, University of Milan and is currently a member of the
Council of the Malta Association of Credit Management.
3. Chief People Officer – Raymond Bonnici
Committee Memberships: Executive Committee
Bio: Raymond joined the Bank in 2016 as Head of Human Capital and was appointed to his present role
in June 2020. He started his career in aviation, working for KLM, Swissair and Sabena. Following this
period, he worked at Hilton Hotels International, as Director of Human Resources for Malta. Prior to
joining the Bank, he was Director of Human Resources at Premier Capital plc and was a key element in
setting up the group’s human resources function across the company’s business in six EU Member
States. He currently oversees the sourcing of the Bank's employee talent and the human resource
management functions.
Raymond holds a BA in Youth and Community Studies from the University of Malta.
EXECUTIVE MANAGEMENT
APS Bank plc 13
4. Chief Banking Officer – Anthony Buttigieg
Committee Memberships: Board Credit Committee (Non-Voting)
Risk Committee (Non-Voting)
Compliance Committee
Executive Committee
Management Credit Committee
Bio: Anthony joined the Bank in 2016 as Head of Banking and was appointed to his present role in June
2019. His experience in the banking sector spans 45 years. His career started with Mid-Med Bank, which
later became HSBC Bank (Malta) plc, where he held a number of senior and managerial roles. Anthony
is responsible for the Bank’s commercial business division, retail branches, contact centre and electronic
channels.
Anthony is an Associate of the Institute of Bankers.
5. Chief Operations Officer - Edward Calleja
Committee Memberships: Board Credit Committee (Voting)
Compliance Committee
Executive Committee
Bio: Edward joined the Bank in 1992 and was appointed to his present role in August 2021. Edward
started his career with Mid-Med Bank in 1981. Since then, he held senior managerial positions in lending,
corporate strategy and risk management. He was responsible for the setting up of the Bank’s lending
function and the centralisation of the key operations through the implementation of a Loans Processing
System in 2009. Edward is responsible for the efficient management of the Bank’s operations, including
the customer profiling unit.
He holds a BA (Hons) in Accountancy from the University of Malta (1990), a Diploma in Management
(2003) and an MBA from Henley Management College, UK (2005). He obtained his warrant as CPA in
1991 and became a Fellow of the Malta Institute of Accountants in 2011.
6. Chief Technology Officer – Jonathan Caruana
Committee Memberships: Technology & Innovation Committee
Executive Committee
Bio: Jonathan joined the Bank in 1999 and was appointed to his present role in November 2016. He held
various senior managerial positions in technology. He was appointed Information Systems Manager in
2008 and Head of Technology in 2015. Jonathan is responsible for both the technology and digital
innovation domains of the Bank.
He holds a BSc (Hons) in Computing from the University of Greenwich and an MSc in Software
Engineering from the University of Hertfordshire.
EXECUTIVE MANAGEMENT
APS Bank plc 14
7. Chief Strategy Officer – Liana DeBattista
Committee Memberships: Environmental, Social and Governance Committee
Executive Committee
Bio: Liana joined the Bank in 2003 and was appointed to her present role in October 2021. She held
various managerial positions across multiple areas, including strategy, internal audit, and marketing,
and was promoted to Head of Strategy & Propositions in 2020. Liana is responsible for business
planning, corporate strategy formulation, product development, research, performance management
and ESG.
Liana has a BSc in Business & Computing (2001) and a BCom (Hons) in Management (2002), both from
the University of Malta, and an MSc in Corporate Finance from the University of Liverpool (2015).
8. Chief Investments Officer – Noel McCarthy
Committee Memberships: Risk Committee (Non-Voting)
Executive Committee
Management Credit Committee
Bio: Noel joined the Bank in 2000 and was appointed to his present role in 2020. Noel has successively
served in a number of senior positions, including as Chief Financial Officer. Noel oversees the Investment
Management and Investment Distribution units, the activities of the subsidiary and affiliated companies
and the Bank’s property portfolio. He also serves as a Director in ReAPS Asset Management Ltd.
Noel holds an MA in Financial Services from the University of Malta. He is a CPA and a Fellow of the
Malta Institute of Accountants.
9. Chief Financial Officer – Ronald Mizzi
Committee Memberships: Risk Committee (Non-Voting)
Technology & Innovation Committee
Assets and Liabilities Committee
Executive Committee
Management Credit Committee
Bio: Ronald joined the Bank in 2020. Prior to this, Ronald was Group Chief Financial Officer at FIMBank
plc having spent his earlier career with parallel engagements with PricewaterhouseCoopers in Malta,
the Channel Islands and New York. Ronald is responsible for leading and maintaining the effective
governance and stewardship of the Bank’s finance, asset-liability management and capital management
programme. He is also responsible for the renovation and facility management of the Bank’s head office
and branch network as well as the security of physical assets.
Ronald holds a BA (Hons) in Accountancy from the University of Malta and a Diploma in VAT
Compliance from the Institute of Indirect Taxation (UK). He is a warranted CPA and holds a Practicing
Certificate in Auditing, both issued by the Accountancy Board in Malta. He is a Fellow of the Malta
Institute of Accountants and sits on the Institute’s Financial Services Committee, Financial Reporting
Committee and Disciplinary Appeals Board.
EXECUTIVE MANAGEMENT
APS Bank plc 15
HEADS OF DEPARTMENTS
Wilhelm Attard - Head of Support; (MC)
Kenneth Azzopardi - Head of Human Capital
Rachael Blackburn - Head of Culture
Cynthia Borg - Head of Financial Crime Compliance & MLRO; (CC); (C)
Elaine Calleja - Head of Career Development
Alexander Camilleri - Head of Operations; (T)
Gilbert Caruana - Head of Finance; (AL)
Daniel Cassar - Head of Digital Transformation; (T)
Angele de Mesquita - Head of Transformation; (T)
Marvin Farrugia - Head of Asset Liability Management; (AL) (CH); MC (NV)
Mario Gauci - Head of Commercial; (B) (NV); (MC) (NV)
Kenneth Genovese - Head of Investment Distribution; (AL)
Gordon Gilford - Head of Electronic Channels; (T)
Dione Stephan Gravino - Head of IT Infrastructure & Operations
Nives Grixti - Head of Legal; (E) (NV); (C); (B) (NV); (CC); (MC) (NV)
Zoltan Horvath - Head of Propositions; (AL)
Marco Micallef - Head of Risk; (R) (NV); (B) (NV); (MC) (NV)
Simon Micallef - Head of Customer Profiling; (CC)
Aaron Mifsud - Head of Retail; (AL); (MC)
Rodney Naudi - Head of Operational Risk and Security Governance; (T)
Josef Portelli - Head of Investment Management; (AL)
Ronald Psaila - Head of Business Solutions
Richard Scerri - Head of Internal Audit
Dorianne Tabone - Head of Regulatory Compliance; (C); (CC)
LEGEND
Membership in Committees
Audit Committee
–
(A)
Nominations and Remunerations
Committee – (N)
Technology and Innovation
Committee – (T)
Risk Committee
–
(R) ESG Committee
–
(E) Executive Committee
–
(EX)
Conduct Committee – (C)
Board Credit Committee – (B)
Compliance Committee – (CC)
Assets-Liabilities Committee – (AL)
Management Credit Committee –
(MC)
Chair – (CH) Non-Voting (NV)
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 16
CONSTITUTION AND PRINCIPAL ACTIVITIES
SHARE CAPITAL STRUCTURE AND MAJOR SHAREHOLDERS
In the first half of 2022, the Bank embarked on Phase 3 of the Capital Development Plan via an IPO. At
the Annual General Meeting (AGM) held on 28 April 2022, the shareholders approved an increase to
the Bank’s authorised share capital to €125,000,000, divided into 500,000,000 shares of €0.25c each,
and the issuance of 110,000,000 shares and the subsequent listing of the said shares on the Official List
of the MSE. Consequently, on 17 June 2022, the Bank listed its entire shareholding on the MSE. Trading
commenced on 20 June 2022. Following an interim dividend distributed in shares in the second half of
2022, the Bank increased its issued share capital to 366,917,168 shares of €0.25c each. The share capital
consists of one class of ordinary shares, with equal voting rights. Further information on the Bank’s
authorised and issued share capital are disclosed in Note 37 to the financial statements.
The shares are freely transferable on the MSE. However, as part of the IPO, AROM Holdings Limited and
the Diocese of Gozo have undertaken not to offer, sell, grant any option, right or warrant to purchase
or otherwise transfer, assign or dispose of, any of the shares they held in the Bank on 24 May 2022, for
a period of 24 months from the date when the shares were admitted to listing on the Official List, and
this undertaking shall subsist notwithstanding any provisions of the Companies Act and the
Memorandum and Articles of Association and/or the Capital Markets Rules that would otherwise have
permitted such transfer, assignment or disposal. As an exception to the lock-in, AROM Holdings Limited
and the Diocese of Gozo may transfer, sell, assign or dispose of any of these shares in the Bank where
such transfer, sale, assignment or disposal is made (1) consequent to the enforcement, as a result of
default of the underlying obligation by the pledgor, of a bona fide pledge made to a credit institution
licensed in Malta or holding an equivalent authorisation in an EU member state or EEA state; or (2) in
the context of an internal corporate restructuring exercise of either of the said shareholders, where the
beneficial interest in the relevant shares does not change.
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 17
SHARE CAPITAL STRUCTURE AND MAJOR SHAREHOLDERS (continued)
Following the equity listing, AROM Holdings Limited and the Diocese of Gozo are the two shareholders
with a holding exceeding 5%. The below table provides a comparative overview of the shareholding
held throughout 2022.
No. of shares held
1 January 2022
% holding
1 January 2022
No. of shares held
31 December 2022
% holding
31 December 2022
AROM Holdings
Limited
(wholly owned by the
Archdiocese of Malta)
198,367,765
79.44%
202,339,143
55.15%
Diocese of Gozo
45,449,032
18.00%
46,358,922
12.63%
The following table includes the number of shares held by Directors as at December 2022:
Director
No. of shares
Martin Scicluna
30,601*
Joseph C. Attard
32,131
Laragh Cassar
16,524
Alfred DeMarco
12,240
Victor Gusman
28,051
*held jointly with spouse
All of the ordinary shares in the Bank rank pari passu in all respects, including in terms of voting rights,
participation in dividends and other distributions of profits of the Bank or otherwise.
There are no arrangements currently known to the Bank the operation of which may at a subsequent
date result in a change of control in the Bank.
DIRECTORS, THEIR APPOINTMENT AND POWERS
The Articles of Association specify that a shareholding of ten per cent (10%) of the Bank’s shares having
voting rights shall constitute a ‘qualifying shareholding’, and that a shareholder of the Bank that holds,
or shareholders who among them hold (in the aggregate), a qualifying shareholding, shall be entitled
to appoint one Director by letter in respect of each qualifying shareholding held, in every case subject
to regulatory approval. Consequently, at the last AGM held on 28 April 2022, AROM Holdings Limited
held 79.44% shareholding in the Bank and therefore appointed seven Board Directors, whereas the
Diocese of Gozo held 18% shareholding and therefore appointed one Director. The ninth Director was
appointed by aggregating the remaining shareholding percentages of these two shareholders.
Following the IPO, the two shareholders diluted their shareholding and therefore, currently AROM
Holdings Limited is able to appoint five Directors, the Diocese of Gozo one Director, and the other three
Directors are appointed by a combination of aggregation of remaining shareholding and nomination by
the public float. The provisions relating to the appointment of Directors are found in Articles 102 to 115
of the Bank’s Articles of Association.
The Articles of Association also provide that the largest single shareholder of the Bank (holding at least
twenty-five per cent (25%) of the ordinary issued share capital of the Bank) shall be entitled to appoint
the Chairman of the Board from amongst the Directors appointed or elected to the Board.
The Directors who served during the financial year were:
Martin Scicluna
Victor E. Agius
Joseph C. Attard
Franco Azzopardi
Juanito Camilleri
Laragh Cassar
Alfred DeMarco
Victor Gusman
Michael Pace Ross
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 18
DIRECTORS, THEIR APPOINTMENT AND POWERS (continued)
Mr Victor Gusman retired on 31 December 2022. Mr Joseph Rapa was appointed to office on 1 January
2023. All the above Directors, bar Mr Gusman, continue to serve at the date of approval of the Directors’
Report. Bio notes on these Directors are found on pages 7 to 11.
The powers of Directors are provided in Articles 128-136 of the Bank’s Articles of Association. In terms
of Article 19 of the said Articles of Association, the Bank may, acquire any of its own shares in line with
the provisions of the Companies’ Act (Cap 86).
There are no agreements between the Bank and the Directors providing for compensation on
resignation or termination of directorship.
EMPLOYEE SHARE INCENTIVE PLAN (ESIP)
At the 2022 AGM, the shareholders approved the establishment of an ESIP (the Plan) and applicable
rules for the period 2022-2026. By virtue of this Plan, the Board of Directors of the Bank may grant
Shares to Eligible Employees subject to ESIP Rules. The Rules provide the conditions on the share
awards released to Eligible Employees over a three-year period, which are then vested at the Eligible
Employee’s discretion. During the vesting period the eligible employee has no voting rights.
COLLECTIVE AGREEMENT
The Bank’s Collective Agreement regulates redundancies, early termination, resignation or termination
of employees. Further information on the Collective Agreement is found in the Remuneration Report.
There are no further disclosures to make under Capital Markets Rules 5.64
NON-FINANCIAL DISCLOSURES
Directive 2014/95/EU – also referred to as the Non-Financial Reporting Directive (NFRD) – lays down
the rules on disclosure of non-financial and diversity information by certain large companies. The
following are the disclosures hereby made pursuant to this Directive:
1. THE BANK’S BUSINESS MODEL
APS Bank plc is an established Maltese credit institution that provides a comprehensive range of
banking and financial services to its personal and corporate customers. Ever since its foundation in 1910,
its aim has been to always fully connect with customers within local communities, where through the
Bank’s professional network, it has been able to assist customers in realising their financial and
economic ambitions, whether for purchasing their new family home, a new car or saving and investing
for their retirement or other goals.
The Bank provides a wide suite of products and services, ranging from basic deposit accounts, credit
and lending facilities and also investment and retirement services. All of this is delivered to customers
through the Bank’s branch network in Malta and Gozo, which the Bank is continuously investing in to
ensure presence and accessibility in various locations.
All the Bank’s customers are also provided access to banking services digitally through myAPS desktop
and mobile app, making it easy to view and perform transactions through their accounts.
The Bank also participates in Syndicated Lending on an ongoing basis, where across the years, it has
managed to secure participations in facilities arranged by renowned international institutions. Being
there for the community and being able to provide banking services effectively to all strata of society
was always a strategic priority for the Bank. In fact, ongoing effort is dedicated to make sure that
families in need, or those who require dedicated assistance, can be provided with a banking experience
through specific products and services provided by the Bank itself or through collaboration with local
and international entities, such as the Malta Development Bank, the Malta Housing Authority, and the
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 19
1. THE BANK’S BUSINESS MODEL (continued)
European Investment Bank. The Bank’s commitment to the betterment of the communities it serves
also extends to its own core product offering.
Early 2023 saw the launch of the Responsible Lending Policy (RLP), a first for Malta. The purpose of
this policy, which brings together practices already adopted by the Bank for some years, is to provide
clear and transparent assessment criteria for evaluating lending proposals from an ESG perspective.
The Bank’s ESG and Executive Committees have approved the implementation and distribution of the
RLP, which has been articulated in line with European Banking Authority (EBA) Guidelines on Loan
Origination and Monitoring, outlining responsible lending standards across Europe.
2. COMMUNICATING BRAND, PURPOSE AND CORPORATE STRUCTURE
The Culture Department is responsible for the Bank’s brand and marketing, CSR, the voice of the
customer (VOC) and corporate culture change programmes. These four units adopt communication
and brand management strategies, to ensure that internal and external communications are aligned
with the Bank’s purpose and strategic priorities.
Brand and Marketing
The APS Bank brand is a vital medium to communicate the Bank’s vision, mission and values. In 2022,
the Brand & Marketing function focused on further elevating the brand in its communication strategy,
whilst complementing product specific messages.
This was done through the launch of the Bank’s new website offering a simple and intuitive user
experience, the continuation of the Bank’s brand campaign across integrated media channels and
multiple product-specific campaigns – such as the launch of the Bank’s new credit cards and IPO.
The brand messaging was further sustained with the launch of a new Christmas advert focusing on the
true meaning and value of Christmas. This year, the focus was on raising awareness about the stark
reality of different experiences of the festive season, whilst encouraging people to support each other
and come together.
Corporate Social Responsibility Programme
CSR is a critical driver in the successful delivery of the Bank’s strategy and a vehicle to communicate
its brand and corporate values: Excellence, Authenticity, Passion, Inclusiveness and being
Contemporary. The annual CSR Programme is made up of curated events and activities, in addition to
donations and sponsorships, which are selected in alignment with three CSR pillars to support arts and
culture, education and sustainability.
The CSR Programme includes a wide range of activities with a broad appeal to reach different
audiences. APS talks and APS Business talks are lectures open to the public and delivered by experts
with the objective of knowledge-sharing, building awareness and encouraging cross-disciplinary
application of best practice. From the sponsorship of diverse book publications, artistic exhibitions and
performances, restoration projects to collaborations with educational institutions, each CSR activity
demonstrates the Bank’s commitment to sustain and celebrate the community, which it serves.
Two of the Bank’s main CSR initiatives in 2022 included the Malta Sustainability Forum (MSF) and the
APS Summer Festival.
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 20
2. COMMUNICATING BRAND, PURPOSE AND CORPORATE STRUCTURE (continued)
Corporate Social Responsibility Programme (continued)
The MSF was launched by the Bank in 2019 with the objective of providing a platform to raise awareness
on the topic of sustainability and empower citizens in making conscious decisions towards a more
sustainable life. Since its inception, MSF has evolved from an annual, calendar event, to a platform
providing year-round communication and a trusted reference on all aspects of sustainability. In 2022,
MSF adopted the overarching theme ‘Sustain tomorrow, today.’ Three events were delivered: two
online, focusing on carbon neutrality and water security and a third as an in-person conference on the
subject of pension adequacy and sustainability. The conference also saw the launch of the first Pension
Engagement Index commissioned by APS Bank.
The third edition of the APS Summer Festival was held during the last fortnight of July 2022, on campus
at the University of Malta. The Festival was designed in line with the Bank’s vision of being the
community bank in Malta. The multidisciplinary programme of performances promoted diversity in the
line-up of artists, the variety of artistic forms and in the delivery of a festival in a safe and sustainable
way. Following a call for applications, the selected performances catered for varied audiences, from
children of tender age, through to older adults.
Voice of the Customer
The Bank’s vision, mission and values are also engrained in the VOC function as it catalyses its ‘Customer
First’ strategy, ensuring that the voices of the Bank's customers are heard and channelled throughout
the organisation to deliver an optimal experience. Responsible for directly assisting customers who
have feedback or complaints on any point in the customer journey, VOC handles each individual case
through to resolution, ensuring a fair outcome for all concerned.
In the spirit of continuous improvement, VOC collates and shares customer feedback with senior
management and develops and delivers ongoing coaching and training on effective customer support,
across the Bank. VOC coordinates various research initiatives annually to identify ways to optimise the
Bank’s customers' experience. These exercises include mystery shopping, regular customer satisfaction
surveys (CSAT) and focus groups. 2022 saw the expansion of the Bank’s feedback touchpads
throughout the Branch network. The customer sentiment feedback collated from the touchpads is now
displayed as a score on the in-branch digital screens.
Corporate Culture Change Programme
The Corporate Culture Change Management Programme, aims to cultivate the Bank’s corporate culture
as defined in the APS Bank Culture Deck through various activities and strategic corporate culture
communications. The Programme is designed to embed the Bank’s vision, mission and values in the
thinking, behaviour and actions of employees, optimising employee experience and engagement. The
2022 Programme included Executive Breakfasts, #APSlife consumer-graded internal communications
such as the Bank’s in-house podcast, workshops, and talks and presentations for senior and middle
management.
2022 also saw the launch of the annual APS Bank Values Awards where awards were given to
employees who walk the talk on living and breathing the Bank’s values.
Developing an Environmental, Social and Governance Strategy (ESG)
The ESG strategy is owned by the Chief Strategy Officer and implemented by a dedicated ESG Unit
which was set up in 2022. Oversight of the strategy is provided to both the ESG Committee and the
Executive Committee.
The ESG Unit, within the Strategy Department, is responsible for formulating and executing the Bank’s
ESG strategy across all its functions. The role encompasses formulating an ESG led growth business
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 21
2. COMMUNICATING BRAND, PURPOSE AND CORPORATE STRUCTURE (continued)
Developing an Environmental, Social and Governance Strategy (ESG) (continued)
strategy, mapping the delivery of regulatory ESG reporting as well as leading an ESG engagement with
both internal and external stakeholders of the Bank.
The ESG Unit is responsible to serve as secretariat of the ESG Committee and owns the management
of the ESG action tracker.
The Strategy and Propositions functions are responsible for the integration of ESG-related factors
where required within the Bank’s suite of products and services.
The ESG Unit manages the Bank’s participation and membership of the Malta ESG Alliance (MESGA) of
which APS Bank is a founding member. MESGA was set up in July 2022 by 13 founding members from
various sectors across Malta who are committed to collaborate and work collectively to lead and drive
national ESG goals.
3. CLIMATE CHANGE AND ESG RELATED RISKS
Transitioning to a low-carbon and circular economy entails both risks and opportunities for the
economy at large and for financial institutions operating in it, while physical damage caused by climate
change and environmental degradation can also have a significant impact on the real economy and the
financial system. Throughout the years, the focus on sustainability has been growing, resulting in the
need for businesses to act and be part of the solution to pressing environmental and social issues.
The Group recognises the pace of such trends and the need for a Sustainable and Responsible banking
strategy in line with the Group’s Vision and Mission, which is that of being the community bank in Malta.
The Group is committed to continue to support business and economic growth, but mindful of the fact
that existential issues such as climate change need to be prioritised if we are to make meaningful
inroads into the sustainability of the environment we live in, for our lives and that of our descendants.
The Group is aware of its exposure to the ESG risks and is closely following regulatory guidelines,
developments, and supervisory expectations. As such, measures to mitigate its exposure to these risks
form an integral part of the Group’s risk management framework.
Climate and environmental risk drivers can result – in terms of monetary and other impacts – into
traditional financial risk categories, rather than representing a new type of risk, thereby climate-related
financial risk is integrated into the Group’s risk management framework through the management of
the various risk types, including Credit risk, Market risk, Liquidity risk, Operational risk and Reputational
risk. Climate risk drivers can affect the Group’s credit risk through its counterparties, its market risk
through the value of financial assets, and its liquidity risk through its deposits, funding costs and
withdrawal of credit or liquidity lines.
The Responsible Lending Policy sets out, in a clear and transparent manner, the assessment criteria to
be used when evaluating lending proposals from an ESG perspective. In line with the mentioned Policy,
the evaluation of proposals using ESG assessment criteria has the ultimate objective of grading a
borrower and its financing proposal against pre-determined ESG sustainability criteria and metrics.
When evaluating new investment opportunities, Management reviews research reports published by
external credit rating agencies to get a better understanding not only on the financial aspect of the
government or company but also with respect to their ESG criteria.
The Group has in place an Environmental & Social Management Systems (ESMS) Policy. The ESMS
Policy aims to ensure compliance with relevant regulatory requirements, including best practice
Exclusion Lists and Standards to actualise environmental and social directives, laws and regulations.
The Sustainability Risk Policy of the Group outlines its approach to sustainability within its risk
management framework. It applies as standard to all investments and advice in financial products
provided by the Group. This ensures that the sustainability risk profile of the Group is fully aligned with
its risk appetite, whilst providing a clear rationale for investment decisions taken. The Treasury bond
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 22
3. CLIMATE CHANGE AND ESG RELATED RISKS (continued)
book is mainly composed of high-quality government and supranational bonds and to a lesser extent
investment grade corporate bonds. Before bonds are purchased, the Treasury Unit reviews research
reports published by external credit rating agencies to get a better understanding not only on the
financial aspect of the government or company but also with respect to their ESG criteria. In line with
the Group’s risk appetite and Treasury Policy, the Treasury Unit takes a conservative stance with
respect to the Treasury bond book, hence market and liquidity risk are mitigated as the exposure to
issuers with a low ESG score is heavily curtailed. ESG is also one of the reputational dimensions
considered in the Reputational Risk Management Matrix as part of the Reputational Risk Policy.
Integrated ESG strategy is an integral part of the Group’s Business Plan 2023-2025.
The Risk Department monitors and reports the Bank’s sectorial exposure periodically and benchmarks
this to ESG-related ratings issued by external credit rating agencies. Local exposures within the lending
portfolio are categorised according to the CO
2
emitted by each sector of economic activity in
producing one unit of Gross Value Added (GVA). The Bank performs an internal adequacy assessment
on the Bank’s capital and liquidity positions, with the results being reported in the Bank’s Internal Capital
Adequacy Assessment Process (ICAAP) and the Internal Liquidity Adequacy Assessment Process
(ILAAP) documents. These processes include an assessment of the Bank’s exposure to ESG risk and
the management thereof, to ensure that the risk is managed within the Bank’s risk appetite and that the
Bank’s capital adequately covers its exposure to such risk. As part of the 2023 ICAAP and ILAAP
documents, the Bank will include a tailored and in-depth review of the potential vulnerabilities resulting
from transition risk through stress testing, as mandated by ECB Guidelines. Through this stress scenario
the Bank will understand and monitor its resilience in the context of stressed macro-economic and
financial conditions. The assessment is performed on the basis of both quantitative and qualitative
analysis and consideration is also given to the changing external and internal conditions and supervisory
expectations.
In 2023 the Group published a report which includes regulatory Pillar 3 disclosures on ESG governed
by Part Eight of the Capital Requirements Regulation (CRR) II No. 2019/876 and in line with the
guidelines published by the EBA on prudential disclosures on ESG risks. This report includes data on
climate-material sectors which show how climate risk drivers may impact the balance sheet and how
these risks are being mitigated. This report is available on the Bank’s website.
4. SOCIAL MATTERS
a) Trade Unions
The Bank recognises the Malta Union of Bank Employees (MUBE) as the sole and exclusive bargaining
agency for the managerial, clerical and non-clerical categories of employees. The Bank’s relationship
with the MUBE has been productive throughout the years, with ongoing communication between both
parties on various topical matters. The current Collective Agreement was for a period of three years
2020-2022 with negotiations concluding for the period 2023-2025.
b) Community Relations
The Bank has over the years supported a number of community projects and initiatives and continues
to engage in more on an ongoing basis. These are generally selected for their significance to a specific
sector of society, such as youth or people with special needs, or to support specific areas of Maltese
culture, such as music or visual arts. The Bank’s philosophy is to create partnerships that are just,
sustainable and of mutual value, and preference is given to umbrella organisations, federations, or
collective interest groups over individual endeavours. Through various direct initiatives, substantial
support is given to charitable, voluntary and community projects, in line with the Bank’s social support
philosophy. The Bank’s employees are encouraged to pursue various activities in voluntary work to take
an active role in matters that are so vital to society at large.
DIRECTORS’ REPORT
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APS Bank plc 23
4. SOCIAL MATTERS (continued)
b) Community Relations (continued)
The Bank contributes to public education and debate by sponsoring seminars and their proceedings
which expound topical themes of general or specific interest. In this way, it provides opportunities for
the exchange of ideas in a structured and cohesive manner and makes them available to a wider
audience. Occasionally, the Bank also publishes studies which consider critically particular issues
concerning the demographic, economic, social and political networks in the Maltese Islands and in the
European Union.
c) Consumer Relationships
The provision of the Bank’s products and services through both its physical and virtual channels, as well
as the ongoing refinement and modernisation of its internal processes lend towards the Bank’s ultimate
objective; that of providing excellent levels of customer experience and service.
The Bank continues to devote increasing attention and resource towards ensuring that its customers
feel comfortable and confident in engaging with the Bank through several physical and virtual
interactive spaces.
Significant investment has gone into upgrading the Bank’s network of Retail branches, making them
more modern in design and experience for its customers and colleagues alike. Branches are now being
equipped with improved office spaces and furniture, modern waiting and meeting areas, as well as
interactive digital display monitors that are available for customers to use.
At the same time, the Bank continued to make a positive difference when it comes to sustainability,
through the choices that were made when the project of branch and offices transformation was
ongoing. This regeneration of the Bank’s premises has, as a matter of fact, been planned to contribute
towards lowering its carbon footprint. Energy efficient lighting and heating and cooling systems have
been installed in several of its locations. Many branches have already passed through this
transformation, with the few remaining renovations planned to follow in short order. The Bank’s flagship
branch and head office premises in Swatar also allows for the recycling of rain and wastewater, as well
as generating renewable energy through several photovoltaic panels. The Bank has also invested in
charging bays on every floor of its latest underground staff and customer parking area, aimed at
encouraging its staff to invest in hybrid and electric cars, which are less harmful to the environment.
5. EMPLOYEE MATTERS
The Bank’s people strategy is aimed at being the ‘Employer of Choice’, maintaining high employee
engagement levels to attract and retain the best talent. The strategy focuses on ensuring all employees
achieve their full potential, through supporting the ongoing development of skills, knowledge and
competence required for today’s and future needs. The Bank is an inclusive and equal opportunity
employer. It aims to provide an inclusive environment that promotes diversity, maintains a healthy
working environment in which the rights and dignity of its staff members are respected.
The Bank’s Collective Agreement governs a wide range of family friendly measures, enhanced by a
policy framework that supports the wellbeing of all its employees. During 2021, the Bank reviewed its
remote working and flexi-time policies in line with its investment in collaborative and communication
systems. All its employees have the tools required to work remotely to ensure their wellbeing as well
as business continuation during the pandemic.
In 2021, the Bank also introduced an occupational pension plan for all its employees in support of various
other wellbeing incentives.
In addition, various policies and programmes support the wellbeing of employees. These include a zero-
tolerance policy to cases of bullying, harassment and discrimination, a preventative medical care and
sports activity policy, an employee assistance programme, an employee screening policy, a succession
planning policy, and a performance development programme that provides a holistic approach to
developing employees to achieve their full potential.
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 24
5. EMPLOYEE MATTERS (continued)
Employee Assistance Programme
The Bank’s Employee Assistance Programme (EAP) is an external confidential counselling service
available to all employees. The EAP has been enhanced over the last few years to support the mental
wellbeing of employees. The EAP offers employees the possibility of reaching out for counselling,
guidance and support to assist and resolve work, family and personal issues.
Zero-tolerance Policy
The Bank maintains zero-tolerance to cases of bullying, harassment and unlawful discrimination and
supports a workplace that promotes a dignified working environment and harmonious relations among
its employees based on respect, understanding and appreciation.
Preventative Medical Care and Sports Activity Policy
This policy complements other wellbeing initiatives organised by the Bank to promote the physical,
mental and social health and wellbeing of its employees to achieve their full potential and live a healthy
and active lifestyle.
Employee Screening
The highest standard of integrity and professionalism by employees of financial institutions is critical to
sustain public confidence in the financial sector. Employee screening presents a critical opportunity for
the Bank to ensure prospective and existing employees are aligned with its desired corporate culture,
embrace its values and are ‘fit and proper’ to discharge their duties and responsibilities. The Bank uses
various tools for screening employees as part of its due diligence process. Employees are also expected
to abide with other policies including its Code of Ethics and other regulatory policies and guidelines
that ensure the integrity of its employees.
Succession Planning
This policy details the Bank’s process for identifying and growing talent to fill leadership and business-
critical functions and positions in the future. Succession and talent planning sits inside a much wider
strategic framework encompassing areas such as business strategy and plans, business continuity
management, resource management, required skills and competencies and career development. The
scope of this policy is to complement these areas through a framework for ensuring that the Bank has
the right people in the right place at the right time, and that learning, and development investment is
maximised.
Performance Development
The Bank adopts a clear distinction between fixed and variable remuneration. Its variable remuneration
is based on the performance of staff members taking in consideration both qualitative and quantitative
criteria, the performance of the Bank, the achievement of departmental, team and individual targets in
line with Key Performance Indicators (KPIs), living the Bank’s values and supporting the ongoing
development of skills, knowledge and competency required by each employee. Each employee has
clear objectives and ongoing development discussions so that they can achieve high levels of
performance across the Bank.
Our continued focus on the future of work and customer service saw the completion of the Bank’s
Future Banker Programme focused on the digitisation of banking services as well as sharing of
knowledge on developing and emerging technologies and the launch of the Customer Service Academy
focused on our front-line employees and our service to our customers. These programmes ensure that
as a Bank will continue to remain relevant to our time and that we engage with our communities in a
meaningful way.
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 25
IDENTIFICATION AND MANAGEMENT OF PRINCIPAL RISKS
Credit Risk
Credit Risk is the potential risk that a borrower or counterparty fails to meet the respective obligations
in accordance with, or performing according to, agreed terms. Alternatively, losses may result from
reduction in assets value arising from actual or perceived deterioration in credit quality.
Lending is considered to be APS Bank’s main activity and, as such, assessment of credit risk plays a
pivotal part in the execution of the Bank’s strategy. The Bank’s exposure to credit risk is diversified by
maximum single exposure, by sector, by geography, by tenor and by product, through its engagement
in Retail Lending, Commercial Lending, Trade Finance and selected participations in Syndicated
Lending. The appetite (and tolerance levels) for credit risk which is deemed acceptable by the Bank at
any point in time is defined and evaluated in the Risk Appetite Statement (RAS), which is approved by
the Board and reviewed on an annual basis.
Credit Risk is managed and controlled in various ways, including the regular four-eye approach/risk-
based review of the:
a) credit risk policy, including the policies relating to forbearance and non-performing loans;
b) lending procedures of the first line of defence;
c) new lending products and/or the review/revamp of existing lending products;
d) internal credit scoring systems;
e) internal credit risk grading system based on days past due and other non-financial/qualitative
factors, including cure/probation periods;
f) daily excesses/loan arrears exceeding the encroachment tolerance limits of the
branch/commercial managers and/or the 30 days past due (Significant Increase in Credit Risk
(SICR);
g) non-performing credit exposures graded ‘Doubtful’ and/or ‘Classified’, including monitoring of
the Bank’s NPL ratio;
h) fresh and/or renewal of business and retail credit limits and/or fresh retail credit facilities;
i) six monthly sample of credit facilities sanctioned by the first line of defence;
j) forward-looking expected loss model for quantifying provisions compliant with the IFRS 9
accounting regime;
k) stress testing relating to credit risk;
l) internal limits relating to single-name and sectoral concentration risk;
m) risk-based credit pricing model to determine the Return on Equity of fresh credit limits and/or
new lending products/schemes.
Financial Crime Compliance Risk
APS Bank plc is committed towards combatting financial crime and complying with all applicable laws
and regulations relating to financial crime to protect the Bank, its customers and its employees from
financial crime related risks, namely:
Money laundering and funding of terrorism;
Breach of International & Local Sanctions;
Bribery & Corruption; and
External Fraud.
The Bank has therefore implemented the highest standard of financial crime risk management practices
to ensure full compliance with applicable anti financial crime laws and regulation.
The Financial Crime Compliance Function is responsible for the design and implementation of a
Financial Crime Compliance (FCC) Framework within APS Group. The FCC Framework is to ensure
consistent management of the above-mentioned risks across Group entities. The programme seeks to
identify, assess, monitor and manage FCC risks in line with the Bank’s risk appetite and statutory
obligations.
DIRECTORS’ REPORT
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APS Bank plc 26
IDENTIFICATION AND MANAGEMENT OF PRINCIPAL RISKS (continued)
Financial Crime Compliance Risk (continued)
The FCC Function, headed by the Head of FCC and MLRO of the Bank reports to the Chief Risk Officer
of the Bank and the Board of Directors.
The FCC function is split into four distinct units which manage the following risks:
Financial Crime Compliance Anti-Money Laundering (AML)/Fraud Investigations and Transaction
Monitoring – Responsible for the analysis and investigation of unusual or suspicious
transactions/activity;
Financial Crime Compliance AML Operations – Responsible for adherence with regulatory reporting
obligations emanating from the Prevention of Money Laundering and Funding of Terrorism
Regulation;
Financial Crime Compliance Monitoring & Advisory (AML & Fraud) – Responsible for the provision
of advice related to AML and Fraud Risks and the monitoring of the same FCC risks; and
Financial Crime Compliance Monitoring & Advisory (Sanctions & ABC) – Responsible for the
provision of advice related to Sanctions and ABC Risks and the monitoring of the same FCC risks.
Operational Risk
The Bank defines Operational Risk as “the risk of loss resulting from inadequate or failed internal
processes, people and systems or from external events” in line with the Basel Committee. This definition
includes legal risk but excludes strategic and reputational risk. Operational risk is inherent in the Bank’s
products, services and activities. The Bank’s operational risk management framework and governance
are fully integrated into the Bank’s overall risk management framework.
The Bank aims to ensure sound operational risk governance practices with the involvement of the
following functions:
Board of Directors;
Risk Committee;
Operational Risk and Security Governance Department;
Senior Management;
Business Risk and Control Management; and
Internal Audit.
The operational risk management process is intended to maintain an overall operational risk level that
meets the Bank’s operational risk appetite.
Risk identification considers internal and external factors and is paramount for the subsequent
development of a viable operational risk monitoring and control system. The Bank has increased its
efforts of risk identification by improving the culture and encouraging all employees from all levels to
report any identified operational risks and incidents in a timely manner.
Following the identification of operational risks, these are measured by quantifying, where possible, the
potential losses from each identified risk and allocation of an adequate amount of capital to cover the
Bank’s exposure to this risk.
The Group maintains a database to regularly quantify and record operational losses and near miss
events, reported electronically by the first line of defence and co-ordinated and analysed by the
Operational Risk and Security Governance department, in order to promote a culture of cooperation,
communication and continuous improvement where lessons are learnt from incidents and near misses.
Once operational risks have been identified, assessed and measured, controls and process
improvements are developed and implemented as necessary to further mitigate identified risks to levels
that are within the risk appetite. The Bank has strengthened this process by appointing Business Risk
and Control Managers in the first line of defence to liaise with the Operational Risk and Security
Governance Department. The Bank also ensures that procedures and processes are documented in the
Bank’s handbooks and reviewed from an Operational Risk perspective.
DIRECTORS’ REPORT
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APS Bank plc 27
IDENTIFICATION AND MANAGEMENT OF PRINCIPAL RISKS (continued)
Operational Risk (continued)
The Bank does regular monitoring of operational risks to quickly detect and correct deficiencies in the
Bank’s policies, processes and procedures. Finally, appropriate reporting mechanisms are in place to
support proactive management of operational risk at Board, Executive and business line level.
Liquidity Risk
Liquidity risk is the risk that the Group cannot meet its financial obligations as they fall due in the short
term and medium term, either at all or without incurring unacceptable losses. Funding risk is the risk
that the Group cannot meet its financial obligations as they fall due in the medium to long term, either
at all or without increasing funding costs unacceptably.
Funding risk can also be seen as the risk that its assets are not stably funded in the medium and long
term.
The Group manages this risk by seeking to match the maturities of assets and liabilities in its balance-
sheet. The management of liquidity and funding is governed by a detailed Liquidity and Funding Risk
Policy. This Policy establishes clear lines of responsibility, limits and guidance on the measurement and
monitoring of the Group’s net funding requirements. The ALM Unit is responsible for implementing the
Policy; whereas ALCO is responsible for monitoring and ensuring the implementation of and adherence
with the Policy, as well as ensuring consistency with the Bank’s Risk Appetite. It also ensures that
adequate liquidity is held to meet both expected and unexpected commitments. This Policy includes a
detailed Liquidity Contingency Plan, which addresses the strategy for handling liquidity crises and
includes procedures for covering cash flow shortfalls in emergency situations.
Market Risk
Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due
to changes in market variables such as interest rates, foreign exchange rates, and prices of equities,
bonds and commodities.
The Group’s exposure to market risk is limited since its trading portfolio is minimal. This is consistent
with the Group’s Risk Appetite. In accordance with Article 94 of the CRR, the Group is exempted from
the trading book capital requirements.
The Group’s exposure to market risk is mainly related to:
i. Interest rate risk – the risk that the Group’s financial position and cash flow are exposed to
unfavourable movements in interest rates;
ii. Foreign exchange risk – the risk that the Group’s financial position and cash flow are exposed
to unfavourable movements in foreign exchange rates.
Solvency Risk
The Group continuously aims at building and sustaining a strong capital base and at applying it
efficiently throughout its activities to attain its strategic objectives, optimise shareholder value whilst
ensuring the sustainability of the Bank’s business model and risk profile. A strong and prudent capital
base is one of the pillars of the Group’s business model and maintaining adequate capital ratios will
continue being key to enable the Group to steer through currently challenging economic conditions.
The Bank performs an ICAAP in compliance with the Pillar II requirements of Banking Rule BR/12/2022
– The Supervisory Review Process of Credit Institutions Authorised Under the Banking Act 1994 and
the CRR. This key decision-making tool is of utmost importance for keeping the Board of Directors
informed about the Bank’s ongoing risk assessment, the mitigation measures adopted and their impact
on the capital requirements. The ICAAP includes an assessment of both Pillar I and Pillar II risks. The
latter includes concentration risk, IRRBB risk, IT and cyber risk, reputation risk and other key risks.
DIRECTORS’ REPORT
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APS Bank plc 28
IDENTIFICATION AND MANAGEMENT OF PRINCIPAL RISKS (continued)
Solvency Risk (continued)
The Bank’s stress testing framework forms an integral part of the ICAAP. A number of severe but
plausible scenarios are developed which test the resilience of the Bank’s business model and risk profile.
Interest Rate Risk
The Group has an Interest Rate Risk Policy approved by the Board, which sets out a comprehensive
risk management process that identifies, measures, monitors and controls interest rate risk exposures,
whilst also ensuring appropriate oversight by Senior Management, Board-appointed committees and
ultimately the Board, to confirm that this risk is consistent with the Group’s risk appetite.
Interest rate risk is measured from two perspectives – the economic value of equity (EVE) and the
earnings-based approach.
The Group’s exposure to interest rate risk is monitored on a monthly basis by the Enterprise Risk
Management Unit (ERMU) and verified by Asset Liability Management (ALM), and is reported to
Executive Committee, ALCO and Risk Committee on a quarterly basis.
Regulatory Compliance Risk
The performance of banking/financial activities exposes the Bank to regulatory risk. The Basel
Committee on Banking Supervision (BCBS) has described Compliance Risk as:
‘The risk of legal or regulatory sanctions, material financial loss, or loss of reputation a bank may suffer
as a result of its failure to comply with laws, regulations, rules, related self-regulatory standards, and
codes of conduct applicable to its banking activities.’
Regulatory Compliance Risks have been identified as:
- Risk to reputation - Risk of damage to the Bank’s integrity or reputation as a result of negative
publicity, whether founded or not, failure to act in accordance with policies and procedures, or
non-compliance with applicable laws, rules, regulations and guidance.
- Regulatory risk - This risk may arise from non-compliance with the applicable laws, rules
regulations and guidelines, including as a result of regulatory developments. There is also a risk
that activities may be carried out on the basis of regulatory interpretation or documents that
are subsequently found to be inaccurate, inadequate or outdated.
In order to mitigate regulatory compliance risk, the Bank has established a Regulatory Compliance Unit
(Regulatory Compliance or RC). Regulatory Compliance is an integral part of good governance. The
Unit’s purpose is to support the Bank in remaining compliant with the applicable rules, regulations, and
guidelines. As a second line of defence function, RC’s role is to identify, evaluate, and address regulatory
risks.
In performing its functions, RC, to the extent applicable, follows the practices indicated in ESMA
Guidance on MiFID II Compliance Function, the EBA Guidelines on Internal Governance and the BCBS
Guidance for the Compliance function of Banks.
DIRECTORS’ REPORT
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APS Bank plc 29
IDENTIFICATION AND MANAGEMENT OF PRINCIPAL RISKS (continued)
Regulatory Compliance Risk (continued)
The key functions of Regulatory Compliance are the following:
Advice
o Track and advise/update senior management with developments to the current regulatory
framework as may be applicable to the Bank – liaising with the other Units/Departments in
the Bank and the issuing regulatory body as may be appropriate;
o Provide guidance and advice in respect of business initiatives intended to ensure that
activities are carried out within the boundaries of the applicable regulatory framework;
Identification, measurement and assessment of compliance risk:
o Identify, document and assess compliance risks arising from:
Business activities – including new products and business practices;
Establishment of new types of business or customer relationships;
Material changes to current relationships.
Monitoring, Testing and Reporting
o Conduct sufficient and representative compliance testing/reviews;
o Report to senior management and the Board of Directors, on a regular basis, the
outcome of monitoring and testing/reviews.
Thereby helping the Bank to carry on business successfully and in conformity with external and internal
standards.
The key areas within scope of RC’s remit as a second line of defence are the following:
Conduct of business and treating customers fairly;
Conflicts of Interest;
Market Abuse;
Marketing and Promotions;
Product Oversight Governance; and
GDPR.
Regulatory Compliance
Regulatory Compliance is headed by the Head of RC and Compliance Officer of the Bank which reports
to the Chief Risk Officer of the Bank and the Board of Directors. The Unit is divided into Regulatory
Development and Regulatory Oversight.
- Regulatory Development Section is in charge of researching and keeping abreast with
regulatory developments. These developments are analysed and communicated to the
respective departments within the Bank, through internal Briefing/Guidance Notes for
implementation in the Banks’ policies and procedures. The Department owning the
implementation of such regulation carries out a gap analysis and the Regulatory Development
Section ensures that the implementation is concluded in a timely manner and that any policies
and procedures adopted are in line with the current regulation.
-
Regulatory Oversight Section is in charge of conducting oversight monitoring on the various
functions within the Bank to ensure that the operational procedures are in line with the
regulatory requirements through a set Compliance Monitoring Programme and Ad hoc reviews.
This Section also provides assistance and advice when it comes to new Projects, Product
Launches and Complaints Management and is also responsible for Regulatory Reporting and
Tax Compliance.
Both Sections are interdependent and provide support to each other on an ongoing basis. In addition
to the above, the GDPR function also falls within the remit of RC, and this is represented by the Data
Protection Officer (DPO).
DIRECTORS’ REPORT
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APS Bank plc 30
IDENTIFICATION AND MANAGEMENT OF PRINCIPAL RISKS (continued)
Regulatory Compliance (continued)
The Bank’s Board of Directors retains ultimate responsibility for all the Bank’s identified risks. The Board
Risk Committee ensures implementation of the Bank’s risk management and compliance strategy,
systems and policies that ensure adherence to the Bank’s Risk Appetite Statement.
Reputational Risk
Reputation is one of the Bank’s most important intangible assets, founded on trust from its internal and
external stakeholders. It has a direct impact on the Bank’s value, which falls under the scrutiny of the
Bank’s Board of Directors, employees, existing and prospective customers, business partners, investors,
regulators and legislators.
The Bank established an appropriate reputational risk environment by defining the governance
framework and pertinent responsibilities for managing reputational risk. The framework is established
to provide consistent standards for the identification, assessment, management and monitoring of
reputational risk issues, especially direct reputational risk.
The Operational Risk and Security Governance Unit (ORSG) has developed a framework for the second
line of defence monitoring of Reputational Risk. The framework sets out a risk dashboard which
presents metrics that capture the eight reputational risk dimensions defined by the Reputational Risk
Policy:
Corporate Governance;
Strategy and Leadership;
Financial Performance and Profitability;
Products and Services;
Image, Brand, Communications, Marketing and Customer Relations;
Ethical, ESG and CSR;
Innovation, Opportunities and Technology; and
Employee and Corporate Culture.
As of 2023, this risk dashboard will be compiled on a quarterly basis and aims to provide quantitative
measurement of reputational risk as well as providing insight and identifying potential issues or gaps
that can lead to reputational damage.
Reputational risks which may arise from a failure with another risk type, control or process (indirect
reputational risk) are addressed separately via the associated risk type framework.
In addition to the above, other mitigating factors that the Bank adopts to manage reputational risk are
the following:
Prompt and effective communication with all categories of stakeholders;
Strong and consistent enforcement of controls on governance, business, legal and compliance;
Establishment and continual updating of the Business Continuity Plan and Crisis Management Plan,
and the team required to support them;
Continuous monitoring of threats to reputation;
Clear core corporate values setting out expected standards of behaviour;
A strong corporate culture that is open, trusting and supportive;
A robust and dynamic risk management framework which provides continuous monitoring of
threats to reputational and early warning of developing issues; and
Organisational learning leading to corrective action where necessary.
The Bank has zero appetite for any form of reputational risk, as articulated in the Bank’s Risk Appetite
Statement. Reputational risks and their implemented/planned controls are recorded in the Bank’s risk
register.
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 31
Key Performance Indicators (KPIs)
The Group has in place a set of KPIs that include:
2022
2021
%
%
CET1
15.2
12.8
Solvency Ratio
18.8
16.8
LCR
127.6
142.9
Profitability ROAE
2.3
7.1
Further analysis and KPIs are found in CEO Review, Financial Overview and Notes to the financial
statements.
TAXONOMY REGULATION (REGULATION (EU) 2020/852)
Content of Taxonomy Regulation and related Delegated Acts
In order to meet the EU’s climate and energy targets for 2030 and reach the objectives of the European
Green deal, the European Commission put forward a number of legislations to direct investments
towards sustainable projects and activities. To achieve this, a common language, and a clear definition
of what is ‘sustainable’ is being formulated at EU level, through the creation of a common classification
system for sustainable economic activities or an “EU Taxonomy”. The EU Taxonomy is a classification
system, establishing a list of environmentally sustainable economic activities through the Taxonomy
Regulation which was published on 22 June 2020 and entered into force on 12 July 2020. It establishes
the basis for the EU Taxonomy by setting out four conditions that an economic activity must meet to
qualify as environmentally sustainable. The Taxonomy Regulation establishes six environmental
objectives, two of which relate to Climate Change Mitigation and Adaption.
The European Commission published a delegated act on sustainable activities for Climate Change
Adaptation and Mitigation objectives defining technical screening criteria for these environmental
objectives. The Bank is monitoring developments in the Taxonomy Regulation through its ESG
Committee. The European Commission is to publish further legislative documentation on the topic for
the other environmental objectives.
Article 8 of the Taxonomy Regulation requires institutions that are in scope of the NFRD to publish
information on how and to what extent the undertaking’s activities are associated with economic
activities that qualify as environmentally sustainable under that Regulation. The European Commission
also published a Delegated Act in this respect, which requires the Bank to publish a number of
indicators, subject to a phase in period. It specifies the content, methodology and presentation of
information to be disclosed by financial and non-financial undertakings concerning the proportion of
environmentally sustainable economic activities in their business, investments or lending activities. This
Delegated Act applies from 1 January 2022 and requires the publishing of such information in the Annual
Report of 2022.
Article 10 paragraph 3 of that Delegated Act requires financial institutions to publish ratios related
economic activities that are Taxonomy Eligible and those which are not. The aim is to indicate the
percentage of assets that would be eligible for the technical screening to determine their alignment
with the EU Taxonomy Classification.
Key Performance Ratios
The below information is consolidated in accordance with the Capital Requirements Regulation (EU)
575/2013.
The proportion in total assets of exposures to Taxonomy eligible economic activities stands at 58.0%.
The proportion in total assets of exposures to Taxonomy-eligible economic activities stands at 3.5%.
DIRECTORS’ REPORT
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APS Bank plc 32
TAXONOMY REGULATION (REGULATION (EU) 2020/852) (continued)
Key Performance Ratios (continued)
These two ratios have been reported in a combined manner for the two Taxonomy objectives adopted
as of 1 January 2022, that is climate change mitigation and climate change adaptation.
The proportion in the total assets of the exposures to central governments, central banks and
supranational issuers stands at 14.7%.
The proportion in the total assets of the exposures to undertakings that are not obliged to publish non-
financial information pursuant to Article 19a or 29a of the NFRD stands at 20%.
Finally, the Bank’s exposure to on demand inter-bank loans as a percentage of total assets stood at
0.9%. The Bank has no trading portfolio.
Taxonomy-Eligible and Non-Eligible economic activities
“Taxonomy-eligible economic activities” refers to the share of economic activities that are described in
the Commission’s Delegated Acts, but that do not yet meet the relevant technical screening criteria.
To identify the taxonomy-eligible economic activities within the Group’s portfolio, reference is made to
the Delegated Act on sustainable activities for the environmental objectives. That Delegated Act
provides the list of economic activities for which the European Commission has provided a common
classification vis-à-vis the environmental objectives. The assessment of Taxonomy eligibility for
calculation of the mandated ratios is made using the Nomenclature of Economic Activities (NACE)
code for loans and advances to identify the exposures that fall into scope. For investments in
transferable securities the industry and sub-industry provided by a Research Portal were reviewed vis-
à-vis the list of economic activities provided in the delegated act on sustainable activities for climate
change adaptation and mitigation objectives.
The “Taxonomy Non-eligible economic activities” refers to the share of economic activities that are not
described in the Commission’s delegated acts, and thus are not subject to technical screening criteria.
These are all those economic activities which have not been identified as Taxonomy-eligible economic
activities as explained above.
Exposures to undertakings not in scope of NFRD
The NFRD applies to large public-interest companies with more than 500 employees. Those
Undertakings which are not subject to the NFRD reporting are not included in the Taxonomy-Eligible
and Non-Eligible economic activities but represented in a separate ratio.
Data limitations
The Group used internal and external data to determine Taxonomy eligible and non-eligible exposures
and exposures not subject to NFRD. Availability of more guidance by the authorities, data and
improvements in data quality over time (as undertakings adopt the Taxonomy requirements for their
own disclosures) will further enhance the quality of disclosure.
The Group is working in developing its capabilities to assess the Taxonomy alignment of its exposures,
also considering the Taxonomy Alignment reporting requirements from 1 January 2024. This will
enhance the Group’s capabilities to adopt the Taxonomy classifications within its systems and
processes.
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 33
FINANCIAL OVERVIEW
Operating Performance
Having seen a strong post-Covid recovery, 2022 started with promising prospects for the Maltese
economy. However, this has been tainted by the pressures from the prolonged Russia-Ukraine war,
hitting the EU economy through high inflationary pressures. Against these strong headwinds, the
Maltese economy performed well in 2022, with gross domestic product (GDP) growing by 6.8%,
according to Central Bank of Malta projections. Factors which contributed to such robust performance
include strong domestic demand – also supported by price-mitigating fiscal measures, which however
added to the public debt burden, and dynamic net exports – aided by a stronger-than-expected
rebound in tourism. The faster recovery in 2022 also leads to a downward reassessment of GDP growth
for 2023 (projected however at a still respectable +3.6%), driven by a deterioration in the international
environment and the effects of high inflation on Malta’s trading partners. The removal of Malta from the
FATF grey list in June 2022 should also help supporting financial services and other international
business activities, particularly inward foreign investments, into 2023.
For the year ended 31 December 2022, APS Bank registered a profit after tax of €19.2 million, an increase
of €4.1 million (27.4%) over the financial year ended 31 December 2021. This strong performance was
offset by unprecedented financial market volatility which impacted the returns of investments held by
the Group - in turn registering €5.8 million in profit after tax and contracting by €9.3 million when
compared to 2021 results.
Net interest income remains the largest driver in the Group’s revenue mix. Total net interest income for
2022 was €65.1 million, €9.7 million or 17.6% higher than 2021. Amidst the current challenging economic
and interest-rate environment, the continued growth in the Group’s lending book created opportunities
for wider spread. Efficient management of cost of funds remains key to the Group, which is further
affirmed through the marginal increase in total interest payable which as at end of December 2022
amounted to €14.8 million, being only 7.2% higher over the €13.8 million registered as at end December
2021.
Fee and commission income increased by 1.5% on 2021, however this was offset by higher related
expenses on the roll-out of new products - mainly card charges, pension scheme fees and payment
fees - amounting to €2.3 million (2021: €2.0 million). As a result, net fee and commission income
amounted to €6.9 million compared to €7.0 million of 2021.
By the end of 2022, the Group’s other operating income remained in red territory of €7.3 million (2021:
+€0.8million) as financial markets performance deteriorated on heightened macro-economic and geo-
political uncertainty which negatively impacted the investment in the Group’s sub funds. Excluding such
net losses, other operating income from business activities amounted to €3.0 million (2021: €0.9
million), mainly attributable to foreign exchange results of €1.3 million, net gains of €1.0 million from
derecognition of financial assets and €0.5 million from other operating income.
Impairment against expected credit losses consisted of a writeback of €0.3 million (2021: €1.5 million).
This reflects the performance of the Group’s loans and advances book, and its credit quality, even in
such challenging times, further asserting the management’s prudent approach towards risk.
Operating expenditure for the year under review was €47.0 million, up by €6.4 million or 15.9% on 2021.
Employee compensation and benefits remain a key contributor to such increase which has been
brought about by higher labour costs, as the Group remains committed in attracting and retaining
highly skilled resources whilst investing in their training and wellbeing. In addition, the Group increased
its contribution to the Deposit Compensation Scheme (DCS) and incurred higher technology costs -
the latter in line with various initiatives undertaken to improve the customer experience and achieve
greater efficiency through automation, digitisation of records, centralisation of processes and use of
robotics and new technologies.
The cost-to-income ratio for the year is distorted by the impact from the sub funds. Eliminating this,
cost-to-income ratio related to ongoing business activities was of 62.8%, down by 1.3% over the ratio
of 2021.
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 34
FINANCIAL OVERVIEW (continued)
Operating Performance (continued)
ReAPS Asset Management Limited, as the Investment Manager of APS Funds SICAV plc and other
investment portfolios, generated €0.3 million profit before tax (2021: €0.7 million). Largely due to the
financial market instability, total net assets managed by APS Funds SICAV plc as at end of December
2022 stood at €158.2 million, retracting by 19.1% over the comparative period.
Financial Position
During the financial year ended 31 December 2022, Group total assets exceeded the €3 billion mark -
at year-end standing at €3.1 billion, growing by €317.1 million, or 11.3% year-on-year. This expansion was
mainly steered by the increase in the lending book, which reached €2.4 billion (2021: €2.1 billion).
Lending to the household sector remained key to the increase, followed by commercial real estate
activity. Syndicated loans also supported this expansion with further growth as opportunities for spread
improved. The treasury fixed-income portfolio has also seen a significant increase during the year with
total growth of €131.6 million, reaching €459.6 million. Offsetting this increase in the Group’s liquidity
stock and lending portfolio were cash and reserves with the Central Bank of Malta which at the end of
year stood at €85.9 million, decreasing by €121.8 million when compared to the €207.7 million at
December 2021.
At Group level, total liabilities, amounted to €2.9 billion, further expanding by 10.7% over the end-2021
balance of €2.6 billion. Attributing to this were the amounts owed to customers which by end of 2022
stood at €2.7 billion (2021: €2.4 billion). Short-term funding in the form of overnight deposits largely
drove this growth, contributing to 67.7% from the total increase in deposit funding over the 12-month
period, also improving the portfolio mix and the Group’s cost of funding.
The Group’s equity at year-end amounted to €261.5 million, rising by €40.6 million or 18.4% over the
prior year-end. The month of June saw the Bank conclude the final phase of its 2018-2022 Capital
Development Plan, through a highly successful and heavily over-subscribed IPO which raised €66
million of new equity. An interim dividend distributed in October through the issuance of new ordinary
shares further boosted the equity position. At year-end, the Bank’s capital adequacy ratio was 18.8%
(2021: 16.8%) and CET1 ratio of 15.2% (2021: 12.8%).
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 35
FINANCIAL OVERVIEW (continued)
Financial Position (continued)
Outlook
The global economy entered 2023 with some positive signs as inflation and energy prices eased from
their peak levels and supply chain disruptions seemed to stabilise. China’s ending of its zero-COVID
policy also provides some growth impulses although its full impact is yet to unfold. But the overall
macroeconomic environment remains challenging for economies, business, and consumers as
persistent inflation, rising interest rates and ongoing geopolitical uncertainties continue to dent private
consumption and investment in many parts of the world.
While a full-blown global recession is a less likely scenario, the outlook for world economic growth is
expected to be the weakest for decades, apart from the outlier years of 2009 and 2020. Closer to
home, economic sentiment in Malta - while not insulated from these difficulties - stayed positive. This is
driven by a good performance in the retail and services sectors, particularly an encouraging rebound
in tourism, and sustained Government support to households and businesses. However, challenges lie
ahead as pressures mount for Malta to reform its corporate tax system and reduce energy subsidies.
The Group approaches this demanding landscape on a solid footing, backed by strong 2022 results,
robust capitalisation and liquidity. But it is also the time to maintain a conservative approach to risk and
a prudent credit underwriting policy in view of the vulnerabilities that may trigger pressures on asset
quality. Interest rate dynamics have also entered a new phase, with intensified competitive pressures
on the funding side, not only from banks but also other economic actors, including Government due to
its borrowing requirements. Pricing pressures are also noticeable from retail and commercial borrowers
while the syndicated loan book should provide further opportunities to find spread. On the whole, a
challenging outlook which will require judicious strategic choices and decision-making firmly anchored
in our values and the overarching aim of providing a simpler, contemporary and complete banking
experience.
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 36
GOING CONCERN
The financial statements are prepared on a going concern basis. The Group prepared financial plans
for the next three years addressing the Group’s operating performance, risks, capital and liquidity.
As required by the Companies Act (Cap 386) and the Capital Markets Rule 5.62, the Directors having
considered the financial performance and position of the Company and its future outlook deem that
the Group is able to continue operating as a going concern for the foreseeable future.
STATEMENT OF RESPONSIBILITY
This Statement of Responsibility is required in terms of the Companies Act (Cap 386) and the Capital
Markets Rule 5.55.2 and set out in the form required by Capital Markets Rules 5.67 to 5.69.
The Companies’ Act requires the Directors to prepare financial statements for each financial year that
give a true and fair view of the state of affairs of the Group and the Bank at end of each financial year
and of its profit or loss for that financial year in accordance with the requirements of International
Financial Reporting Standards as adopted by the European Union (EU).
The Directors are responsible for ensuring that proper accounting records are kept which disclose with
reasonable accuracy at any time, the financial position of the Group and the Bank and which enable
them to ensure that the financial statements comply with the Companies Act and the Banking Act. The
Directors are also responsible for ensuring that:
Appropriate accounting policies have been consistently applied and supported by reasonable
and prudent judgments and estimates;
The financial statements are prepared on a going concern basis; and
Account has been taken of income and charges relating to the accounting period, irrespective
of the date of receipt or payment.
The Directors are also responsible for safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors, through oversight of Management, are responsible to ensure that the Group establishes
and maintains internal controls to provide reasonable assurance with regard to reliability of financial
reporting, effectiveness and efficiency of operations and compliance with applicable laws and
regulations.
Additionally, the Directors are responsible for:
The preparation and publication of the Annual Financial Report, including the consolidated
financial statements and the relevant tagging requirements therein, as required by Capital
Markets Rule 5.56A, in accordance with the requirements of the European Single Electronic
Format Regulatory Technical Standard as specified in the Commission Delegated Regulation
(EU) 2019/815 (the ESEF RTS);
Designing, implementing, and maintaining internal controls relevant to the preparation of the
Annual Financial Report that is free from material non-compliance with the requirements of the
ESEF RTS, whether due to fraud or error; and
Consequently, for ensuring the accurate transfer of the information in the Annual Financial
Report into a single electronic reporting format.
DIRECTORS’ REPORT
________________________________________________________________________
APS Bank plc 37
DISCLOSURE IN TERMS OF THE SIXTH SCHEDULE TO THE COMPANIES’ ACT
During the financial year ended 31 December 2022, no shares in the Bank were:
Purchased by the Bank itself or acquired by it by forfeiture or surrender or otherwise;
Acquired by another person in circumstances where the acquisition was the Bank’s nominee,
or by another with the Bank’s financial assistance, the Bank itself having a beneficial interest; or
Pledged or made subject to other privileges, to a hypothec or to any other charge in favour of
the Bank.
STANDARD LICENCE CONDITIONS
a) During February 2023, the Bank paid an administrative penalty to the FIAU amounting to €
228,706. The penalty was applied following an inspection which was carried out in 2020. The
Bank had fully cooperated with the FIAU during the inspection and had taken immediate
remedial action soon after the review was concluded. The Bank did not appeal this decision
and settled the penalty once notification was received.
There were no breaches of licence requirements nor any other regulatory sanctions against the
Bank.
b) In accordance with Standard Licence Condition 7.28 of the Investment Services Guidelines
issued by the MFSA, licence holders are required to disclose any regulatory breaches of the
Standard Licence Conditions in their annual report. During the year under review, there were
no such regulatory breaches nor were any regulatory sanctions imposed on the Group by the
MFSA.
In accordance with Standard Licence Condition R1-2.1.3 of the Investment Services Guidelines
issued by the MFSA, licence holders are required to disclose any regulatory breaches of the
Investment Standard Licence Conditions in their annual report. During the year under review,
there were no such regulatory breaches nor were any regulatory sanctions imposed on the
Group by the MFSA.
AUDITORS
Deloitte Audit Limited have signified their willingness to continue in office as auditors of the Group and
a resolution proposing their reappointment will be put to the AGM.
The Directors’ report was authorised for issue by the Board of Directors and was signed on its behalf
by:
Martin Scicluna Franco Azzopardi
Chairman Director
9 March 2023
REMUNERATION REPORT
APS Bank plc 38
REMUNERATION POLICY
The Remuneration Policy of APS Group aims to exercise a competent and independent judgement on
its remuneration practices and its incentives created for managing risk, capital and liquidity, and ensure
that they are in line with applicable legislation, directives, regulations and guidelines. The approval of
the Group’s Remuneration Policy is the responsibility of the Board of Directors and covers all categories
of staff including Senior Management (CEO, Chief Officers and Heads of Department), risk takers and
staff engaged in control functions.
The application of the principles of Directive 2013/36/EU, the EBA Guidelines on sound remuneration
policies and Banking Rule 21 (BR21/2022) – Remuneration Policies and Practices, considers the nature
and scale of the Group and the complexity of its activities. A Collective Agreement with the Malta Union
of Bank Employees for the years 2020–2022 covers all staff members (renewal currently under
negotiation), excluding Senior Management. References in this Report to types and modes of
remuneration apply to all staff, but where these refer to staff covered by the Collective Agreement it
shall be construed accordingly.
The Remuneration Policy is reviewed on a regular basis and was last updated and approved on the 24
March 2022 by the Board of Directors to include an ESIP, and applicable Rules for the period 2022–
2026. The Remuneration Policy was approved by the shareholders at the 2022 AGM. The Remuneration
Policy will be updated and submitted to a vote at the general meeting to reflect the provisions under
Chapter 12 of the Capital Markets Rules.
Fixed Remuneration
The base salary provides a predictable base level of income reflecting each staff member’s level of
responsibility, capabilities, skills and experience. Base salaries are reviewed annually, and increases are
granted in line with performance and when a staff member assumes increased responsibilities or
significantly deepens knowledge and expertise. Base salaries may also be reviewed when there is a
material change in the remuneration levels of comparable roles in the respective market. Base salaries
are set for a number of different levels within approved salary ranges. Fixed remuneration includes an
occupational pension scheme for staff members with a fixed contribution in accordance with
established eligibility criteria.
Variable Remuneration
Staff members may have a variable component to their remuneration in addition to their fixed
remuneration. The relation between fixed and variable remuneration shall not exceed twenty-five (25)
per cent of the fixed component for each individual. The variable portion is clearly connected to the
work and performance of the staff member, the performance of their business unit and the overall
performance of the Bank and its subsidiaries. The goals are based on factors that support the Group’s
long-term strategy and business objectives. Staff in Control Functions are adequately compensated in
accordance with their own objectives and not directly tied to the results of any business unit. They are
judged on their success in developing appropriate policies, developing effective risk management
controls and procedures, monitoring risk and building control systems.
Bonuses related to individual performance are based on both quantitative and qualitative targets.
Qualitative criteria consider (i) adherence to the applicable regulatory framework, (ii) treating
customers fairly, and (iii) the on-going provision of a high-quality service to customers. Performance
bonus promotes teamwork and encourages all staff members to perform to the best of their abilities,
for their mutual benefit and the long-term sustainable success of the Group.
The Group ensures that bonuses are fair, transparent, easy to understand and based on the Bank’s
Business Plan and Annual Budgets. Any variable remuneration, be it monetary or non-monetary, outside
the parameters of the Policy is referred to the Nominations and Remuneration Committee for approval.
Variable remuneration does not include “clawback’’ provisions. APS Group does not offer buy out
contracts or share options. Schemes relating to early termination are established within the Collective
Agreement.
REMUNERATION REPORT
APS Bank plc 39
REMUNERATION POLICY (continued)
Employee Share Incentive Plan
During 2022 the shareholders approved the establishment of an ESIP and applicable rules for the period
2022-2026 at its AGM. By virtue of this Plan, the Board of Directors of the Bank may grant Shares to
Eligible Employees subject to Rules. The implementation of these Rules was delegated by the Board of
Directors to the Nominations and Remuneration Committee.
The Rules regulate Share Awards based on an Eligible Employee’s performance for any applicable year.
An Eligible Employee will therefore be awarded Share Awards subject to the attainment of the
stipulated performance criterion for that year. The Plan contemplates loss of benefits to varying
degrees depending on the circumstances, including to those Eligible Employees who do not remain in
the employ of the Group. Share awards have a vesting period of three years.
Link between Pay and Performance
The variable portion of remuneration is linked to the level of profit earned by the Bank during the relative
financial period. The bonus pool allocated to the staff in the clerical, non-clerical and managerial grades
is calculated as determined in the Collective Agreement and based on the profit achieved by the Bank.
The bonus is distributed to employees according to the merit of performance achieved by the individual
and reflecting the respective grade and level of responsibility. Annual bonus entitlements are also
applicable to members of Senior Management in terms of their individual contracts.
Performance Management System
KPIs, by which employees’ performance is measured, provide corporate departmental, unit and
team/individual targets aligned with the strategic objectives and business plan of the Group.
Performance management also takes into consideration leadership competencies required by the
individual positions as well as the Group’s corporate values. Performance targets are reviewed
periodically to ensure that these are aligned to specific strategic and operational objectives set out by
the Board of Directors, covering not only business generation, but also other areas of importance such
as compliance with prevalent regulation and internal policies and procedures, onboarding and customer
due diligence, non-performing borrowing, quality of service and others.
Identified Staff
Additional disclosures on the governance process related to remuneration have been made in this
report. The target population defined as Identified Staff for the purposes of this disclosure represents
6.9% of total number of employees in the Group. Identified staff is determined in line with recommended
EBA Regulatory Technical Standards
1
and includes:
all members of the management body and senior management;
staff members with managerial responsibility over the institution's control functions or material
business units; and
other employees who are members of Committees with collective authority to commit to risk
exposures per transaction beyond 0.5% of CET1 Capital, and employees who, individually or as
part of a Committee take, approve or veto decisions on new products, material processes or
material systems.
For the purposes of remuneration, Identified Staff have been split into business areas according to EBA
guidelines
2
. The tables overleaf show total fixed and variable remuneration for Identified Staff during
the financial year 2022 broken down by business area, Senior Management and members of staff whose
actions have a material impact on the risk profile of the institution. All fixed and variable remuneration
were paid in cash apart from the Occupational Pension Scheme and Share Awards.
1 EBA Final Draft Regulatory Technical Standards EBA/RTS/2020/05 dated 18 June 2020
2 EBA Guidelines on the remuneration benchmarking exercise EBA/GL/2014/08 dated 16 July 2014
REMUNERATION REPORT
APS Bank plc 40
REMUNERATION POLICY (continued)
Identified Staff (continued)
In line with Annex XXXIII of the EBA Implementing Technical Standards on institutions’ public
disclosures of the information referred to in Titles II and III of Part Eight of Regulation (EU) No 575/2013,
the Bank is required to disclose information in respect of special payments made to Identified Staff. No
severance payments or sign-on payments were made and no payments of €1 million and over were
made. Therefore, the REM2 table and the REM 4 table are not required for this Remuneration Report.
Standard contracts for all Identified staff would generally be indefinite following a period of definite
employment with notice periods and retirement from the Bank in line with local legislation.
The below tables presents remuneration disclosures in respect of the Bank’s Remuneration Policy.
Management
Body
Supervisory
function
Management
Body
Management
function
Other Senior
Management
Other
Identified Staff
Fixed
Remuneration
Number of
identified staff
9
9
25
6
Total fixed
remuneration of
which:
418,000
1,872,663
2,473,071
231,413
Cash based
418,000
1,835,253
2,379,647
226,438
Other forms
-
37,410
93,424
4,975
Variable
Remuneration
Number of
identified staff
9
9
25
6
Total variable
remuneration of
which:
-
303,768
517,255
30,659
Cash based
-
216,968
284,755
26,691
Share-linked
instruments or
equivalent non-cash
instruments
-
86,800
232,500
3,968
Total Remuneration
2,176,431
2,990,326
262,072
Deferred and retained
remuneration
Total amount of deferred
remuneration awarded for
previous performance periods
Of which vesting in subsequent
financial years
Management Body
Management function
86,800
86,800
Other Senior management
232,500
232,500
Other Identified staff
3,968
3,968
Total amount
323,268
323,268
REMUNERATION REPORT
APS Bank plc 41
REMUNERATION POLICY (continued)
Identified Staff (continued)
MB
Supervisory
function
MB
Management
function
Total MB
Investment
Banking
Retail
Banking
Asset
management
Corporate
functions
Independent
internal
control
functions
Total
Total number
of identified
staff
9
9
18
2
3
6
11
9
49
Of which:
Other Senior
management
-
-
-
2
3
1
11
8
Other
identified
staff
-
-
-
-
-
5
-
1
Total
remuneration
of identified
staff
418,000
2,176,431
2,594,431
272,924
372,066
343,982
1,247,865
1,015,561
5,846,829
Of which:
Variable
remuneration
-
303,768
303,768
49,934
63,065
44,852
217,422
172,641
Fixed
remuneration
418,000
1,872,663
2,290,663
222,990
309,001
299,130
1,030,443
842,920
Notes to the table:
Total fixed remuneration comprises benefits, specifically car allowances.
Fixed occupational pension contribution is subject to eligibility criteria.
Share awards are vested over the next three years, in line with the vesting periods declared at time of award.
Variable remuneration for identified staff includes performance related bonuses and share awards.
NOMINATIONS & REMUNERATION REPORT AS AT 31 DECEMBER 2022
1. Terms of Reference and Membership of the Nominations and Remuneration Committee
This Remuneration Report is being prepared in terms of Appendix 12.1 of the Capital Markets Rules. The
Nominations & Remuneration Committee (the Committee) has a two-pronged function: (i) ensuring
that the Directors and senior management of the Bank have the appropriate mix of skills, qualifications,
and experience necessary to fulfil their supervisory and management functions respectively; (ii)
overseeing the development and implementation of the remuneration and related policies of the Group
and to exercise a competent and independent judgement on its remuneration practices.
The Committee is composed of three Non-Executive Directors. The members of the Committee are
Martin Scicluna as Chairman, Victor Gusman, Dr Laragh Cassar and Michael Pace Ross. Michael Pace
Ross was appointed Committee member on 1 July 2022, in preparation for the retirement of Victor
Gusman who retired as Non-Executive Director on 31 December 2022. None of the members participate
in the discussion regarding their own nomination, remuneration or performance. A senior member
within the Human Capital Department acts as Secretary to the Committee.
Further detail on the Terms of Reference of the Committee is found in the “Statement of Compliance
with the Code of Principles of Good Corporate Governance” under Principle 4, on pages 48 and 50.
REMUNERATION REPORT
APS Bank plc 42
NOMINATIONS & REMUNERATION REPORT AS AT 31 DECEMBER 2022 (continued)
2. Meetings
The Committee held six (6) meetings during the period under review. All members were present at
these meetings, except for Dr Cassar who was absent for two meetings. Dr Cassar’s absence was pre-
authorised. The CEO, Chief People Officer and Company Secretary were invited to the meetings to
contribute as necessary.
3. Nominations
In line with the requirement of the Capital Markets Rule 8.B.7, the work carried out by the Committee
relating to Nominations throughout 2022 is being presented under the following main headings:
Board Composition and Succession
Throughout the year the Committee ensured that the Bank had, and will continue to have, a strong and
effective Board in place, with all the necessary competencies, experience, and skills.
The Committee maintains a Nominations Pool which contains a list of suitable individuals who can be
considered for eventual Board appointments on an “as required” basis. Individuals are not aware that
they are included in the Nominations Pool. Once a vacancy at Board level materialises, appropriate
assessments and approaches are made to identify an individual that displays the required personal
traits and fits in with collective suitability benchmarks. This process complies with both Regulatory
requirements and with best practice Corporate Governance codes generally.
Further to Mr Victor Gusman’s communication of his intention to retire as Non-Executive Director on 31
December 2022, the Committee embarked on the appointment of a replacement Director. In terms of
Article 103 of the Bank’s Articles of Association, the Diocese of Gozo, as Qualifying Shareholder having
originally nominated Mr Gusman, appointed Mr Joseph Rapa as Non-Executive Director in his stead.
This appointment was thoroughly assessed by the Committee, followed by a “fit and proper”
recommendation, which was eventually authorised by the Board of Directors. Mr Rapa’s appointment
became effective as from 1 January 2023 following due process through the MFSA Personal
Questionnaire process. Mr Rapa’s biography may be found on page 10.
Diversity
In line with both Regulatory expectations and in line with Corporate Governance best practices, the
Committee addressed the topics of succession planning with a focus on diversity, particularly diversity
of gender and diversity of age, director appointment tenure and educational and professional
background, always underpinned by the fundamental pre-requisite of competence. Currently, (1) one
member of the Board is female. The Committee is fully aware and cognisant of Regulatory and
Corporate Governance guidelines that require more balance in all aspects of Diversity. The appropriate
action is being taken to ensure improvements in Diversity criteria. Following the appointment of Joseph
Rapa, the average age and the average tenure have both improved.
The Committee approved the Bank’s Diversity, Equity and Inclusion Policy that supports the Bank in
fostering, cultivating, and preserving a culture of diversity, equity, and inclusion amongst all its staff
members. It aims to create an inclusive environment that respects the dignity and diversity of all its
people, in line with the Bank’s Values and its Culture Deck.
REMUNERATION REPORT
NOMINATIONS & REMUNERATION REPORT AS AT 31 DECEMBER 2022 (continued)
4. Remuneration
Statement
4.
1 Remuneration Policy – Senior Management
The Board of Directors (Board) determines the framework of the overall remuneration policy for
Executives based on recommendations from the Nominations and Remuneration Committee. The
Committee, on the recommendations of the CEO, then establishes the individual remuneration
arrangements of the Group’s Senior Management, namely the Executives and Heads of Departments.
The Remuneration Policy applies consistently to all employees within the Group. Its objective is to align
employees’ remuneration with the Group’s performance, business strategy and business models, risk
appetite framework, values and long-term goals. The overriding principle of the Remuneration Policy is
that individual performance is evaluated according to both quantitative/financial and
qualitative/competency measures.
The Committee considers that the current remuneration packages for Executives are based upon the
appropriate market equivalents and are adequate for the responsibilities involved to enable the Group
to attract, retain and motivate executives having the appropriate skills and qualities, in order to ensure
the proper management of the organisation.
For the purposes of this Remuneration Statement, references to “Executives” shall mean the CEO and
the eight members of the Executive Committee. Executives are in full employment with the Bank on
indefinite contracts. They enjoy health insurance arrangements, death in service benefits, an
occupational pension scheme, as all Bank employees, and participate in the ESIP.
The CEO’s remuneration is reviewed and approved by the Committee. The CEO is eligible for an annual
bonus entitlement by reference to the attainment of pre-established objectives and targets as approved
by the Committee. Executives are also eligible for an annual bonus entitlement and eligible for an annual
salary increase within a maximum salary range approved by the Committee.
Apart from the Occupational Pension Scheme and ESIP no discretionary pensions or other
supplementary pension benefits were payable to the Executives in 2022. Insofar as early retirement
schemes are concerned, the Executives are subject to the schemes which are set out and defined in the
Collective Agreement (for Managerial and Clerical Grades) as may be applicable to employees from
time to time.
Variable Remuneration of Executives
The total Variable Remuneration of Executives including share awards is proposed by the CEO,
reviewed by the Committee, and confirmed by the Board. During 2022 the Executives were awarded a
performance bonus linked to the performance and achievement of their objectives and share awards
vesting over a period of three years 2023-2025. The objectives were based partly on financial targets
and partly on qualitative performance review.
Total emoluments received by Executives during the financial year ended 31 December 2022 are
reported in the Remuneration Report.
4.2 Remuneration Policy – Chief Executive Officer
The CEO’s remuneration is agreed by the Board of Directors. It is composed of fixed and variable
remuneration and other benefits, including a pension scheme and eligibility to the ESIP. Total
remuneration, including all benefits, awarded in 2022 are shown in the table below.
€
Fixed Pay
360,000
Fringe Benefits (Car and Pension Scheme)
33,336
Variable Pay (Performance Bonus and ESIP)
62,400
Aggregate
455,736
APS Bank plc 43
REMUNERATION REPORT
APS Bank plc 44
NOMINATIONS & REMUNERATION REPORT AS AT 31 DECEMBER 2022 (continued)
4. Remuneration
Statement
(
continued
)
4.2 Remuneration Policy – Chief Executive Officer (continued)
The amounts above represents the remuneration package of the CEO accruing for the financial year
ending 31
December 2022.
The CEO is employed on a five-year fixed-term contract expiring on the 31 December 2026. The
performance assessment of the CEO involved the evaluation of the targets achieved against a number
of pre-set objectives and behaviours, including business growth in line with the Bank’s strategic plan,
engagement with other key stakeholders and regulators, and ensuring adherence to risk management
and compliance measures. The extent to which the CEO would have reached each objective is
discussed and reviewed by the Board of Directors. These objectives are reviewed on a quarterly basis
to ensure ongoing review and alignment with expected performance.
4.3 Remuneration Policy – Directors
The Board of Directors is composed in its entirety of Non-Executive Directors. None of the Directors,
in their capacity as Directors of the Bank, are entitled to profit sharing, share awards or pension benefits.
In terms of non-cash benefits, Directors are entitled to health insurance and to a refund of out-of-pocket
expenses. All Directors are non-employees and receive a fee for their services as Directors.
The remuneration of the Chairman and Directors of the Bank for 2022 was approved by the
shareholders at the AGM. The remuneration consists of fixed fees for being appointed as Board of
Director as well as for membership in Board Committees. It is set at a level which broadly reflects:
▪ market practices and rates of compensation at comparable regulated firms;
▪ the competencies and contribution required; and
▪ the extent of responsibilities and the number of board meetings and committee membership/s.
The Directors are appointed at every AGM following their resignation and resubmitting themselves for
re-election. There is no severance payments upon termination of their respective directorship. Directors
are entitled to certain benefits after the termination of their directorship, including discounts on
products and services offered by the Group.
Directors are obliged to avoid conflicts of interest and shall take reasonable steps to keep the Bank’s
matters confidential. Directors’ emoluments are designed to reflect the time committed by Directors to
the Bank’s affairs, including the different Board Committees of which Directors are members, and their
responsibilities on such Committees and confirmed at the AGM.
The Directors’ fees as approved by the Board of Directors are as follows:
€
Board Fees
Chairman
45,000
All other Directors
202,333
Board Committee Fees
Chairman of the Board
5,250
All other Directors
165,417
REMUNERATION REPORT
APS Bank plc 45
NOMINATIONS & REMUNERATION REPORT AS AT 31 DECEMBER 2022 (continued)
4.Remuneration
Statement
(
continued
)
4.3 Remuneration Policy – Directors (continued)
CORPORATE GOVERNANCE REPORT
APS Bank plc 46
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD
CORPORATE GOVERNANCE
The Board of Directors (Board or Directors) of APS Bank plc (Bank) is presenting this Statement of
Compliance in conformity with the requirements of the Capital Markets Rules 5.94 et seq of the MFSA
and the principles outlined in the Code of Principles for Good Corporate Governance (Code), in
Appendix 5.1 of the Capital Markets Rules. Reference to the Bank also covers the subsidiary
undertakings forming the APS Group as noted in the Directors’ Report on page 16.
The Board is committed to the well-being of the Bank by instilling robust corporate governance
principles, sound management and general supervision of its affairs. The Board acknowledges that the
Code recommends principles for the Board and the Bank’s management to pursue objectives that are
in the interest of the Bank and its shareholders and undertakes to comply fully with it to the extent that
this is considered consistent with the size, nature and operations of the Bank. As at the date of this
Statement, the Board considers the Bank to be in compliance with the Code, save for the exceptions
delineated on page 57.
COMPLIANCE WITH THE CODE
Principle 1: The Board
The Board plays a salient role in setting the strategy of the Bank by providing leadership, integrity and
judgement, upholding the highest standards of corporate governance. In doing so, the Board
establishes the required focus on the value-added deliverables, promoting the Bank’s culture, values
and ethics, aiming to safeguard the interests of the institution, shareholders, employees and customers
alike.
As at the date of this Statement, the Board is composed of nine Non-Executive Directors, including the
Chairman, as listed in the Directors’ Report on page 17. There is a strong, value-adding Board, with a
diverse range of skills, experiences, background and competencies, ensuring effective and efficient
decision-making. The Board supports open and honest conversations to ensure that decisions taken
are in the long-term interest of the Bank.
The Board requirements are clearly documented in the Bank’s Articles of Association, which has been
revamped following the Bank’s equity listing in mid-2022, and in the Bank’s Board Charter which has
been updated and approved together with a Schedule of Matters Reserved for the Board.
Furthermore, the Board delegates specific responsibilities to various Board and Management
Committees, as illustrated by the governance structure chart on page 51. Supplementary information
on delegated authorities and responsibilities is provided in Principle 4.
The Board is fully supported by a Company Secretary, whose role is separate and independent from
other management bodies. All Directors have unrestricted access to the Company Secretary. The
Company Secretary works closely with the Chairman to ensure effective functioning of the Board and
appropriate information flows between the Board and its Committees. The Company Secretary also
facilitates Board induction and Directors’ professional development. The responsibilities of the
Company Secretary also cover corporate governance and investor relations.
Principle 2: Chairman and CEO
The Bank’s organisational structure incorporates the positions of a Chairman and a CEO, which are
separate and distinct positions, occupied by different individuals, having a clear division of
responsibilities.
The Chairman is appointed from among the Directors by the largest shareholder, holding at least 25%
of the ordinary issued share capital of the Bank. The Chairman is responsible for leading the Board and
setting its agenda for meetings, ensuring that the Directors receive precise, timely and objective
information so that they can properly discharge their duties, while encouraging their active engagement
at meetings and on issues of a complex or contentious nature.
CORPORATE GOVERNANCE REPORT
APS Bank plc 47
COMPLIANCE WITH THE CODE (continued)
Principle 2: Chairman and CEO (continued)
The CEO is responsible for the running of the Bank’s business and to lead the management team,
establishing the required forums to communicate, review and agree on issues and actions of Group-
wide significance, with the exception of those matters reserved for the Board or specifically delegated
by the Board to its Committees. The CEO is also responsible for the recruitment and appointment of
senior management, after consultation with the Nominations & Remuneration Committee.
To allow the respective responsibilities to be discharged effectively and yet ensure an effective flow of
information, the Chair and the CEO maintain regular dialogue outside the Boardroom.
Principle 3: Composition of the Board
The Bank’s Articles of Association, with their detailed provisions, govern the appointment in office, and
the retirement and/or resignations of Board Members. As per practice, Directors hold office from the
close of the AGM at which they are appointed until the end of the subsequent AGM, at which they
become eligible for re-election. The Nominations and Remuneration Committee has the delegated
authority to lead this process, ensuring Board suitability at all times.
All Directors hold office in a non-executive capacity and actively participate in Board Committees. All
Directors are committed to high standards of conduct, ethics and governance practices.
Each Director is expected to be an active participant to ensure that the Board functions effectively as
a whole. The Directors combine broad business and commercial experience, conveying independent
and objective judgement, providing constructive challenge to the executives, and ensuring diligent
monitoring of internal control functions. All Directors have adequate knowledge of the KPIs and have
the required understanding of the business risks involved.
The Board contains a mix of longer-serving Directors and more-recently appointed ones, balancing
good institutional memory with fresh insight and bringing to the Board a broad range of skills, expertise
and experience. This is considered to be a good formula that enables the Board to deal with current
and emerging opportunities and issues and to appreciate effectively the business risk and KPIs affecting
the Bank’s ability to achieve its objectives. This is complemented with an ongoing evaluation of the
skills, competences, knowledge, experience, tenure and independence to fulfil boardroom
responsibilities. The Nominations and Remuneration Committee maintains a skills matrix with key skills,
experiences and attributes that have been identified as particularly valuable to effective oversight of
the Bank and execution of the strategy. The element of diversity is top on the agenda. A diversity policy
governs the principles of diversity, equity and inclusion. The skills matrix is reviewed annually following
the finalisation of the Board and Individual Annual Evaluation. Board succession planning has been a
key area of focus throughout this reporting year, given the retirement of Victor Gusman on 31 December
2022, coupled with two Directors who are not seeking re-election at the 2023 AGM. Further information
on the Nomination and Remuneration Committee proceedings is found in the Nomination and
Remuneration Committee Reports.
In accordance with the Code Provision 3.2, the independent Non-Executive Directors of the Bank as at
31
December 2022 were:
- Martin Scicluna (Chairman)
- Victor E. Agius
- Joseph C. Attard
- Franco Azzopardi
- Laragh Cassar
- Juanito Camilleri
CORPORATE GOVERNANCE REPORT
APS Bank plc 48
COMPLIANCE WITH THE CODE (continued)
Principle 3: Composition of the Board (continued)
In determining the independence or otherwise of its Directors, the Board has considered the principles
emanating from the Code, the Joint EBA and ESMA Guidelines on the Assessment of the Suitability of
Members of the Management Body (2021), as well as general principles of good practice.
The Board has determined that Franco Azzopardi has demonstrated the ability to take objective
decisions independently, notwithstanding his tenure of over 12 years as Director.
Conversely, the Board considers Michael Pace Ross, who holds the role of Administrative Secretary of
the Archdiocese of Malta, and Victor Gusman who until the second quarter of 2021 held the same role
with the Diocese of Gozo, to be non-independent from the Bank. On 31 December 2022, Victor Gusman
retired from the Board. In terms of Article 103 of its Articles of Association, the Diocese of Gozo, as
Qualifying Shareholder having originally nominated Victor Gusman, appointed Joseph Rapa as Non-
Executive Director in his stead. Joseph Rapa is considered to be a non-independent Director. A copy
of Joseph Rapa’s bio is found on page 10. Additionally, Alfred DeMarco sits on the Kunsill Finanzjarju
Djoceżan within the Archdiocese of Malta, and therefore he too is regarded as being non-independent.
This notwithstanding, the Board does not consider that the roles of these Directors with the
shareholders hinder them from maintaining independence of free judgement and character, as they
demonstrably make their own objective, sound and independent decisions and judgements when
performing their Board duties.
Furthermore, Franco Azzopardi and Alfred DeMarco have expressed their intention not to seek re-
appointment at the forthcoming AGM. A process is currently underway for two Non-Executive
Directors to be appointed in their stead.
Principle 4: The Responsibilities of the Board
In its primary responsibility to set the ‘tone at the top’, the Board is responsible for understanding and
for advising management on the processes through which governance occurs and is accountable for
the results of those processes. Hence the Board ensures effective execution of its functions through
clear articulation of the Bank’s purpose and strategy, exercising stewardship and oversight of the
institution. In so doing, the Board works closely with the senior management team, led by the CEO, and
together establish a balance between oversight and strategy execution.
The Board actively oversees the affairs of the Bank by formulating policy in alignment with relevant
laws, regulations, and codes of practice. The Board is responsible to approve major projects, budgets,
capital expenditures and financing, and oversees the adequacy of its corporate governance,
transformation, internal controls systems and risk management, as well as people management.
The Board ensures that the Bank has appropriate policies and procedures in place to lead its employees
in accordance with the highest standards of corporate conduct and to comply at all times with
applicable laws, regulations, business and ethical standards.
Further information on the Board’s responsibilities on internal controls and risk management is found
on pages 58 to 59.
As detailed in Principle 1, the Board delegates its authority to various Board and Management
Committees which operate under their respective Terms of Reference, setting out the Committee’s
mandate, scope and working procedure. The below is an infographic on the Bank’s governance
framework.
CORPORATE GOVERNANCE REPORT
APS Bank plc 49
COMPLIANCE WITH THE CODE (continued)
Principle 4: The Responsibilities of the Board (continued)
The Board
The main role of the Board of Directors is to perform the duties of strategic planning and oversight.
The Board Committees
The Board has the following seven Board Committees to which it delegates certain responsibilities.
A more detailed overview of the Terms of Reference and membership of Board Committees is found on the Bank’s website
Audit
Committee
Assists the
Board in
monitoring
the
integrity of
the
financial
reporting
process,
including
the audit of
the annual
accounts
and review
of any
interim
reporting,
and
ensuring an
effective
system of
internal
controls
and the
effectivene
ss of the
Internal
and
External
Auditors.
Risk
Committee
Has a wide
mandate for
risk
oversight,
including
credit risk,
market risk,
reputational
risk,
operational
risk,
technology
and cyber
risk,
concentratio
n risk,
liquidity risk
as well as
compliance
and
reputational
matters, and
reviews the
Bank’s risk
management
framework
accordingly.
Nominations
and
Remuneration
Committee
Keeps the
Board
composition
under review
and carries out
the process for
Board
appointments
and assists the
Board on senior
management
appointment
and succession
planning.
Recommends
the
compensation
framework of
Board and
senior
executives.
Conduct
Committee
Acts as first
point of
reference on
Board
governance
policies and
procedures,
codes of
conduct and
conflicts of
interest.
Performs
oversight on
matters of
ethics, brand,
values,
reputation,
and culture
keeping
consumer
(customers’)
protection
primary.
Board Credit
Committee
Reviews
credit
applications
and approves
credit limits
for customers
and
transactions,
within the
parameters
set by the
Board in
terms of the
credit policy
procedures.
Reviews
emerging
issues and
concerns
relating to the
performance
of the
portfolio,
including to
specific
sectoral
exposures.
Environmental,
Social and
Governance
Committee
Considers the
material ESG
issues and
policies
relevant to the
Bank’s business
activities and
promotes
initiatives to
raise ESG
performance.
Oversees the
implementation
of social
sustainability
initiatives and
commitments,
including
performance,
challenges and
opportunities,
to ensure their
effectiveness in
delivering
social impact.
Technology &
Innovation
Committee
Oversees
management
with regard to IT-
related risks,
security and
business
continuity plans.
Provides
strategic
leadership
through a steady
flow of
innovative ideas
that will serve as
a catalyst for
innovation at the
Bank as well as
monitoring IT
project
implementation.
The Chief Executive Officer
The CEO is responsible for the development and implementation of the Group’s strategy and overall commercial
objectives. In ensuring that this role is carried out effectively, the Board has set-up the following Management
Committees
A more detailed overview of the Terms of Reference and membership of Management Committees is found on the Bank’s
website.
Executive
Committee
(EXCO)
Acts as
consultative body
and advisor to the
CEO on matters
such as strategy,
operations and
business.
Focuses on the
four Ps, namely
Performance,
Products, Projects
Assets-Liabilities
Committee
Generally
responsible for
the asset liability
management
(ALM) strategy,
policy, surveying
of market
developments,
including the
Bank’s Base Rate
and funding
strategy.
Management
Credit
Committee
Receives and
reviews credit
applications and
approves credit
limits for
customers and
transactions,
within the
parameters set by
the Board in
terms of the
Compliance
Committee
Ensures that
prescribed
regulations, rules,
policies,
guidelines and
procedures are
being followed
and also
anticipated in
advance.
Acts as a
decision point for
Weekly Management
Meeting
Reports to EXCO, with which
it also works very closely.
The Meeting brings together
the senior levels of
management – Chiefs and
Heads – in a weekly forum
where all members share
updates about their respective
areas of responsibility, work
plans as well as matters or
items of significant interest.
CORPORATE GOVERNANCE REPORT
APS Bank plc 50
and People, and
these four broad
areas describe
adequately the
coverage of this
Committee.
Focuses on
liquidity
management and
contingency
planning,
determines the
liquidity strategy.
credit policy and
procedures.
Refers and
recommends to
the BCC limit
applications
where these
exceed its MCC
limits.
business
acceptance, on-
boarding and
dismissal of
customers, in line
with the Bank’s
on-boarding and
exit policies.
The Compliance
Committee
reports to the
Risk Committee.
Principle 5: Board Meetings
The Board meets regularly to discharge its duties effectively, typically monthly. Stemming from the
Bank’s COVID-19 safety protocol, 2022 Board meetings followed a hybrid set-up, that is, a mix of in
person and virtual attendance. This enabled the required flexibility to accommodate uninterrupted
attendance.
During the year under review, the Board met 12 times, with another five additional meetings held on an
ad hoc basis. During 2022, the average rate of attendance was 93%. Due to unforeseen circumstances,
Laragh Cassar was indisposed for seven meetings, having informed the Board of this accordingly, who
took cognisance of this. She appointed the Chairman as her alternate Director throughout her period
of absence.
All Directors are required to attend all meetings of the Board, the meetings of those Committees on
which they serve, and the AGM. All Directors are expected to devote sufficient time to the Bank’s affairs
to enable them to fulfil their duties as Directors, always exercising independent judgement.
The below table provides the attendance of Board members at Board meetings:
Board Attendance at Meetings as at 31 December 2022
Board Member
Attendance out of 17 meetings (including ad hoc meetings)
Martin Scicluna
17/17
Victor E. Agius
17/17
Joseph C. Attard
17/17
Franco Azzopardi
16/17
Juanito Camilleri
17/17
Laragh Cassar
10/17
Alfred DeMarco
17/17
Victor Gusman
16/17
Michael Pace Ross
15/17
CORPORATE GOVERNANCE REPORT
APS Bank plc 51
COMPLIANCE WITH THE CODE (continued)
Membership of Board and Management Committees as at the date of this report.
CORPORATE GOVERNANCE REPORT
APS Bank plc 52
COMPLIANCE WITH THE CODE (continued)
Principle 5: Board Meetings (continued)
Board agendas and packs are circulated in advance to permit Board Directors to prepare themselves
for the discussions that take place during the meetings. Over a 12-month period, Board agendas
covered the following topics: create long-term value; responsibility towards stakeholders; instil values
and shape culture; scrutinise performance; exercise accountability and set strategy. Structured
reporting from the Committees, Subsidiaries and Associates are a regular agenda item of each Board
meeting. The CEO is invited to attend all Board meetings, and other senior management officials attend
Board meetings as required, according to the nature of the discussion and their specific area of
responsibility. This provides the Board with an opportunity to engage directly with senior management
on key issues.
After each Board meeting, minutes are drawn up by the Company Secretary, faithfully recording the
attendance of Directors at said meetings, conflicts raised, matters discussed, considerations made,
decisions taken, and action points agreed upon. Minutes are kept of all the business transacted in the
course of Committee meetings. All Directors have ready access to Committee papers and minutes.
Committee Chairs report on Committee business at the subsequent Board meetings, also through
written briefs.
In 2022, in addition to its scheduled meetings, the Board also met with the Management Team in: July
for the Annual Business Planning brainstorming days; and November for the Business Planning Wrap-
up Workshop, looking into the Bank’s main priorities for the updated 2023-2025 Plan and strategic
initiatives for the same period.
Principle 6: Information and Professional Development
The Directors have access to a wide range of briefing and training sessions and other professional
development opportunities to help them keep abreast of the environment in which the Bank operates.
Training discussions and updates are provided by professional advisors, and external and internal
subject-matter experts. These updates not only cover a range of pertinent strategic, legislative and
regulatory issues but issues relating to the political and economic environment, sustainability and
technological considerations. The Company Secretary also provides regular updates on corporate
governance matters. Directors may also request individual in-depth briefings from time to time on areas
of particular interest.
Directors are also invited to visit key operational facilities and branches of the Bank.
In 2022, the Directors attended two tailor-made training programmes. The first programme was
organised by an international cybersecurity firm which provided insights on cyber-attack scenarios. The
second programme consisted of engaged external professionals who delved into the interpretation of
financial statements and climate risks, and senior management colleagues who tackled financial crime
and the prevention of financial markets abuse. The annual Business Plan & Budget Review Off-Site
Workshops held in July and November also served as a professional development opportunity for the
Directors. Directors attended online seminars and conferences on an array of topics. Directors were
kept abreast of other webinars that were being organised by local and international entities. A training
and development log is maintained by the Human Capital Department.
Upon appointment, all Directors undertake a formal and tailored induction programme providing the
required familiarisation with the Bank. In preparation for his appointment, Joseph Rapa was provided
with an induction programme facilitated by the Company Secretary and tailored to suit his
requirements. This included a series of meetings with senior management, providing an overview of the
Bank’s main functions, namely strategy, finance, risk, people, technology, operations and other internal
control functions. The programme also provided sessions with the Risk and Conduct Committee Chairs
and Secretaries for a familiarisation session on the Committee’s Terms of Reference and proceedings,
given that he is sitting on these Committees.
CORPORATE GOVERNANCE REPORT
APS Bank plc 53
COMPLIANCE WITH THE CODE (continued)
Principle 7: Evaluation of the Board’s Performance
On an annual basis, the Board of Directors – both individually and collectively – take part in a Board
Evaluation exercise that focuses on skills, competencies and experiences in addition to softer attributes
such as strategic thought, communication, external awareness, ability to forge relationships and other
important attributes that make an effective board room. The Board Evaluation process for 2022 was
conducted in-house following the process detailed hereunder. Evaluations are carried out under the
oversight of the Conduct Committee and facilitated by the Company Secretariat. Outcomes are
discussed in detail with the Chairman of the Board.
The Internal Evaluation Process:
It is positive to note the satisfactory outcome of the Board evaluation, which showed that no changes
in the governance and the organisation were required. Outputs of the Board evaluation processes are
actioned via training programmes and/or sharing of feedback at the appropriate forum.
The Board evaluation exercise will be conducted by an external party for 2023, as was the case in 2019.
Regular benchmarking with international practices is considered to be essential in this area.
The Senior Independent Director, Laragh Cassar, carried out a review of the Chairman’s performance
which included meeting the Directors without the Chairman being present. The consolidated feedback
was then shared with the Chairman.
A Committee evaluation exercise will be held in the second half of 2023.
Principle 8: Committees
As explained, the Board places significant reliance on its Committees and therefore it remains crucial
that there are effective linkages between Committees and the Board. There is constant attention to
ensure there are no gaps or unnecessary duplications, and there is a continuous effort to avoid this
happening. References to Board and Management Committees is made throughout this report.
In January 2023, changes in some Board Committee compositions took place to further diversify
knowledge in the memberships.
December 2022
Three online self-
evaluation
questionnaires
formulated by the
Company Secretariat
and discussed with the
Chairman and Senior
Independent Director
have been distributed to
all Board Members.
January 2023 to
February 2023
Directors completed
online questionnaires.
Company Secretariat
prepared report based
on questionnaires
results.
February 2023
Draft report discussed
by the Company
Secretary with the
Chairman and Senior
Independent Director
and tabled at the
Conduct Committee.
March 2023
The report was
presented to the Board
for discussion and
evaluation of Action
Points for finalisation
and implementation.
Ongoing
The Conduct Committee
with the support of the
Company Secretary has
been tasked with
overseeing
implementation of
Action Points.
CORPORATE GOVERNANCE REPORT
APS Bank plc 54
COMPLIANCE WITH THE CODE (continued)
Principle 8: Committees (continued)
Further information on the Audit Committee and Risk Committee is found in the Section below “Internal
Control and Risk Management System”. The function of the Nominations and Remuneration Committee
is covered under Principle 4, when reviewing all the other Bank Committees, and in the Nominations &
Remuneration Report, which also includes the Remuneration Statement in terms of Code Provision
8.A.4 and the Nominations Report in terms of Code Provision 8.B.7.
Principles 9 and 10: Relations with Shareholders and with the Market and Institutional Investors
The Board is aware that its actions and decisions impact the Bank’s shareholders, other stakeholders
and the wider community in which the Bank operates. The Board values the insight gained from
stakeholder engagement and places significant importance on ‘having an ear to the ground’ and taking
decisions in the interest of all stakeholders. The Board continues to listen to stakeholders which helps
in the shaping of the Bank’s strategy and decisions taken.
The table below identifies the Bank’s key stakeholders and how both the Bank and the Board engaged
with them throughout 2022. The Board seeks to understand the needs and the key areas of interest of
each stakeholder group and consider them during deliberations and as part of the decision-making
process.
Key stakeholders
Reason for engagement and key priorities for
2022
Shareholders, Bondholders and Institutional
Investors
The Board always placed engagement with
shareholders foremost. The year 2022, marked
the inception of engagement with a much wider
shareholder base for the Bank. Since the first
quarter of the year, the Bank was heavily
engaged in the execution of its Phase 3 of its
Capital Plan –
the equity listing. This involved
more frequent meetings with the Bank’s four
main shareholders and their consultants.
As the progression of the Capital Plan ensued,
roadshows were conducted with a number of
institutional invest
ors and potential private
investors. In line with regulatory obligations
encompassing these meetings, the senior
management team had the opportunity to
generate interest in the Bank’s performance and
plans.
Following the success of the IPO, the Bank
ensured it kept in touch with its shareholders. On
the second anniversary of the bond issue, the
Bank thought it proper to amalgamate the
recognition of both bondholders’ and
shareholders’ trust in the Bank by launching a
newsletter titled Snapshot together wit
h a
collective Investor Offers & Benefits package.
This will continue to serve as a link between the
Bank and its investor base, ensuring they are
continuously updated with the Bank’s projects.
Meetings with major
shareholders were
organised by the Chairman, along with the CEO
and Company Secretary.
CORPORATE GOVERNANCE REPORT
APS Bank plc 55
The Board is keenly aware of stakeholder
expectations in relation to future dividend
payments. References to 2022 dividend
payments are found on page 98.
The Bank’s
dividend policy prudently balances the dual
objectives of appropriately rewarding risk capital
held by the shareholders through dividends, and
retaining capital in order to maintain healthy
solvency and liquidity ratios to support future
growth. The payments of any dividend will
depend upon, among other factors, the Bank’s
capital requirements, the profits available for
distribution for the relevant year, the Group’s
growth strategy, and its view of the prevailing
market outlook, general economic conditions,
and any regulatory restrictions that may be
imposed by supervisory authorities. The
dividend policy allows for an annual dividend
pay-out not exceeding more than one half of the
Bank’s audited profits after tax for the year. Over
the forthcoming 3-year period (2022-2024) it is
the Bank’s intention to distribute one-third of its
post-tax profits.
Business customers, potential new customers,
financial advisers
The Bank engages with business customers,
potential new customers and financial advisers
through various channels to ensure strong
relationships are maintained allowing its vision,
business model and modus operandi to be
communicated, with emphasis on strategy and
delivery.
Furthermore, the Bank constantly monitors
emerging trends and is responsive to customers’
needs in order to create new
products and
identify future revenue drivers.
The Section “Communicating brand, purpose
and corporate culture” covers the Culture
Department’s Brand & Marketing, CSR, VO
C &
Corporate Culture Change contributions, and is
found on pages 19 to 21.
Employees
The Board monitors and assesses the Bank’s
culture by maintaining an intimate connection
with the Bank’s team, particularly the senior
management team, and through the work of the
various Committees. The Board is very vocal on
the talents of the workforce and commends their
efforts and successes. When opportune, the
Board visits various branches and offices to
observe the Bank’s operations in action and to
reinforce their knowledge.
2022 saw the return of physical Townhall
meetings, adopting a h
ybrid approach. Staff
were encouraged to become more actively
engaged in understanding the Bank’s
progression, strategy and financial results. For
the first time, staff were rewarded who
CORPORATE GOVERNANCE REPORT
APS Bank plc 56
demonstrated themselves to be ambassadors of
the Bank’s corporate culture and values.
Relevant information provided to stakeholders
1. Annual Report and Financial reporting
The Bank’s Annual Report is available to
shareholders and the public at large. The Bank
aims to make the Annual Report as accessible as
possible. Downloa
dable copies are available
from the Bank’s website. A number of printed
copies are available at branches. Interested
parties may also contact the Company
Secretariat to obtain a copy.
This year, the Bank organised three financial
reporting presentations c
overing the annual
financial reporting and two for interim reporting.
The last reporting was held in October 2022, and
was upgraded to a market briefing, expanding
the content, and giving an insight on market and
economic developments apart from the Bank’s
financial performance.
2. Company Announcements
As a listed entity, the Bank is required to issue
Company Announcements, in terms of the
Capital Markets Rules, to bring useful, relevant
and material facts to the attention of the market.
3. Press releases
The Bank issues press releases on a regular basis
in order to inform its customers and other
stakeholders about developments and news. The
widespread use of social media has helped the
Bank to increase the reach and speed of its
communication.
4. Corporate Website
The Bank’s website (www.apsbank.com.mt
) is
the platform through which interested parties
may access Bank information. The website has
been updated to render it more user-friendly.
The Investor R
elations section is consistently
updated with biographies of the members of the
Board and of Executive Management as well as
Annual Reports, Company Announcements,
regulatory reports and investor benefits.
CORPORATE GOVERNANCE REPORT
APS Bank plc 57
COMPLIANCE WITH THE CODE (continued)
Principle 11: Conflicts of Interest
Each Director is expected to act in accordance with the highest standards of ethical behaviour and
fiduciary duties. The Directors are aware of their obligation to avoid conflicts of interest and their
responsibility to act in the wider interest of the Bank and its shareholders, irrespective of which
shareholder nominated him/her to the Board.
The Board Charter contains specific sections dealing with conflicts of interest, starting with the general
precept that Directors should take all reasonable steps to avoid such situations. However, from time to
time, actual or potential conflicts of interest may arise in which case it needs to be ensured that these
are managed properly by the Board and the interested Director, as also provided in the amended
Conflicts of Interest Policy. Directors are required to inform the Board or Committee of any matter that
may result or has already resulted in a conflict of interest. A record of such declaration is entered into
the meeting’s minute book and the said Director is precluded from voting in any resolution concerning
a matter in respect of which they have declared a direct or indirect interest or asked to absent
themselves when the conflicting matter is discussed.
Board Directors hold external directorships and other outside business interests and these are
recognised as significant benefits that greater boardroom exposure provides for the Bank’s Directors.
However, Directors are expected to report the holding of new directorships and other roles to ensure
that any potential or actual conflicts of interest are mitigated, and that additional appointments will not
adversely impact their time commitment or their ability to continue to fulfil their role as Director.
Directors are informed and reminded of their obligations vis-a-vis dealing in the Bank’s shares and
bonds in line with prevailing legislation and in terms of the Capital Markets Rules. Clearance prior to
dealing is obtained from the Chairman in line with the Bank’s Personal Dealing Policy.
Principle 12: Corporate Social Responsibility
The Board of Directors ensures that sound principles of CSR are adhered to and integrated into the
core ethos of the Bank and embedded in its day-to-day culture and operations. For these reasons also,
the Bank is a prominent supporter of various CSR initiatives at both national and community level aimed
at contributing to economic, societal, environmental and cultural development.
Further details on the Bank’s’ CSR outreach are disclosed separately on pages 19 to 20.
Non-Compliance with the Code
Principle 3 (Composition of the Board): The Board is currently composed of nine Non-Executive
Directors including the Chairman. While the Code of Principles for Good Corporate Governance
provides that the Board should be composed of executive and non-executive Directors, there are no
executive Directors presently appointed to the Board. The Board believes that with the required
diversity of knowledge, judgement and experience, it can still adequately perform its functions (even
without the appointment of any executive Directors) and collectively execute the four basic roles of
corporate governance namely: accountability; monitoring; strategy formulation; and policy
development. In addition, the CEO is ordinarily invited to attend meetings of the Board of Directors to
ensure that the Board is adequately supported from an executive management perspective. The Bank’s
Memorandum & Articles of Association includes a clause specifying that executive members are also
eligible to be appointed Directors. Furthermore, with respect to the appointment of non-executive
Directors, the Nominations and Remuneration Committee and Board are guided by the relative
provisions of the Articles of Association, as amended in 2022, as well as the EBA and ESMA Guidelines
on the assessment of the suitability of members of the management body.
CORPORATE GOVERNANCE REPORT
APS Bank plc 58
COMPLIANCE WITH THE CODE (continued)
Internal Control and Risk Management System
Board responsibility
The Board, supported by the Risk Committee and Audit Committee, oversees the system of internal
controls, corporate governance and risk management frameworks, ensuring they are in line with
applicable rules, regulations and guidelines, and assumes responsibility for establishing the purpose of
the Bank, setting its strategy, establishing its culture and determining the values to be observed in
achieving that strategy. The Directors and senior management are committed to maintaining a robust
control framework as the foundation for the delivery of effective risk management. The Directors
acknowledge their responsibilities in relation to the Bank’s risk management and internal control
systems, and for reviewing their effectiveness.
In establishing and reviewing the risk management and internal control systems on an ongoing basis,
the Directors carry out a robust assessment of the most significant and emerging risks facing the Bank,
including those that would threaten its business model, future performance, solvency or liquidity, and
reputation, the likelihood of a risk event occurring and the costs of control. The process for
identification, evaluation and management of the risk events faced by the Bank is integrated into the
Bank’s overall framework for risk governance. The risk identification, evaluation and management
process also cover an assessment of whether the controls in place result in an acceptable level of
residual risk. As mentioned above, the Risk Appetite Statement and Risk Appetite Dashboard are
presented to and reviewed and debated regularly by the Risk Committee and the Board, in the presence
of the Chief Risk Officer, to ensure that the Board is satisfied with the overall risk profile, risk
accountabilities and mitigating actions. Monthly and quarterly Dashboards provide a view of the Bank’s
overall risk profile, key risks and management actions, together with performance against risk appetite
and an assessment of emerging risks which could affect the Bank’s performance over the life of the
operating profile and assists in the strategy that is set up.
Control effectiveness review
The Bank’s control effectiveness is carried out following the ‘three lines of defence’ model with an aim
to evaluate the effectiveness of the Bank’s control framework in its widest sense, with regard to its
material risks, and to ensure management actions are in place to address key gaps or weaknesses in
the control framework. The second line of defence, manifesting itself in reporting to the Risk Committee,
is responsible for the design and implementation of the risk management framework and for risk
reporting to senior management and the Board. As a third line of defence, the Internal Audit function
provides independent assurance to senior management and the Board that the Group’s control
framework and the risk management process are operating effectively. The Audit Committee receives
reports from the Bank’s statutory auditors, Deloitte (which include details of significant internal control
matters that they have identified), and it has discussions with the statutory auditors at least twice a
year, to ensure that there are no unresolved issues of concern.
In terms of Capital Markets Rules 5.117, 5.118 and 5.118A, the Audit Committee is composed of three Non-
Executive Directors, two of whom are considered as independent of the Bank, since they are free from
any business, family or other relationship with the Bank or its management that may create a conflict
of interest such as to impair their judgement (see also Principle 3 on pages 47 to 48). Until 31 December
2022, the Committee was composed of three members, Franco Azzopardi (Chair), Alfred DeMarco and
Juanito Camilleri. As from 1 January 2023, Joseph C. Attard joined the Audit Committee. The Committee
members’ bio may be found on pages 7 to 11. Franco Azzopardi is the member who the Board considers
as competent in accounting. In view of the diverse skills and professional experience of each of the
Audit Committee Members, the Bank considers the Audit Committee as a whole to have the adequate
competence and meet the independence criteria as required by Capital Markets Rule 5.118.
CORPORATE GOVERNANCE REPORT
APS Bank plc 59
COMPLIANCE WITH THE CODE (continued)
Internal Control and Risk Management System (continued)
Control effectiveness review (continued)
Audit Committee:
Membership
2022 Attendance out of 8 meetings
Franco Azzopardi
8/8
Alfred DeMarco
7/8
Juanito Camilleri
8/8
Risk Committee:
Membership
2022 Attendance out of 9 Meetings
Victor E. Agius
8/9
Joseph C. Attard
9/9
Franco Azzopardi
8/9
Michael Pace Ross
8/9
Juanito Camilleri
9/9
The Bank’s risk management and internal control systems are regularly reviewed by the Board and are
consistent with applicable guidance issued by the competent authorities and compliant with the
requirements of Capital Requirements Directive V. More detail on the review of internal controls is found
in the Pillar 3 Disclosures Report found on the Bank’s website.
The below infographic summarises the Bank’s internal control framework:
Board of Directors
1st line of Defence
2nd Line of Defence
3rd Line of Defence
Who is responsible:
Who is responsible:
Who is responsible:
Operational
management/
Employees
Spearheaded by Internal
Control Unit
Compliance/Risk oversight
Functions
Audit Committee
Internal Audit
Activity/controls:
Activity/controls:
Activity/controls:
Policies and procedures
Internal controls
Planning, budgeting,
forecasting processes
Delegated authorities
Business workflows/
IT system controls
Personal objectives
and incentives
Operational/governance/regulatory
compliance
Compliance Committee / Risk
Committee
Controls compliance
monitoring
Management/Board
reporting and review of KPIs
and financial performance
Corporate policies
Approved Internal Audit
plan
Internal Audit reporting
line
to Audit Committee
Regular Internal Audit
updates to Audit
Committee
Capital Markets Rule 5.97.5
The information relating to the Shareholder register required by Capital Markets Rule is found in the
Directors’ Report.
CORPORATE GOVERNANCE REPORT
APS Bank plc 60
COMPLIANCE WITH THE CODE (continued)
General Meetings
General Meetings are the Bank’s highest decision-making body, at which the shareholders exercise their
voting rights. The proceedings are conducted in terms of the Bank’s Articles of Association. A General
Meeting of the Bank is duly convened by providing 21 days prior notice to the shareholders.
Ordinary business is transacted at the Bank’s AGM, that considers the accounts, balance sheets and the
reports of the Directors and the auditors, the appointment or election of Directors, the appointment of
auditors and the fixing of the remuneration of Directors and the auditors. All other business is deemed
to be ‘special’, whether transacted at the AGM or at an Extraordinary General Meeting (EGM).
The Articles relating to General Meetings stipulate that shareholders registered in the Shareholders’
Register on the record date have the right to attend, participate and vote at the General Meeting, and
those owning not less than 5% of the voting issued share capital of the Bank may request the Bank to
include items on the agenda of a General Meeting, and table draft resolutions for items included in the
agenda of a General Meeting, insofar as they are received at least 46 days before the date set for the
relative General Meeting.
A shareholder who is unable to participate in the General Meeting can appoint a proxy by written or
electronic notification to the Bank. Every shareholder represented in person or by proxy is entitled to
ask questions which are pertinent and related to items on the agenda of the General Meeting and to
have such questions answered by the Directors or such persons as the Directors may delegate for that
purpose.
During the period under review, two General Meetings were held by the Bank. On the 28 April 2022, the
Bank held its AGM. This was the last AGM before the Bank listed its shares on the MSE, and hence the
last AGM for four shareholders. Apart from the standing AGM Agenda Items, which also included a
declaration of a final dividend, the shareholders considered resolutions relating to the issuance of shares
to the public and their listing on the MSE and the issue of an ESIP. This also triggered an entire change
in the Bank's Memorandum and Articles of Association, and the Remuneration Policy. All resolutions
were carried.
On 28 July 2022, the Board declared an interim dividend payable through the issuance of new ordinary
shares. An EGM was held on 19 October 2022 for the capitalisation of profits and allotment of shares to
be approved by the shareholders. Given that there was only one Ordinary Resolution for consideration
and approval, the EGM was held remotely, whereby the Chairman was the only appointed proxy for the
meeting. Shareholders were requested to cast their visiting preferences before the General Meeting.
99.5% of the shareholders who cast their vote through the Chairman voted in favour of the resolution.
Shareholders were invited to submit any questions relating to the items on the agenda prior to the
meeting. The questions received were replied to during the EGM and the questions and answers were
uploaded on the website after the event. The General Meeting was live cast and a recording was also
made available on the Bank’s website after the event.
This Statement was authorised for issue by the Board of Directors on 9 March 2023 and signed on its
behalf by:
Martin Scicluna Franco Azzopardi
Chairman Director
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 61
STATEMENTS OF PROFIT OR LOSS
for the year ended 31 December 2022
The Group
The Bank
2022
2021
2022
2021
Note
€000
€000
€000
€000
Interest and similar income:
On loans and advances, balances with
the Central Bank of Malta and treasury bills
(3)
73,497
63,246
On debt and other fixed income instruments
(3)
4,942
4,394
Total interest and similar income
(3)
78,439
67,640
Interest expense
(4)
(14,766 )
(13,773 )
(14,766)
(13,773)
Net interest income
63,673
53,867
Fee and commission income
8,197
7,909
Fee and commission expense
(2,253 )
(1,9 81 )
(2,253)
(1,981)
Net fee and commission income
(5)
5,944
5,928
Dividend income
(6)
1,477
1,273
Net gains on foreign exchange
(7)
860
428
Net gains from derecognition of financial assets
at amortised cost
(8)
984
572
Net (losses)/gains on financial instruments
(8)
(10,263 )
(152 )
1,076
215
Other operating income/(loss)
(35 6 )
541
(356)
Operating income before net impairments
74,555
61,927
Net reversal of impairment losses
(11)
254
1,488
Net operating income
74,809
63,415
Employee compensation and benefits
(9)
(26,096 )
(21, 847 )
(25,510)
(21,424)
Other administrative expenses
(10)
(16,140 )
(14,6 67 )
(15,577)
(14,184)
Depreciation of property and equipment
(27)
(1,911 )
(1,6 03 )
(1,911)
(1,603)
Amortisation of intangible assets
(28)
(2,264 )
(1,9 05 )
(2,264)
(1,905)
Depreciation of right-of-use assets
(29)
(618 )
(562 )
(618)
(562)
Operating expenses
(47,029 )
(40 ,584 )
(45,880)
(39,678)
Net operating profit before associates’ results
28,929
23,737
Share of results of associates, net of tax
(25)
(2,213 )
-
-
Profit before tax
28,929
23,737
Income tax expense
(12)
(9,893 )
(8,967 )
(9,773)
(8,696)
Profit for the year
19,156
15,041
Profit for the year attributable to:
Equity holders of the parent
19,156
15,041
Non-controlling interest
(2,236 )
-
-
19,156
15,041
Basic and diluted earnings per share
(13)
6.1c
5.9c
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 62
STATEMENTS OF COMPREHENSIVE INCOME
for the year ended 31 December 2022
The Group
The Bank
2022
2021
2022
2021
€000
€000
€000
€000
Profit for the year
19,156
15,041
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Change in fair value on debt instruments measured at fair
value through other comprehensive income (FVTOCI)
(28,893 )
(7,908 )
(28,893)
(7,908)
Fair value gains reclassified to profit or loss on disposal of
debt instruments measured at FVTOCI
5,354
1,236
Deferred income tax relating to the components of other
comprehensive income (OCI)
1,186
560
Items that may not be reclassified subsequently to profit or
loss:
Revaluation of land and buildings
(863 )
-
(863)
Deferred income tax relating to the revaluation on land and
buildings
-
49
Other comprehensive loss for the year, net of tax
(22,353 )
(6,926 )
(22,353)
(6,926)
Total comprehensive (loss)/income for the year, net of tax
(16,586 )
(3,197)
8,115
Total comprehensive (loss)/income attributable to:
Equity holders of the parent
(14,35 0 )
(3,197)
8,115
Non-controlling interest
(2,236 )
-
-
(16,586 )
(3,197)
8,115
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 63
STATEMENTS OF FINANCIAL POSITION
as at 31 December 2022
The Group
The Bank
Note
2022
2021
2022
2021
€000
€000
€000
€000
ASSETS
Cash and balances with Central Bank of Malta
(15)
85,887
207,723
Cheques in course of collection
-
2,881
Loans and advances to banks
(16)
71,023
30,831
Financial assets at fair value through profit or loss
(17)
-
-
Non-current assets held for sale
(18)
1,733
-
Syndicated loans
(19)
135,210
134,262
Loans and advances to customers
(20)
2,224,694
1,932,044
Derivative financial instruments
(21)
738
552
Other debt and fixed income instruments
(22)
459,601
328,041
Equity and other non-fixed income instruments
(23)
303
307
Investment in subsidiaries
(24)
-
-
40,251
45,251
Investment in associates
(25)
14,063
16,761
Investment properties
(26)
6,593
6,053
Property and equipment
(27)
39,252
40,998
Intangible assets
(28)
14,545
11,746
Right-of-use assets
(29)
5,040
5,051
Other receivables
(30)
8,202
8,303
Deferred tax assets
(31)
2,957
2,249
TOTAL ASSETS
3,110,092
2,773,053
LIABILITIES
Derivative financial instruments
(21)
738
552
Amounts owed to banks
(32)
50,387
57,208
Amounts owed to customers
(33)
2,712,804
2,433,073
Lease liabilities
(29)
5,246
5,348
Accruals
(34)
13,561
13,224
Debt securities in issue
(35)
54,642
54,597
Other liabilities
(36)
13,080
10,404
Current tax
2,306
758
TOTAL LIABILITIES
2,852,764
2,575,164
EQUITY
Share capital
(37)
91,729
62,429
Share premium
(38)
48,410
10,453
Revaluation reserve
(39)
2,981
25,334
Retained earnings
(40)
114,061
99,673
Other reserves
147
-
Attributable to equity holders of the parent
257,328
197,889
Non-controlling interest
(41)
-
-
TOTAL EQUITY
257,328
197,889
TOTAL LIABILITIES AND EQUITY
3,110,092
2,773,053
MEMORANDUM ITEMS
Contingent liabilities
(42)
21,911
25,356
Commitments
(43)
878,787
802,552
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 64
STATEMENTS OF CHANGES IN EQUITY
for the year ended 31 December 2022
Attributable to the equity holders of the parent
Non-
Share
Share
Revaluation
Retained
Other
controlling
Total
capital
premium
reserve
earnings
reserves
Total
interest
equity
The Group
€000
€000
€000
€000
€000
€000
€000
€000
FINANCIAL
YEAR ENDED
31 December
2022
Balance at 1
January 2022
Profit for the year - - - 8,003
Other
comprehensive
loss
(22, 353 )
(22, 353 )
(22, 353 )
Total
comprehensive
(loss)/income
(22,353 )
(14,350 )
(2, 236 )
(16,586 )
Issue of shares,
net of issue costs
Other movements
Share incentive
plan - Value of
employee
services
Dividends to
equity holders
(Note 14)
(4, 800 )
(3,000 )
(309 )
(3,309 )
Net share capital
issued by
subsidiary
company
Loss of control of
subsidiary
company
(6,2 09 )
(6,2 09 )
Balance at 31
December 2022
FINANCIAL
YEAR ENDED
31 December
2021
Balance at 1
January 2021
Profit for the year
Other
comprehensive
loss
(6,9 26 )
(6,9 26 )
(6,9 26 )
Total
comprehensive
(loss)/income
(6, 926 )
Dividends to
equity holders
(Note 14)
(2,4 00 )
(1,913 )
(218 )
(2,131 )
Net share capital
issued by
subsidiary
company
Balance at 31
December 2021
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 65
STATEMENTS OF CHANGES IN EQUITY
for the year ended 31 December 2022
Share
Share
Revaluation
Retained
Other
Total
capital
premium
reserve
earnings
reserves
equity
The Bank
€000
€000
€000
€000
€000
€000
FINANCIAL YEAR ENDED
31 DECEMBER 2022
Balance at 1 January 2022
62,429
10,453
25,334
99,673
-
197,889
Profit for the year
-
-
-
19,156
-
19,156
Other comprehensive loss
-
-
(22,353)
-
-
(22,353)
Total comprehensive (loss)/income
-
-
(22,353)
19,156
-
(3,197)
Issue of shares, net of issue costs
27,500
37,957
-
-
-
65,457
Other movements
-
-
-
32
-
32
Share incentive plan - Value of employee
services
-
-
-
-
147
147
Dividends to equity holders (Note 14)
1,800
-
-
(4,800)
-
(3,000)
Balance at 31 December 2022
91,729
48,410
2,981
114,061
147
257,328
FINANCIAL YEAR ENDED
31 DECEMBER 2021
Balance at 1 January 2021
62,255
10,140
32,260
87,032
-
191,687
Profit for the year
-
-
-
15,041
-
15,041
Other comprehensive loss
-
-
(6,926)
-
-
(6,926)
Total comprehensive (loss)/income
-
-
(6,926)
15,041
-
8,115
Dividends to equity holders (Note 14)
174
313
-
(2,400)
-
(1,913)
Balance at 31 December 2021
62,429
10,453
25,334
99,673
-
197,889
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 66
STATEMENTS OF CASH FLOWS
for the year ended 31 December 2022
The Group
The Bank
Note
2022
2021
2022
2021
€000
€000
€000
€000
OPERATING ACTIVITIES
Interest and commission receipts
83,280
71,077
Interest and commission payments
(15 ,18 5 )
(11,672 )
(14,647)
(11,672)
Cash paid to employees and suppliers
(43,516 )
(37,367 )
(42,897)
(36,517)
Operating profit before changes in operating
assets and liabilities
25,736
22,888
(Increase)/decrease in operating assets
Loans and advances to customers/syndicated loans
(295,504 )
(266,941 )
(295,504)
(266,941)
Loans and advances to banks
(707 )
-
-
Reserve deposit with Central Bank of Malta
(2,88 0 )
(2,878 )
(2,880)
(2,878)
Cheques in course of collection
(2,778 )
2,881
(2,778)
Other assets
(36 )
-
-
Increase/(decrease) in operating liabilities
Amounts owed to customers
279,731
308,924
Amounts owed to banks
(1,549 )
(1,549 )
(1,549)
(1,549)
Other liabilities
(1,09 5 )
2,814
(1,120)
Cash from operating activities before tax
11,229
56,546
Income tax paid
(8 ,02 1 )
(8,51 2 )
(7,712)
(8,388)
Net cash flows from operating activities
3,517
48,158
INVESTING ACTIVITIES
Dividends received
1,477
1,273
Interest income from debt securities
7,328
7,054
Purchase of financial assets measured at amortised
cost
(222,644 )
(222,644)
-
Proceeds on maturity of financial assets measured at
amortised cost
5,987
3,107
Purchase of debt instruments measured at FVTOCI
(7,291 )
(44,389 )
(7,291)
(44,389)
Proceeds on disposal of debt instruments measured
at FVTOCI
67,053
20,731
Purchase of financial assets at FVTPL
(98, 742 )
(46,2 41 )
-
-
Proceeds on disposal of financial assets at FVTPL
-
249
Proceeds on disposal of investments in associates
9,589
-
Additional investment in associate
(500 )
(1,500 )
(500)
(1,500)
Purchase of property, equipment and intangible
assets
(5,431 )
(653 )
(5,431)
(653)
Net cash flows used in investing activities
(144,595 )
(26,689 )
(144,432)
(14,128)
FINANCING ACTIVITIES
Dividends paid
(3,1 70 )
(2,144 )
(3,000)
(1,913)
Amounts received on creation of shares in
subsidiaries
-
-
Proceeds from issue of new shares, net of issue costs
65,457
-
Amounts paid on redemption of units in subsidiaries
(630 )
(794 )
-
-
Cash payment for the principal portion of lease
liability
(761 )
(515 )
(761)
(515)
Net cash flows from/(used in) financing activities
61,696
(2,428)
Net (decrease)/increase in cash and cash
equivalents
(78,8 37 )
(79,219)
31,602
Cash and cash equivalents at 1 January
169,636
138,034
Cash and cash equivalents at 31 December
(44)
90,417
169,636
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 67
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 99
NOTES TO THE FINANCIAL STATEMENTS (continued)
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 107
The Bank
2022
2021
€000
€000
Cost
At 1 January
45,251
45,251
Derecognition of a subsidiary to an associate (Note 25)
(5,000)
-
At 31 December
40,251
45,251
Fair value measurement hierarchy
The Bank
Level 1
Level 2
Level 3
Total
€000
€000
€000
€000
Assets as at 31 December 2022
Property and equipment (Note 27)
- Land and buildings
-
-
27,208
27,208
Investment properties (Note 26)
- Residential property - - 495 495
- Commercial property - - 6,098 6,098
Non-current assets held for sale (Note 18)
-
-
1,733
1,733
Derivative assets not designated as hedges (Note 21)
-
738
-
738
Financial assets at FVTOCI
- Other debt and fixed income instruments (Note 22) 141,927 - - 141,927
- Equity and other non-fixed income instruments
(Note 23)
-
-
303
303
Total
141,927
738
35,837
178,502
Liabilities as at 31 December 2022
Derivative liabilities not designated as hedges (Note 21) - 738 - 738
Total
-
738
-
738
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 128
NOTES TO THE FINANCIAL STATEMENTS (continued)
47. FAIR VALUES (continued)
Fair value measurement hierarchy
The Bank
Level 1
Level 2
Level 3
Total
€000
€000
€000
€000
Assets as at 31 December 2021
Property and equipment (Note 27)
- Land and buildings
-
-
29,159
29,159
Investment properties (Note 26)
- Residential property - - 495 495
- Commercial property - - 5,558 5,558
Derivative assets not designated as hedges (Note 21)
-
552
-
552
Financial assets at FVTPL (Note 17)
- Fixed income instruments and collective investment
schemes
-
-
-
-
Financial assets at FVTOCI
- Other debt and fixed income instruments (Note 22)
227,103
-
-
227,103
- Equity and other non-fixed income instruments (Note 23) - - 307 307
Total
227,103
552
35,519
263,174
Liabilities as at 31 December 2021
Derivative liabilities not designated as hedges (Note 21) - 552 - 552
Total
-
552
-
552
There were no reclassifications made within the fair value hierarchy and there were no changes in valuation
techniques used by the Group during the year, except as disclosed below.
APS BANK PLC
_________________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.2 Credit risk (continued)
48.2.2 ECL Measurement (continued)
APS Bank plc 134
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 139
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.2 Credit risk (continued)
48.2.2 ECL Measurement (continued)
48.2.2.4 Forward Looking Information (continued)
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 142
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.2 Credit risk (continued)
48.2.3 Credit Risk Exposure (continued)
48.2.3.2 Concentration of risk (continued)
The Bank
Concentrations of risk
Financial
Institutions
Manufac
-turing
Real
Estate
Wholesale
and
Retail
Trade
Public
Sector
Other
Industries
Individuals
Total
€000
€000
€000
€000
€000
€000
€000
€000
Cash and balances with
Central Bank of Malta
(excluding cash in hand) (gross)
72,390
-
-
-
-
-
-
72,390
Loans and advances to banks
(gross)
71,098
-
-
-
-
-
-
71,098
Syndicated loans (gross)
43,235
48,417
18,000
-
-
26,334
-
135,986
Loans and advances to
customers (gross)
3,018
22,525
269,592
50,722
21,132
294,919
1,581,768
2,243,676
Derivative financial instruments
738
-
-
-
-
-
-
738
Other debt and fixed income
instruments (gross)
56,037
9,325
761
9,259
381,855
2,567
-
459,804
Other receivables
-
-
-
-
-
8,202
-
8,202
As at 31 December 2022
246,516
80,267
288,353
59,981
402,987
332,022
1,581,768
2,991,894
Financial guarantees and other
contingent liabilities
770
316
4,210
1,651
-
14,400
564
21,911
Commitments
16,418
17,283
161,316
24,969
1,920
123,836
533,045
878,787
As at 31 December 2022
17,188
17,599
165,526
26,620
1,920
138,236
533,609
900,698
The Bank
Concentrations of risk
Financial
Institutions
Manufac
-turing
Real
Estate
Wholesale
and
Retail
Trade
Public
Sector
Other
Industries
Individuals
Total
€000
€000
€000
€000
€000
€000
€000
€000
Cash and balances with
Central Bank of Malta
(excluding cash in hand) (gross)
192,570
-
-
-
-
-
-
192,570
Cheques in course of collection
2,881
-
-
-
-
-
-
2,881
Loans and advances to banks
(gross)
30,862
-
-
-
-
-
-
30,862
Syndicated loans (gross)
27,494
68,701
-
-
2,652
36,405
-
135,252
Loans and advances to
customers (gross) 3,726 22,747 200,116 41,121 6,099 314,624 1,362,938 1,951,371
Derivative financial instruments
552
-
-
-
-
-
-
552
Other debt and fixed income
instruments (gross)
38,982
10,298
1,544
10,300
254,131
12,848
-
328,103
Other receivables
-
-
-
-
-
8,303
-
8,303
As at 31 December 2021
297,067
101,746
201,660
51,421
262,882
372,180
1,362,938
2,649,894
Financial guarantees and other
contingent liabilities
743
514
7,946
1,155
-
11,903
3,095
25,356
Commitments
14,121
7,984
164,644
16,692
5,288
90,327
503,496
802,552
As at 31 December 2021
14,864
8,498
172,590
17,847
5,288
102,230
506,591
827,908
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 146
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.2 Credit risk (continued)
48.2.3 Credit Risk Exposure (continued)
48.2.3.4 Credit quality
The following table sets out information about the credit quality of financial assets measured at
amortised cost and FVTOCI. Unless specifically indicated, for financial assets, the amount in the table
represents gross carrying amounts.
Explanation of the terms: 12-month ECL, lifetime ECL and credit-impaired are included in previous
notes.
The Bank
12-month
ECL
Lifetime ECL
not credit-
impaired
Lifetime ECL
credit-
impaired
Total
31 December 2022
€000
€000
€000
€000
Loans and advances to customers
at amortised cost
Grade 1-4: Low risk
2,052,270
-
-
2,052,270
Grades 5-6: Watch & substandard
-
110,982
-
110,982
Grade 7: Doubtful
-
-
56,270
56,270
Grade 8: Classified
-
-
24,154
24,154
Loss allowance
(731)
(570)
(17,681)
(18,982)
Carrying amount
2,051,539
110,412
62,743
2,224,694
Debt securities – At amortised cost
Investment grade
315,078
-
-
315,078
Sub-investment grade
2,799
-
-
2,799
Loss allowance
(203)
-
-
(203)
Carrying amount
317,674
-
-
317,674
Debt securities - FVTOCI
Investment grade
141,696
-
-
141,696
Sub-investment grade
44
187
-
231
Carrying amount
141,740
187
-
141,927
Syndicated loans
Grade 1-4: Low risk
7,318
-
-
7,318
Investment grade
37,253
-
-
37,253
Sub-investment grade
59,327
32,088
-
91,415
Loss allowance
(574)
(202)
-
(776)
Carrying amount
103,324
31,886
-
135,210
Cash and balances with Central
Bank of Malta
Investment grade
85,889
-
-
85,889
Loss allowance
(2)
-
-
(2)
Carrying amount
85,887
-
-
85,887
Loans and advances to banks
Investment grade
71,098
-
-
71,098
Loss allowance
(75)
-
-
(75)
Carrying amount
71,023
-
-
71,023
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 147
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.2 Credit risk (continued)
48.2.3 Credit Risk Exposure (continued)
48.2.3.4 Credit quality (continued)
The Bank
12-month
ECL
Lifetime ECL
not credit-
impaired
Lifetime ECL
credit-
impaired
Total
31 December 2021
€000
€000
€000
€000
Loans and advances to customers
at amortised cost
Grade 1-4: Low risk
1,741,052
-
-
1,741,052
Grades 5-6: Watch & substandard
-
132,210
-
132,210
Grade 7: Doubtful
-
-
54,274
54,274
Grade 8: Classified
-
-
23,835
23,835
Loss allowance
(678)
(852)
(17,797)
(19,327)
Carrying amount
1,740,374
131,358
60,312
1,932,044
Debt securities – At amortised cost
Investment grade
100,700
-
-
100,700
Sub-investment grade
300
-
-
300
Loss allowance
(62)
-
-
(62)
Carrying amount
100,938
-
-
100,938
Debt securities - FVTOCI
Investment grade
227,058
-
-
227,058
Sub-investment grade
45
-
-
45
Carrying amount
227,103
-
-
227,103
Syndicated loans
Grade 1-4: Low risk
35,845
-
-
35,845
Investment grade
7,514
-
-
7,514
Sub-investment grade
74,206
17,687
-
91,893
Loss allowance
(849)
(141)
-
(990)
Carrying amount
116,716
17,546
-
134,262
Cash and balances with Central
Bank of Malta
Investment grade
207,735
-
-
207,735
Sub-investment grade
-
-
-
-
Loss allowance
(12)
-
-
(12)
Carrying amount
207,723
-
-
207,723
Loans and advances to banks
Investment grade
30,842
-
-
30,842
Sub-investment grade
20
-
-
20
Loss allowance
(31)
-
-
(31)
Carrying amount
30,831
-
-
30,831
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 150
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.2 Credit risk (continued)
48.2.4 Loss Allowance (continued)
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 156
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.2 Credit risk (continued)
48.2.4 Loss Allowance (continued)
The Bank
Stage 1
Stage 2
Stage 3
Loans and advances to Banks
12-month
ECL
Lifetime ECL
Lifetime ECL
(but not
POCI)
Total
€000
€000
€000
€000
Gross carrying amount as at 1 January 2022
30,862
-
-
30,862
New financial assets originated or purchased
9,666
-
-
9,666
Financial assets derecognised during the period
(20)
-
-
(20)
Changes in model/risk parameters
30,590
-
-
30,590
Gross carrying amount as at 31 December 2022
71,098
-
-
71,098
The Bank
Stage 1
Stage 2
Stage 3
Loans and advances to Banks
12-month
ECL
Lifetime ECL
Lifetime ECL
(but not
POCI)
Total
€000
€000
€000
€000
Gross carrying amount as at 1 January 2021
46,330
-
-
46,330
New financial assets originated or purchased
933
-
-
933
Financial assets derecognised during the period
(12,623)
-
-
(12,623)
Changes in model/risk parameters
(3,778)
-
-
(3,778)
Gross carrying amount as at 31 December 2021
30,862
-
-
30,862
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 160
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.3 Liquidity risk (continued)
The Bank
Less than
three
months
Between
three
months
and one
year
Between
one year
and five
years
More
than five
years
Others
Total
€000
€000
€000
€000
€000
€000
At 31 December 2022
Assets
Cash and balances with
Central Bank of Malta
85,887
-
-
-
-
85,887
Loans and advances to banks
71,023
-
-
-
-
71,023
Syndicated loans (net)
2,621
46,492
71,452
14,645
-
135,210
Loans and advances to
customers (net)
28,969
90,086
154,431
1,951,208
-
2,224,694
Derivative financial
instruments
-
23
59
656
-
738
Other debt and fixed income
instruments (net)
4,576
16,198
296,304
142,523
-
459,601
Equity and other non-fixed
income instruments
-
-
-
-
303
303
Investment in subsidiaries
-
-
-
-
40,251
40,251
Investment in associates
-
-
-
-
14,063
14,063
Other assets
5,746
1,432
-
-
71,144
78,322
198,822
154,231
522,246
2,109,032
125,761
3,110,092
Liabilities and equity
Derivative financial
instruments
-
23
59
656
-
738
Amounts owed to banks
44,191
6,196
-
-
-
50,387
Amounts owed to customers
1,943,777
398,370
363,327
7,330
-
2,712,804
Lease liabilities
-
508
2,410
2,328
-
5,246
Debt securities in issue
-
-
-
54,642
-
54,642
Other liabilities
3,168
1,248
2,134
233
22,164
28,947
Equity
-
-
-
-
257,328
257,328
1,991,136
406,345
367,930
65,189
279,492
3,110,092
Gap
(1,792,314)
(252,114)
154,316
2,043,843
(153,731)
-
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 161
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.3 Liquidity risk (continued)
The Bank
Less than
three
months
Between
three
months
and one
year
Between
one year
and five
years
More
than five
years
Others
Total
€000
€000
€000
€000
€000
€000
At 31 December 2021
Assets
Cash and balances with
Central Bank of Malta
207,723
-
-
-
-
207,723
Cheques in course of
collection
2,881
-
-
-
-
2,881
Loans and advances to banks
30,831
-
-
-
-
30,831
Syndicated loans (net)
25,582
36,102
50,468
22,110
-
134,262
Loans and advances to
customers (net)
16,007
99,065
111,479
1,705,493
-
1,932,044
Derivative financial
instruments
-
-
552
-
-
552
Other debt and fixed income
instruments (net)
10,949
29,979
153,555
133,558
-
328,041
Equity and other non-fixed
income instruments
-
-
-
-
307
307
Investment in subsidiaries
-
-
-
-
45,251
45,251
Investment in associates
-
-
-
-
16,761
16,761
Other assets
6,940
1,040
-
-
66,420
74,400
300,913
166,186
316,054
1,861,161
128,739
2,773,053
Liabilities and equity
Derivative financial
instruments
-
-
552
-
-
552
Amounts owed to banks
49,463
7,745
-
-
-
57,208
Amounts owed to customers
1,760,125
272,826
399,097
1,025
-
2,433,073
Lease liabilities
-
596
2,068
2,684
-
5,348
Debt securities in issue
-
-
-
54,597
-
54,597
Other liabilities
1,295
794
2,694
220
19,383
24,386
Equity
-
-
-
-
197,889
197,889
1,810,883
281,961
404,411
58,526
217,272
2,773,053
Gap
(1,509,970)
(115,775)
(88,357)
1,802,635
(88,533)
-
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 163
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.3 Liquidity risk (continued)
Analysis of financial liabilities by remaining contractual maturities
The table below summarises the maturity profile of the Bank’s financial liabilities as at 31 December
2022 and 31 December 2021 based on contractual undiscounted repayment obligations:
The Bank
Less than
three
months
Between
three
months
and one
year
Between
one year
and five
years
More
than five
years
Others
Total
€000
€000
€000
€000
€000
€000
At 31 December 2022
Liabilities
Derivative financial
instruments
-
23
59
656
-
738
Amounts owed to
banks
44,191
6,196
-
-
-
50,387
Amounts owed to
customers
1,944,758
399,602
365,462
7,352
-
2,717,174
Lease liabilities
-
760
2,703
2,493
-
5,956
Debt securities in issue
-
1,788
7,150
59,959
-
68,897
Other liabilities
3,168
1,248
2,134
233
22,165
28,948
1,992,117
409,617
377,508
70,693
22,165
2,872,100
Less than
three
months
Between
three
months
and one
year
Between
one year
and five
years
More
than five
years
Others
Total
€000
€000
€000
€000
€000
€000
At 31 December 2021
Liabilities
Derivative financial
instruments
-
-
552
-
-
552
Amounts owed to
banks
49,463
7,745
-
-
-
57,208
Amounts owed to
customers
1,760,753
273,623
401,795
1,034
-
2,437,205
Lease liabilities
-
701
2,387
2,897
-
5,985
Debt securities in issue
-
1,788
7,150
61,747
-
70,685
Other liabilities
1,295
794
2,694
220
19,383
24,386
1,811,511
284,651
414,578
65,898
19,383
2,596,021
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 164
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 168
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.4 Market risk (continued)
48.4.1 Interest rate risk (continued)
The Bank
At 31 December 2022
Up to 1
year
1 – 5
years
5 – 10
years
More
than 10
years
Others
€000
€000
€000
€000
€000
Assets
Cash and balances with Central Bank of
Malta
50,009
-
-
-
-
Loans and advances to banks
71,023
-
-
-
-
Syndicated loans
135,210
-
-
-
-
Loans and advances to customers
1,731,560
311,816
180,758
560
-
Debt securities
20,773
296,306
136,043
6,479
-
2,008,575
608,122
316,801
7,039
-
Liabilities
Amounts owed to banks
50,387
-
-
-
-
Amounts owed to customers
1,605,418
1,100,056
7,330
-
-
Debt securities in issue
-
54,642
-
-
-
1,655,805
1,154,698
7,330
-
-
Net interest rate risk GAP
at 31 December 2022
352,770
(546,576)
309,741
7,039
-
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 169
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.4 Market risk (continued)
48.4.1 Interest rate risk (continued)
The Bank
At 31 December 2021
Up to 1
year
1 – 5
years
5 – 10
years
More
than 10
years
Others
€000
€000
€000
€000
€000
Assets
Cash and balances with Central Bank of
Malta
173,060
-
-
-
-
Loans and advances to banks
30,831
-
-
-
-
Syndicated loans
134,262
-
-
-
-
Loans and advances to customers
1,519,670
239,872
168,461
4,041
-
Debt securities
40,928
153,555
125,220
8,338
-
1,898,751
393,427
293,681
12,379
-
Liabilities
Amounts owed to banks
57,208
-
-
-
-
Amounts owed to customers
1,288,714
1,142,815
944
600
-
Debt securities in issue
-
54,597
-
-
-
1,345,922
1,197,412
944
600
-
Net interest rate risk GAP at 31
December 2021
552,829
(803,985)
292,737
11,779
-
The carrying amount of assets and liabilities that carry a variable interest rate is €2.0 billion and €1.8
billion, respectively (2021: €1.8 billion and €1.6 billion).
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 172
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.6 Capital management (continued)
The Bank
2022
2021
€000
€000
Total exposure (on and off-balance sheet)
3,212,972
2,871,279
Risk weighted amounts:
Credit risk calculation - standardised approach
1,393,156
1,273,347
Operational risk - basic indicator approach
119,344
106,307
Foreign exchange risk
14
129
Total credit, operational and foreign exchange risk
1,512,514
1,379,783
CET 1/Tier 1 Capital
229,430
176,722
Tier 2 Capital
54,642
54,597
Total Own Funds
284,072
231,319
Capital Adequacy Ratio
Tier 1 Ratio
15.17%
12.81%
Total Capital Ratio
18.78%
16.76%
The Bank’s capital is composed of Common Equity Tier 1 (CET 1) and Tier 2 capital instruments, as defined
by the CRR. CET 1 capital is the highest quality capital and, therefore, the most effective in absorbing losses.
The Bank’s capital is mainly composed of CET 1 capital, which primarily consists of ordinary share capital and
retained earnings.
In June 2022, the Bank issued an IPO of 110,000,000 new shares at the price of €0.62 per share. The IPO
qualifies as Tier 1 capital, which ranks as shareholders’ equity.
Further information on the composition and features of the Bank’s capital instruments is provided in the
following two tables.
No changes were made in the objectives, policies and processes governing the Bank’s capital management
from the previous years.
The original own funds calculation comprises retained earnings which are adjusted to exclude the amount
specified in favour of the Depositor’s Compensation Scheme Reserve in line with the legislation (Note 22).
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 173
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.6 Capital management (continued)
The Bank
2022
2021
€000
€000
CET1 capital: instruments and reserves
Capital instruments and the related share premium accounts
140,140
72,882
Retained earnings
98,399
88,843
Accumulated other comprehensive income
2,981
25,334
Funds for general banking risk
2,904
1,700
Other reserves
147
-
244,571
188,759
CET1 capital: regulatory adjustments
Intangible assets
(14,545)
(11,746)
Regulatory adjustments due to the requirements for prudent valuation
pursuant to Article 4 of Delegated Regulation (EU) 2016/101
(197)
(291)
Regulatory adjustments due to insufficient coverage for non-performing
exposures
(399)
-
(15,141)
(12,037)
CET 1/Tier 1 Capital
229,430
176,722
Tier 2 capital
Debt securities in issue
54,642
54,597
Total Capital
284,072
231,319
Total Risk Weighted Assets
1,512,514
1,379,783
Capital Ratios
CET1/Tier 1Capital Ratio
15.17%
12.81%
Total Capital Ratio
18.78%
16.76%
Amounts below the thresholds for deduction:
Direct and indirect holdings of the
capital of financial sector entities
where the institution does not have significant investments in those
entities (not included in CET 1 capital)
8,054
8,331
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 175
NOTES TO THE FINANCIAL STATEMENTS (continued)
48. RISK MANAGEMENT (continued)
48.6 Capital management (continued)
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 176
FIVE YEAR SUMMARIES - STATEMENTS OF PROFIT OR LOSS
The Group
2022
2021
2020
2019
2018
€000
€000
€000
€000
€000
Interest and similar income
79,859
69,135
62,280
58,021
49,963
Interest expense
(14,766)
(13,773)
(13,434)
(13,379)
(12,149)
Net interest income
65,093
55,362
48,846
44,642
37,814
Other operating (loss)/income
(445)
7,781
6,298
12,039
6,905
Total operating income
64,648
63,143
55,144
56,681
44,719
Operating expenses
(47,029)
(40,584)
(33,551)
(30,354)
(24,575)
Share of results of associate, net of tax
(2,213)
21
(258)
1,585
38
Net impairment gains/(losses)
254
1,488
(5,538)
(1,074)
(1,555)
Profit before tax
15,660
24,068
15,797
26,838
18,627
Income tax expense
(9,893)
(8,967)
(5,707)
(7,268)
(6,043)
Profit for the year
5,767
15,101
10,090
19,570
12,584
The Bank
2022
2021
2020
2019
2018
€000
€000
€000
€000
€000
Interest and similar income
78,439
67,640
61,140
56,674
48,958
Interest expense
(14,766)
(13,773)
(13,434)
(13,379)
(12,182)
Net interest income
63,673
53,867
47,706
43,295
36,776
Other operating income
10,882
8,060
6,600
9,586
8,888
Total operating income
74,555
61,927
54,306
52,881
45,664
Operating expenses
(45,880)
(39,678)
(33,246)
(30,163)
(24,427)
Net impairment gains/(losses)
254
1,488
(5,538)
(1,074)
(1,555)
Profit before tax
28,929
23,737
15,522
21,644
19,682
Income tax expense
(9,773)
(8,696)
(5,589)
(7,182)
(5,974)
Profit for the year
19,156
15,041
9,933
14,462
13,708
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 177
THE GROUP’S STATEMENTS OF FINANCIAL POSITION
2022
2021 2020 2019 2018
€000
€000 €000 €000 €000
ASSETS
Cash, treasury bills and balances
with Central Bank of Malta
13,499
15,165 15,064 11,225 10,387
Balances with Central Bank of Malta
72,388
192,558 93,266 151,178 165,021
Cheques in course of collection
-
2,881 103 128 69
Loans and advances to banks
72,870
32,296 51,068 59,840 50,384
Financial assets at fair value through profit or loss
41,046
61,846
50,636
41,478
36,241
Non-current assets held for sale
1,733
-
-
-
2,600
Syndicated loans
135,210
134,262
113,152
125,953
61,610
Loans and advances to customers
2,224,694
1,932,044 1,689,003 1,458,144 1,253,883
Derivative financial instruments
738
552 499 721 822
Other debt and fixed income instruments
459,601
328,041 315,983 238,166 251,040
Equity and other non-fixed income instruments
303
307 303 308 1,272
Investment in associate
13,667
19,803
18,641
19,257
17,748
Investment properties
6,593
6,053
1,830
1,830
1,860
Property and equipment
39,252
40,998
46,180
43,851
22,286
Intangible assets
14,545
11,746 8,848 7,320 5,861
Right-of-use assets
5,040
5,051 5,235 2,592 -
Other receivables
8,016
9,152 8,619 6,478 6,293
Deferred tax assets
2,957
2,249 2,553 460 3,853
TOTAL ASSETS
3,112,152
2,795,004 2,420,983 2,168,929 1,891,230
LIABILITIES
Derivative financial instruments
738
552
499
721
822
Amounts owed to banks
50,387
57,208
9,304
24,512
74,473
Amounts owed to customers
2,710,633
2,431,757
2,123,446
1,928,971
1,650,308
Lease liabilities
5,246
5,348 5,365 2,629 -
Accruals
13,621
13,325 10,103 8,752 10,102
Debt securities in issue
54,642
54,597 54,558 - -
Other liabilities
13,121
10,450 10,090 10,966 11,892
Current tax
2,306
945
1,399
463
1,389
TOTAL LIABILITIES
2,850,694
2,574,182 2,214,764 1,977,014 1,748,986
EQUITY
Share capital
91,729
62,429
62,255
62,255
57,605
Share premium
48,410
10,453
10,140
10,140
1,770
Revaluation reserve
2,981
25,334
32,260
30,706
12,398
Retained earnings
107,209
103,974 91,736 82,785 68,478
Other reserves
147
- - - -
Non-controlling interest
10,982
18,632 9,828 6,029 1,993
TOTAL EQUITY
261,458
220,822 206,219 191,915 142,244
TOTAL LIABILITIES AND EQUITY
3,112,152
2,795,004 2,420,983 2,168,929 1,891,230
MEMORANDUM ITEMS
Contingent liabilities
21,911
25,356 23,128 22,855 23,269
Commitments
878,787
802,552 786,427 755,638 711,160
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 178
THE BANK’S STATEMENTS OF FINANCIAL POSITION
2022
2021
2020
2019
2018
€000
€000
€000
€000
€000
ASSETS
Cash, treasury bills and balances
with Central Bank of Malta
13,499
15,165
15,064
11,225
9,490
Balances with Central Bank of Malta
72,388
192,558
93,266
151,178
165,021
Cheques in course of collection
-
2,881
103
128
69
Loans and advances to banks
71,023
30,831
46,281
54,841
49,384
Financial assets at fair value through profit or loss
-
-
251
464
879
Non-current assets held for sale
1,733
-
-
-
2,600
Syndicated loans
135,210
134,262
113,152
125,953
61,610
Loans and advances to customers
2,224,694
1,932,044
1,689,003
1,458,144
1,253,883
Derivative financial instruments
738
552
499
721
822
Other debt and fixed income instruments
459,601
328,041
315,983
238,166
251,040
Equity and other non-fixed income instruments
303
307
303
308
1,272
Investment in subsidiaries
40,251
45,251
45,251
40,251
40,251
Investment in associate
14,063
16,761
15,261
15,261
14,886
Investment properties
6,593
6,053
1,830
1,830
1,860
Property and equipment
39,252
40,998
46,180
43,851
22,286
Intangible assets
14,545
11,746
8,848
7,318
5,858
Right-of-use assets
5,040
5,051
5,235
2,592
-
Other receivables
8,202
8,303
7,974
5,907
5,845
Deferred tax assets
2,957
2,249
2,553
460
3,853
TOTAL ASSETS
3,110,092
2,773,053
2,407,037
2,158,598
1,890,909
LIABILITIES
Derivative financial instruments
738
552
499
721
822
Amounts owed to banks
50,387
57,208
9,304
24,512
74,473
Amounts owed to customers
2,712,804
2,433,073
2,124,149
1,929,504
1,653,309
Lease liabilities
5,246
5,348
5,365
2,629
-
Accruals
13,561
13,224
10,031
8,712
10,077
Debt securities in issue
54,642
54,597
54,558
-
-
Other liabilities
13,080
10,404
10,090
10,966
11,892
Current tax
2,306
758
1,354
452
1,321
TOTAL LIABILITIES
2,852,764
2,575,164
2,215,350
1,977,496
1,751,894
EQUITY
Share capital
91,729
62,429
62,255
62,255
57,605
Share premium
48,410
10,453
10,140
10,140
1,770
Revaluation reserve
2,981
25,334
32,260
30,706
12,398
Other reserves
147
-
-
-
-
Retained earnings
114,061
99,673
87,032
78,001
67,242
TOTAL EQUITY
257,328
197,889
191,687
181,102
139,015
TOTAL LIABILITIES AND EQUITY
3,110,092
2,773,053
2,407,037
2,158,598
1,890,909
MEMORANDUM ITEMS
Contingent liabilities
21,911
25,356
23,128
22,855
23,269
Commitments
878,787
802,552
786,427
755,638
711,160
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 179
THE GROUP’S FIVE-YEAR SUMMARY - STATEMENTS OF CASH FLOWS
2022
2021 2020 2019 2018
€000
€000 €000 €000 €000
Net cash flows from/(used in) operating activities
3,835
49,036 (12,347) (57,230) 141,844
Investing activities
Dividends received
403
597 544 195 596
Interest income from debt securities
7,328
7,054 6,684 7,811 9,546
Purchase of debt and other fixed income instruments
(229,935)
(44,389) (134,778) (26,435) (45,614)
Proceeds on maturity and disposal of debt and other
fixed income instruments
73,040
23,838
55,957
40,490
41,197
Purchase of financial assets at FVTPL
(98,742)
(46,241) (39,165) (34,520) (30,124)
Proceeds on disposal of financial assets at FVTPL
99,653
34,605
31,496
34,224
26,741
Purchase of equity and other fixed income instruments
-
-
(950)
-
-
Proceeds on disposal of equity and other non-fixed
income instruments
-
- 1,000 880 397
Proceeds on disposal of investments in associates
9,589
- - - -
Investment in associate
(500)
(1,500) - (375) -
Purchase of property and equipment
(5,431)
(653) (6,034) (6,781) (7,543)
Proceeds on disposal of property and equipment
-
- - - 7
Net cash flows (used in)/from investing activities
(144,595)
(26,689) (85,246) 15,489 (4,797)
Financing activities
Dividends paid
(3,170)
(2,144) (91) (3,171) (2,135)
Amounts received on creation of units in subsidiary
1,027
9,386 4,207 3,865 -
Amounts paid on redemption of units in subsidiary
(630)
(794) (535) (228) (64)
Net proceeds from issue from debt securities in issue
-
- 55,000 - -
Net proceeds from issue of units in subsidiary
- - - 1,017
Proceeds from issue of new shares, net of issue costs
65,457
- - 13,020 -
Cash payment for the principal portion of lease liability
(761)
(515) (496) (394) -
Net cash flows from/(used in) financing activities
61,923
5,933 58,085 13,092 (1,182)
Net (decrease)/increase in cash and cash equivalents
(78,837)
28,280 (39,508) (28,649) 135,865
Cash and cash equivalents at 1 January
171,101
142,821 182,329 210,978 75,113
Cash and cash equivalents at 31 December
92,264
171,101 142,821 182,329 210,978
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 180
THE BANK’S FIVE-YEAR SUMMARY – STATEMENTS OF CASH FLOWS
2022
2021 2020 2019 2018
€000
€000 €000 €000 €000
Net cash flows from/(used in) operating activities
3,517
48,158
(13,136)
(58,177)
141,044
Investing activities
Dividends received
1,477
1,273
1,236
1,572
1,604
Interest income from debt securities
7,328
7,054
6,684
7,811
9,546
Purchase of debt and other fixed income instruments
(229,935)
(44,389)
(134,778)
(26,435)
(45,614)
Proceeds on maturity and disposal of debt and other fixed
income instruments
73,040
23,838
55,957
40,490
41,197
Purchase of equity and other non-fixed income instruments
-
- (950) - -
Proceeds on disposal of equity and other non-fixed income
instruments
-
-
1,000
880
397
Purchase of financial assets at FVTPL
-
-
-
-
(184)
Proceeds on disposal of financial assets at FVTPL
-
249
221
213
221
Purchase of property and equipment
(5,431)
(653) (6,034) (6,781) (7,543)
Proceeds on disposal of property and equipment
-
-
-
-
7
Proceeds on disposal of investments in associates
9,589
- - - -
Investment in associates
(500)
(1,500)
-
(375)
-
Investment in subsidiaries
-
-
(5,000)
-
-
Net cash flows (used in)/from investing activities
(144,432)
(14,128)
(81,664)
17,375
(369)
Financing activities
Dividends paid
(3,000)
(1,913)
-
(3,575)
(2,617)
Proceeds from issue of debt securities in issue
-
- 55,000 - -
Proceeds from issue of new shares, net of issue costs
65,457
-
-
13,020
-
Cash payment for the principal portion of lease liability
(761)
(515)
(496)
(394)
-
Net cash flows (used in)/from financing activities
61,696
(2,428)
54,504
9,051
(2,617)
Net (decrease)/increase in cash and cash equivalents
(79,219)
31,602
(40,296)
(31,751)
138,058
Cash and cash equivalents at 1 January
169,636
138,034
178,330
210,081
72,023
Cash and cash equivalents at 31 December
90,417
169,636
138,034
178,330
210,081
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 181
THE GROUP’S FIVE-YEAR SUMMARY - ACCOUNTING RATIOS
2022
2021
2020
2019
2018
%
%
%
%
%
Net interest income and other operating
income to total assets
2.1
2.3 2.3 2.6 2.4
Operating expenses to total assets
1.5
1.5 1.4 1.4 1.3
Cost to income ratio
72.7
64.3
60.8
53.6
55.0
Profit before tax to total assets
0.5
0.9
0.7
1.2
1.0
Return on average equity after tax
2.3
7.1 5.1 11.7 9.0
2022
2021
2020
2019
2018
Shares in issue (thousands)*
366,917
249,716
249,019
249,019
249,019
Net assets per share
68c
79c
77c
73c
55c
THE BANK’S FIVE-YEAR SUMMARY - ACCOUNTING RATIOS
2022
2021
2020
2019
2018
%
%
%
%
%
Net interest income and other operating
income to total assets
2.4
2.2 2.3 2.5 2.4
Operating expenses to total assets
1.5
1.4 1.4 1.4 1.3
Cost to income ratio
61.5
64.1
61.2
57.0
53.5
Profit before tax to total assets
0.9
0.9
0.6
1.0
1.0
Return on average equity after tax
8.3
7.7
5.3
9.0
10.1
2022
2021
2020
2019
2018
Shares in issue (thousands)*
366,917
249,716 249,019 249,019 249,019
Net assets per share
70c
77c
75c
71c
54c
* Number of shares in issue and the net assets per share for 2018 to 2019 have been restated to reflect the number of shares
in issue as a result of the 2020 re-designation of the ordinary shares.
The Net assets per share for 2018 to 2021 have been restated to include the scrip dividend issued in 2022 in the form of
shares amounting to 7.2 million.
Return on average equity before tax of the Bank is calculated as the return as a percentage of the 12 months ending equity
balances. The average capital employed of the Group is calculated as the average of the opening and closing equity balances.
APS Bank plc 182
Independent auditor’s report
to the members of
APS Bank p.l.c.
Report on the Audit of the Financial Statements
Opinion
We have audited the individual financial statements of APS Bank p.l.c. (‘the Bank’) and the consolidated
financial statements of the Bank and its subsidiaries (together, the Group), set out on pages 61 to 175,
which comprise the statements of financial position as at 31 December 2022, and the statements of
profit or loss, statements of comprehensive income, statements of changes in equity and statements
of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial position
of the Bank and the Group as at 31 December 2022, and of the Bank’s and the Group’s financial
performance and cash flows for the year then ended in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the EU and have been properly prepared in accordance
with the requirements of the Companies Act (Cap.386) and the Banking Act (Cap.371).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Bank and the Group
in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code) together with the Accountancy Profession (Code of Ethics for
Warrant Holders) Directive (Maltese Code) that are relevant to our audit of the financial statements in
Malta, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and
the Maltese Code. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion. In conducting our audit, we have remained independent of the Bank
and the Group and have not provided any of the non-audit services prohibited by article 18A (1) of the
Accountancy Profession Act (Cap. 281).
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified. The key audit matter
described below pertains to the audit of both the Bank and the Group financial statements. This matter
was addressed in the context of our audit of the Bank and the Group’s financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on this matter.
APS Bank plc 183
Independent auditor’s report (continued)
to the members of
APS Bank p.l.c.
Impairment of loans and advances to customers
At 31 December 2022 the Bank and Group reported total gross loans and advances to customers
(“assets”) of EUR2,243,676,000 and EUR18,982,000 of expected credit loss provisions.
Management’s judgements and estimates are especially subjective due to significant uncertainty
associated with the assumptions used. The global macroeconomic uncertainties driven by the ongoing
Russia/Ukraine conflict and its consequent implications including but not limited to supply chain
disruptions and increased inflationary pressure, increased the level of judgement in the expected credit
loss (ECL) calculation. Assumptions with increased complexity in respect of the timing and
measurement and disclosure of ECL include:
Staging - Allocation of assets to stage 1, 2, or 3 on a timely basis using criteria in accordance
with IFRS 9 considering the impact of macroeconomic uncertainties on customer behaviours
and further support measures that were granted following the identification of underlying
significant deterioration in credit risk;
Model estimations - Accounting interpretations, modelling assumptions and data used to build
and run the models that calculate the ECL;
Economic scenarios – Inputs, assumptions and weightings used to estimate the impact of
multiple economic scenarios;
Post model adjustments – Assumptions used to estimate the possible negative impact of
macroeconomic uncertainties and increased inflationary pressure on certain customers and/or
sectors and any resulting model adjustments;
Individual provisions - Measurement of individual provisions including the assessment of
multiple scenarios on exit strategies, collateral valuations and time to collect; and
Disclosure - The completeness and preparation of disclosures considering the key judgments,
sources of data and the design of the disclosures.
Our audit response to address the risk of material misstatement arising from the ECL calculation
comprised the following:
Controls testing:
We tested the design, implementation and operating effectiveness of the Bank’s and Group’s key
controls across the processes relevant to the ECL calculation. We reviewed the automated controls
embedded in the ECL system and used data analytics in order to analyse the loan data and the
movements in the various credit risk grading categories and stages in order to identify any anomalies
and possible risk areas. We reviewed the collateral valuation reports including management’s
assessment of the reliability of the valuations being used.
Staging:
We performed an overall assessment of the ECL provision levels by stage to determine if they were
reasonable considering the Bank’s and Group’s portfolio, risk profile, credit risk management policies
and the macroeconomic environment. We challenged the criteria used to allocate an asset to stage 1,
2 or 3 in accordance with IFRS 9 and sample tested assets classified in each of stages 1, 2 and 3 to
verify that they were allocated to the appropriate stage.
Model estimations:
We tested the data used in the ECL calculation by reconciling to source systems in order to gain
reasonable assurance over the data quality. We recalculated the risk ratings (credit grading) for a
sample of performing loans in order to test credit grading. Assumptions and inputs used in ECL models
were tested substantively on a sample basis. This included assessing the appropriateness of model
design and formulas used by recalculating the ECL on a sample basis.
APS Bank plc 184
Independent auditor’s report (continued)
to the members of
APS Bank p.l.c.
Economic scenarios:
We reviewed the inputs, assumptions and weightings used to estimate the impact of multiple economic
scenarios.
Post model adjustments:
We assessed the completeness and appropriateness of post model adjustments.
Individual provisions:
For a sample of individually impaired loans we evaluated the specific circumstances of the customer,
including latest available information, the basis for measuring the impairment provision, and whether
key judgements were appropriate. We reperformed management’s impairment calculations, which
were largely based on the expected recovery from collateral held. We tested the valuation of collateral
challenging subjective estimates by referring to actual historical recovery data and market information
available.
Disclosure:
We assessed the adequacy and appropriateness of disclosures for compliance with International
Financial Reporting Standards as adopted by the EU and regulatory considerations.
The Bank and Group’s disclosures about impairment are included in Notes 2.3, 11 and 48, which include
the directors’ assessment of the adequacy of the impairment provisions.
Other information
The directors are responsible for the other information. The other information comprises the
Chairman’s Statement, the CEO’s Review, the Board of Directors pages, the Executive Management
pages, Corporate Governance Report which includes the Corporate Governance Statement of
Compliance, the Directors’ Report which includes the statement of directors’ responsibilities, the
Remuneration Report required under Rule 12.26K of the Capital Markets Rules, the Five Year Summaries
and Our Presence page which we obtained prior to the date of this auditor’s report. Other information
also includes the Bank’s Pillar 3 Disclosures which have been published on the Bank’s website.
However, the other information does not include the individual and consolidated financial statements,
our auditor’s report and the relevant tagging applied in accordance with the requirements of the
European Single Electronic Format, as defined in our Report on Other Legal and Regulatory
Requirements.
Except for our opinions on the Directors’ Report in accordance with the Companies Act (Cap. 386),
and on the Corporate Governance Statement of Compliance and on the Remuneration Report in
accordance with the Capital Markets Rules issued by the MFSA, our opinion on the financial statements
does not cover the other information and we do not and will not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated. If, based on the work we have performed on the other information that we
obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this regard.
With respect to the Directors’ Report, we also considered whether the Directors’ Report includes the
disclosure requirements of Article 177 of the Companies Act (Cap. 386), and the statement required by
Rule 5.62 of the Capital Markets Rules on the Bank’s and the Group’s ability to continue as a going
concern.
APS Bank plc 185
Independent auditor’s report (continued)
to the members of
APS Bank p.l.c.
In accordance with the requirements of sub-article 179(3) of the Companies Act (Cap. 386) in relation
to the Directors’ Report on pages 16 to 37, in our opinion, based on the work undertaken in the course
of the audit:
a) Non-financial statement in the Directors’ Report
The Directors’ Report includes non-financial information in line with the requirements of
paragraphs 8 and 11 of the Sixth Schedule to the Companies Act (Cap. 386). The proviso to
sub-article 179(3) of that Act requires us to check whether such information is provided, but
not to express any comment thereon;
b) Directors’ Report information other than the non-financial statement
the information given in the Directors’ Report for the financial year for which the Bank’s and
the Group’s financial statements are prepared is consistent with those financial statements;
and
the Directors’ Report has been prepared in accordance with the applicable legal requirements.
In the light of the knowledge and understanding of the Bank, the Group and their environment obtained
in the course of the audit, we have not identified any material misstatements in the Directors’ Report.
Responsibilities of the Directors and the Audit Committee for the Financial Statements
As explained more fully in the Statement of directors’ responsibilities on page 36, the directors are
responsible for the preparation of financial statements that give a true and fair view in accordance with
IFRSs as adopted by the EU and the requirements of the Companies Act (Cap.386) and the Banking
Act (Cap.371), and for such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Bank’s and the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the Bank and/or the Group or to cease operations, or have no realistic alternative but to do so.
The directors have delegated the responsibility for overseeing the Bank’s and the Group’s financial
reporting process to the Audit Committee.
Auditor’s Responsibilities for the Audit of the Financial Statements
This report, including the opinions set out herein, has been prepared for the Bank’s members as a body
in accordance with articles 179, 179A and 179B of the Companies Act (Cap. 386).
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinions in accordance with articles 179, 179A and 179B of the Companies Act (Cap.
386). Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
In terms of article 179A(4) of the Companies Act (Cap. 386), the scope of our audit does not include
assurance on the future viability of the Bank or of the Group, or on the efficiency or effectiveness with
which the directors have conducted or will conduct the affairs of the Bank and the Group. The financial
position of the Bank or the Group may improve, deteriorate, or otherwise be subject to change as a
consequence of decisions taken, or to be taken, by the management thereof, or may be impacted by
events occurring after the date of this opinion, including, but not limited to, events of force majeure.
APS Bank plc 186
Independent auditor’s report (continued)
to the members of
APS Bank p.l.c.
As such, our audit report on the Bank’s and the Group’s historical financial statements is not intended
to facilitate or enable, nor is it suitable for, reliance by any person, in the creation of any projections or
predictions, with respect to the future financial health and viability of the Bank and/or the Group , and
cannot therefore be utilised or relied upon for the purpose of decisions regarding investment in, or
otherwise dealing with (including but not limited to the extension of credit), the Bank and/or the Group.
Any decision-making in this respect should be formulated on the basis of a separate analysis,
specifically intended to evaluate the prospects of the Bank and/or the Group and to identify any facts
or circumstances that may be materially relevant thereto.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Bank’s or the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Bank’s and the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Bank and/or the Group to cease to continue as a going concern.
Accordingly, in terms of generally accepted auditing standards, the absence of any reference
to a material uncertainty about the Bank’s or the Group’s ability to continue as a going concern
in our auditor’s report should not be viewed as a guarantee as to the Bank’s and/or the Group’s
ability to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the Bank or
the business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
For the avoidance of doubt, any conclusions concerning the adequacy of the capital structure of the
Bank, including the formulation of a view as to the manner in which financial risk is distributed between
shareholders and/or creditors cannot be reached on the basis of these financial statements alone and
must necessarily be based on a broader analysis supported by additional information.
APS Bank plc 187
Independent auditor’s report (continued)
to the members of
APS Bank p.l.c.
We communicate with the Audit Committee regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Audit Committee, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on compliance of the Annual Financial Report with the requirements of the European Single
Electronic Format Regulatory Technical Standard as specified in the Commission Delegated
Regulation (EU) 2019/815 (the "ESEF RTS”)
Pursuant to Capital Markets Rule 5.55.6 issued by the MFSA, we have undertaken a reasonable
assurance engagement in accordance with the requirements of the Accountancy Profession (European
Single Electronic Format) Assurance Directive issued by the Accountancy Board in terms of the
Accountancy Profession Act (Cap. 281), hereinafter referred to as the “ESEF Directive 6”, on the annual
financial report of the Company and the Group for the year ended 31 December 2022, prepared in a
single electronic reporting format.
Solely for the purposes of our reasonable assurance report on the compliance of the annual financial
report with the requirements of the ESEF RTS, the “Annual Financial Report” comprises the Directors’
Report, the Statement of Directors’ responsibilities, the Corporate Governance Statement of
Compliance, the annual financial statements, the prescribed disclosures of material contracts, General
Company Information, and the Independent auditor’s report, as set out in Capital Markets Rules 5.55.
Responsibilities of the Directors for the Annual Financial Report
The directors are responsible for:
the preparation and publication of the Annual Financial Report, including the consolidated financial
statements and the relevant tagging requirements therein, as required by Capital Markets Rule
5.56A, in accordance with the requirements of the ESEF RTS,
designing, implementing, and maintaining internal controls relevant to the preparation of the
Annual Financial Report that is free from material non-compliance with the requirements of the
ESEF RTS, whether due to fraud or error,
and consequently, for ensuring the accurate transfer of the information in the Annual Financial Report
into a single electronic reporting format.
APS Bank plc 188
Independent auditor’s report (continued)
to the members of
APS Bank p.l.c.
Auditor’s responsibilities for the Reasonable Assurance Engagement
Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report,
including the consolidated financial statements and the relevant electronic tags therein comply, in all
material respects, with the ESEF RTS, based on the evidence we have obtained. We conducted our
reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.
The nature, timing and extent of procedures we performed, including the assessment of the risks of
material non-compliance with the requirements of the ESEF RTS, whether due to fraud or error, were
based on our professional judgement and included:
Obtaining an understanding of the Bank’s and the Group’s internal controls relevant to the financial
reporting process, including the preparation of the Annual Financial Report, in accordance with the
requirements of the ESEF RTS, but not for the purpose of expressing an assurance opinion on the
effectiveness of these controls.
Obtaining the Annual Financial Report and performing validations to determine whether the
Annual Financial Report has been prepared in accordance with the requirements of the technical
specifications of the ESEF RTS.
Examining the information in the Annual Financial Report to determine whether all the required
tags therein have been applied and evaluating the appropriateness, in all material respects, of the
use of such tags in accordance with the requirements of the ESEF RTS.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
reasonable assurance opinion.
Reasonable Assurance Opinion
In our opinion, the Annual Financial Report for the year ended 31 December 2022 has been prepared,
in all material respects, in accordance with the requirements of the ESEF RTS.
This reasonable assurance opinion only covers the transfer of the information in the Annual Financial
Report into a single electronic reporting format as required by the ESEF RTS, and therefore does not
cover the information contained in the Annual Financial Report.
Report on Corporate Governance Statement of Compliance
Pursuant to Rule 5.94 of the Capital Market Rules issued by the MFSA, the directors are required to
include in the Bank’s Annual Financial Report a Corporate Governance Statement of Compliance
explaining the extent to which they have adopted the Code of Principles of Good Corporate
Governance set out in Appendix 5.1 to Chapter 5 of the Capital Markets Rules, and the effective
measures that they have taken to ensure compliance with those principles. The Corporate Governance
Statement of Compliance is to contain at least the information set out in Rule 5.97 of the Capital
Markets Rules.
Our responsibility is laid down by Rule 5.98 of the Capital Markets Rules, which requires us to include
a report to shareholders on the Corporate Governance Statement of Compliance in the Company’s
Annual Financial Report.
We read the Corporate Governance Statement of Compliance and consider the implications for our
report if we become aware of any information therein that is materially inconsistent with the financial
statements or our knowledge obtained in the audit, or that otherwise appears to be materially
misstated. We also review whether the Corporate Governance Statement of Compliance contains at
least the information set out in Rule 5.97 of the Capital Markets Rules.
APS Bank plc 189
Independent auditor’s report (continued)
to the members of
APS Bank p.l.c.
We are not required to, and we do not, consider whether the directors’ statements on internal control
cover all risks and controls, or form an opinion on the effectiveness of the Company’s corporate
governance procedures or its risk and control procedures.
In our opinion, the Corporate Governance Statement of Compliance set out on pages 46 to 60 has
been properly prepared in accordance with the requirements of Rules 5.94 and 5.97 of the Capital
Markets Rules.
Report on Remuneration Report
Pursuant to Rule 12.26K of the Capital Markets Rules issued by the MFSA, the directors are required to
draw up a Remuneration Report, whose contents are to be in line with the requirements listed in
Appendix 12.1 to Chapter 12 of the Capital Markets Rules.
Our responsibility is laid down by Rule 12.26N of the Capital Markets Rules, which requires us to check
that the information that needs to be provided in the Remuneration Report, as required in terms of
Chapter 12 of the Capital Markets Rules, including Appendix 12.1, has been included.
In our opinion, the Remuneration Report set out on pages 38 to 45 includes the information that needs
to be provided in the Remuneration Report in terms of the Capital Markets Rules.
Additional matters on which we are required to report pursuant to the Banking Act (Cap. 371)
In our opinion:
Proper accounting records have been kept so far as it appears from our examination thereof;
The financial statements are in agreement with the accounting records; and
We have obtained all the information and explanations which, to the best of our knowledge and
belief, are necessary for the purpose of our audit.
Matters on which we are required to report by exception pursuant to the Companies Act (Cap. 386)
in addition to those reported above
We have responsibilities to report to you if in our opinion:
Proper returns adequate for our audit have not been received from branches not visited by us; or
The financial statements are not in agreement with the accounting records and returns.
We have nothing to report to you in respect of these responsibilities.
Auditor tenure
We were first appointed to act as statutory auditor to audit the Bank’s and the Group’s financial
statements by the members of the Bank on 27 July 2017 for the financial year ended 31 December 2017,
and were subsequently reappointed as statutory auditor by the members of the Bank on an annual
basis. The period of total uninterrupted engagement as statutory auditor is six financial years.
Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee in accordance with
the provisions of Article 11 of the EU Audit Regulation No. 537/2014.
The audit was drawn up on 9 March and signed by:
Sarah Curmi as Director
In the name and on behalf of
Deloitte Audit Limited
Registered auditor
Central Business District, Birkirkara, Malta.
APS BANK PLC
_________________________________________________________________________________________
APS Bank plc 190
OUR PRESENCE
HEAD OFFICE
APS Centre
Tower Street, Birkirkara, BKR 4012
COMMERCIAL BUSINESS
APS Centre
Tower Street, Birkirkara, BKR 4012
RETAIL BRANCHES
ATTARD
St. Catherine’s Street, Attard, ATD 2609
BIRKIRKARA (SWATAR)
APS Centre
Tower Street, Birkirkara, BKR 4012
MOSTA
9, Rotunda Square, Mosta, MST 9042
PAOLA
146/147, Antoine De Paule Square, Paola, PLA 1260
QORMI
70-72, St. Sebastian Street, Qormi, QRM 2335
RABAT
25, Saqqajja Street, Rabat, RBT 1192
SLIEMA
226, Tower Road, Sliema, SLM 1600
ST. PAUL’S BAY
Mosta Road, St. Paul’s Bay, SPB 3115
VALLETTA
17/18, Republic Street, Valletta, VLT 1111
VICTORIA (GOZO)
10, Main Gate Street, Victoria, VCT 1341
ZEJTUN
12, Republic Square, Zejtun, ZTN 1011
REGISTERED OFFICE
APS Centre
Tower Street, Birkirkara, BKR 4012
E - info@apsbank.com.mt
W – www.apsbank.com.mt
BIC Code- APSBMTMT
Registration number: C2192