Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
CONTENTS
Chairman’s Statement to the Members 2
Chief Executive Officer’s Review 5
Directors’ Report 10
Statement of Compliance with the Principles of Good Corporate Governance 37
Remuneration Report 48
Company Information 53
Financial Statements:
Statements of Financial Position 55
Income Statements 57
Statements of Comprehensive Income 58
Statements of Changes in Equity 59
Statements of Cash Flows 63
Notes to the Financial Statements 64
Five Year Summaries 191
Independent Auditor’s Report to the Shareholders of Lombard Bank Malta p.l.c.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Chairman’s Statement to the Members
I am pleased to report that during 2025 both members of the Lombard Bank Group, Lombard Bank Malta p.l.c
(‘the Bank’) and MaltaPost p.l.c. registered an encouraging financial performance in the context of a challenging
market environment. The Group’s pre-tax profit amounted to €23.8 million compared with €19.4 million the
previous year, an increase of 22.7%.
The Bank’s total operating income continued on its upward trend, growing at a faster pace by 9.4% compared to
8.3% in 2024. As in previous years, the single largest contributing factor were the Bank’s lending operations, which
responded to sustained credit demand to reach €929.1 million, generating a record €33 million in the process even
though average interest rates on loans were largely unchanged. Our corporate shareholdings also gave a strong
boost to the bottom line in the form of dividends, which however included a one-time inflow reflecting the sale of
a property by an associate company. Net fees and commissions and the Bank’s money market operations were
again other important sources of income.
Interest paid out on deposits meanwhile amounted to €13.7 million and rose faster than interest earned on lending
such that net interest income was slightly less than in 2024. The increase in this expense item is explained by a
pronounced customer preference for longer-term deposits with tenors beyond two years. This deposit category
attracted a further €92.4 million, taking its share in the Bank’s total deposits of €1.2 billion to 32.9% from 27.3%
in 2024. These longer-term deposits carry higher interest rates and are therefore more costly for the Bank but are
less volatile and so represent a more stable source of funds. From a risk perspective the Board considers that
offering this option to depositors contributes to the Bank’s long-term financial sustainability.
These opposing movements in receipts and payments resulted in an increase in total operating income of €3.4
million to an all-time high of €39 million.
As for expenditures, the Bank’s administrative costs absorbed 52.4% of this income, a smaller proportion than in
the previous year and the lowest in five years. Employee compensation and benefits were again the largest single
cost item, accounting for almost half of total outlays. While the average staff complement was unchanged over
the year, the retention of qualified employees in a competitive labour market inevitably gives rise to a higher
expense. Regulatory compliance and the maintenance and upgrading of information systems also entailed
significant costs.
The outcome of these income and expenditure movements was an 18.4% increase in profits before tax to €19.1
million. This resulted in further growth in the Bank’s total equity to €215.2 million, making for a ratio of equity to
total assets of 14.7%. In consideration of this positive performance, the Board is proposing to recommend a gross
dividend of 3.42 cent per share.
It is important to note that the 2025 profit was realised simultaneously with continued observance of the Bank’s
prudent risk management culture, compliance with a growing burden of regulatory obligations and the
maintenance of strong fundamentals. Evidence of the latter are the Total Capital Ratio and the Liquidity Coverage
Ratio which, at 19.9% and 380.5%, respectively were both above the minimum regulatory requirements. The
Leverage Ratio, another important risk indicator, meanwhile was more than four times the required minimum at
13.4%. Other aspects of the Bank’s low-risk business model were the ratio of advances to deposits which, at 79.6%
at year end, remained within the Bank’s risk appetite, and the further progress made in the planned process of
credit diversification such that retail lending, mainly home loans, now accounts for 34% of the total.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Chairman’s Statement to the Members (continued)
During the past year the Bank’s subsidiary, MaltaPost p.l.c., also achieved an encouraging result, recording a pre-
tax profit of €6.4 million compared with €4.7 million in 2024. The increased profitability largely reflects operational
efficiencies and strategic investments in logistics and e-commerce services. While traditional mail volumes
continued to decline, the company experienced strong growth in parcel volumes, driven primarily by a surge in e-
commerce activity. Significant progress was also made in digital transformation initiatives, including the
deployment of AI tools to eliminate repetitive tasks. Investment in the life and general insurance business
continued apace in line with MaltaPost’s commitment to expand its presence in the financial services sector. At
the same time, the company invested further in green technologies, including through additions to its fleet of
electric delivery vehicles. Looking ahead, MaltaPost is well positioned to deliver sustainable growth, enhanced
service delivery and continued digital and operational transformation.
The Bank’s results I highlighted earlier were consistent with the strategic objectives the Board had set for 2025
and marked the successful implementation of the three-year business plan which came to an end in that year.
During this period the Bank continued to perform its primary function of financial intermediation, transforming
customer deposits into loans in support of economic activity across an increasingly diversified range of sectors.
This objective was achieved concurrently with further investments in advanced technologies and operational
systems, in our network of eleven branches – soon to become thirteen - and in human resources, while at the
same time producing a growing balance sheet, which now stands at €1.5 billion, and satisfactory returns to
shareholders.
In the light of this positive track record, the Strategy and Business Plan 2026 – 2029 recently approved by the
Board reaffirms the validity of the Bank’s business model and therefore focuses on consolidation and sustainable
growth. The former is designed to leverage our time-tested prudent approach to the business of banking, strong
ongoing financial performance and a trusted brand in order to ensure continuity, resilience and long-term value
creation. Our growth agenda is centred on exploiting market opportunities to sustain profitability and delivering
on our core strategic priorities, namely operational efficiency, enhanced customer engagement in the context of
rapidly changing expectations and investing in digital capabilities so as to reinforce the Bank’s competitive
advantage. Details of the initiatives and projects forming part of this agenda, some of which are under way, feature
in the Chief Executive Officer’s Review.
You will recall that on this occasion last year I referred to announcements by the ECB and the EC of the imminent
introduction of a significant easing of regulation and also to a proposal by the national regulator whereby
supervision of less complex banks in the EU would be scaled according to each bank's size and risk profile, as
opposed to a one-size-fits-all approach. Though we have not become aware of any developments in this regard
since then, we remain hopeful that this new thinking will soon be translated into meaningful action.
On that same occasion I had also referred to the long-outstanding matter of the disposal by the National
Development and Social Fund (‘NDSF’) of its 49.01% qualifying shareholding in the Bank, a commitment that had
been made publicly in 2018. Despite our relentless efforts to bring this matter to a conclusion acceptable to both
sides, I have to report that this commitment has still not been honoured. We reaffirm our belief that disposal of
these shares would provide needed clarity to prospective investors and would be in the best interest of all our
stakeholders. We are therefore resolved to continue pursuing this objective with the same level of commitment.
Despite these uncertainties, the Board believes that the Bank is well placed to face the future with confidence. We
shall continue to promote sustainable growth, confident that the strategy I have outlined today is well suited to
the changing characteristics of the financial market and the expectations of our shareholders, customers and staff.
This cautious optimism is also justified by the positive outlook for the domestic economy, even though geo-political
events abroad could give rise to unexpected challenges.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Chairman’s Statement to the Members (continued)
In conclusion, on behalf of the Board I would like to express my appreciation to the Bank’s staff and management
team, ably led by the Chief Executive Officer Joseph Said, for their invaluable contribution to the achievement of
the past year’s results and for enhancing the reputation of the Lombard brand. I would also like to thank my fellow
directors and all our stakeholders for their loyalty and support.
Signed on behalf of the Bank's Board of Directors on 24 April 2026 by Michael C. Bonello (Chairman) as per the
Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and
Financial Statements 2025.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Chief Executive Officer’s Review
The results of the Lombard Bank Group (‘the Group’) for the financial year ended 31 December 2025 combine the
financial performance of Lombard Bank Malta p.l.c. and Redbox Limited which is the company holding the Bank’s
shares in MaltaPost p.l.c.
Summary Overview
We are satisfied with the financial year’s performance of both the Bank and its subsidiary, which reflects consistent
results achieved without deviation from our prudent and conservative approach to business.
For the Bank, this year’s results include a gain from the disposal of property by an associate company, which will
not be repeated in the coming financial year. Our performance continues to validate our time-tested business
model and reaffirms our focus on preference for building long-term relationships and sustainable growth over
short-term gains, even when these may stand to be more remunerative.
The banking market in Malta continues to play a central role in supporting households, businesses and the wider
economy, amid geo-political tensions and regulatory and supervisory developments. The competitive
environment continued to be intense, with minimal differentiation in basic offerings. These apart, efficiency,
digital capability and customer experience were the focus of competition which, for the smaller players, remained
very much driven by interest rates.
Our fundamental approach to business remained unchanged, with commercial and retail loan books meeting the
targeted growth, resulting in higher interest income. By no means was growth achieved at the expense of Credit
quality. The stock of facilities termed as “non-performing” closed the year within the regulatory limits.
Customer Deposits also grew in line with target levels. Competition for deposits remained stiff with longer term
deposits coming at a cost. We attract longer tenor deposits for the partial matching of liability and asset maturities,
always in line with our prudent approach to the management of assets and liabilities. Increase in volume together
with an increasing average interest rate payable led to a narrowing margin.
At MaltaPost the financial year ended 30 September 2025, returned a pre-tax profit of €6.4 million, significantly
higher than €4.7 million in the previous period. Parcel and logistics growth helped counterbalance the further
decline of income from Letter Mail. Continued investment in logistics infrastructure, by way of new postal hubs,
increasing delivery vehicles and digital systems; and diversification into non-postal services were the strategic
themes for the year.
Total Assets for the Bank grew by 8% to reach €1.5 billion.
Review of Financial Performance
The Group delivered a Group Profit before Tax of €23.77 million, representing a 22% increase over the previous
year.
Loans and Advances to Customers rose to €929.11 million, generating a 5% increase in gross interest revenues to
€40.03 million. This mitigated the impact of lower interest income from Treasury activities, reflecting the effect of
declining market interest rates. Interest Expense rose by 28%, driven by both a higher volume of customer
deposits, which exceeded €1,207 million, and the more competitive rates offered on these deposits. As a result,
Net Interest Income decreased by 4% to €26.13 million compared with the previous year.
Net Fee and Commission Income remained stable at €6.37 million.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Chief Executive Officer’s Review (continued)
Group Employee Compensation and Benefits rose by 7% to €28.30 million, while Group operating costs rose
marginally by 1% to €24.58 million, reflecting effective cost management alongside strengthened operational
efficiencies. The Bank’s Cost Efficiency Ratio improved to 52.4% (FYE2024: 54.5%), influenced by revenue growth
that outpaced cost increases arising from human resources and continued investment in IT systems. At Group
level, the ratio stood at 73.8% (FYE2024: 73.5%), reflecting the nature of the postal services industry, which is
characterised by high volumes, low margins and significant human resources needs.
Impairment Allowances, as determined by International Financial Reporting Standard 9 (IFRS 9), stood at €8.15
million. The movement in ‘Expected Credit Losses’ (ECL) resulted in a net release of €0.96 million, compared to a
net release of €0.93 million in the previous year. This release was primarily attributable to the full recovery of
customer exposures previously classified as Stage 3, reflecting the Bank’s effective credit risk management.
Total Assets stood at €1,497.62 million (2024: €1,388.42 million), while Equity Attributable to the Shareholders of
the Bank amounted to €223.72 million (2024: €209.45 million). Net Asset Value (NAV) per share increased to €1.45
Treasury Management
Treasury operations remained central to the management of the Bank’s liquidity position and interest income
generation opportunities. Our Treasury function remained responsible for the prudent deployment of surplus
liquidity and the management of market and liquidity risks in line with the Bank’s risk appetite and regulatory
requirements.
Deployment of excess liquidity was focused on the allocation of assets across cash balances, high-quality liquid
assets, interest-bearing local fixed coupon securities and placements with high-quality counterparties. This
approach supported income generation while maintaining appropriate levels of liquidity and ensuring capital
protection.
The risk management of our Treasury operations is covered by the Bank’s overall governance framework. Market
Risk, Liquidity Risk and Interest Rate Risk arising from Treasury activities are monitored on an ongoing basis
applying established limits and in line with the Bank’s Investment Policy. We maintained a strong liquidity position
through a diversified and stable funding base, conservative liquidity buffers and active asset-liability management,
ensuring continued compliance with both regulatory and internal liquidity requirements.
Risk Management
Effective risk management is fundamental to the Bank’s business strategy, underpinning its resilience, governance
and ability to deliver and maintain sustainable value to stakeholders. The Bank recognises that its operations are
inherently exposed to a wide range of risks and that robust systems, controls and governance are essential to
safeguard its financial stability, reputation and long-term sustainability.
In this respect, the Bank developed a comprehensive enterprise-wide Risk Management Framework designed to
identify, assess, monitor, and mitigate risks in a systematic and consistent manner, and aligned to the Risk Appetite
Statement. This provides a benchmark against which business activities are evaluated and ensures that risk-taking
remains consistent with the Bank’s overarching goals, regulatory requirements and commitment to stakeholder
value. Clearly articulated acceptable levels of risk foster disciplined decision-making. This Statement is periodically
reviewed to remain aligned with the Bank’s strategy, regulatory expectations, and evolving economic conditions.
Defined quantitative limits and supporting buffers safeguard the Bank’s capital, protect depositor funds, and
support sustainable long-term operations. In this way the Bank ensures that risks are managed in a controlled and
consistent manner and maintains accountability for risk exposure, at every level.
A strong risk-awareness culture underpins this Framework. Throughout 2025, the Bank reinforced risk awareness
across the organisation, embedding clear accountability, strengthening escalation practices, and encouraging
proactive identification of emerging risks.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Chief Executive Officer’s Review (continued)
The Bank applies the Three Lines of Defence model as the foundation of its risk governance framework. Business
and operational units constitute the First Line of Defence consisting of operational staff and business units which
are responsible for identifying, managing and controlling risks. The Second Line of Defence includes specialised
functions such as Financial Risk Management, Risk Management and Compliance, providing oversight, monitoring
and challenge to ensure adherence to the Bank’s risk framework and regulatory requirements. The Internal Audit
function acts as the Third Line of Defence, providing independent assurance on the adequacy and effectiveness of
the Bank’s governance, risk management and internal control framework.
At 31 December 2025, the Bank’s Total Capital Ratio (TCR) stood at 19.9%, comfortably above regulatory minimum
requirements. This capital strength supports the Bank’s strategic ambitions while providing a prudent cushion
against adverse market developments or potential supervisory capital increases. The Leverage Ratio remained
robust at 13.4% significantly above the 3% minimum threshold and indicative of a sound, well capitalised balance
sheet.
Liquidity risk continues to be prudently managed, well within established investment and funding policies. The
Bank relies on a diversified and relatively stable liquidity funding base, largely composed of local retail deposits,
with emphasis placed on longer-term tenors. We maintain adequate high quality liquid assets to meet our
obligations under both normal and stressed conditions. The Liquidity Coverage Ratio (LCR) and Net Stable Funding
Ratio (NSFR) stood at 380.5% and 158.5% respectively at year end, well above regulatory minima and within Risk
Appetite boundaries. The Loan to Deposit Ratio of 79.6% reflects a prudent approach to funding and lending
activities.
During the year, the Bank enhanced its operational and ICT resilience, conducting further ICT and cyber risk
assessments, reinforcing outsourcing oversight, improving controls related to business continuity, incident
response, system recovery and simulating phishing campaigns for increased staff awareness. These initiatives
strengthen alignment with evolving regulatory expectations and enhance the Bank’s preparedness against
operational and technology-related disruptions.
We also carried out assessments of physical risks within the broader Climate & Environmental (C&E) risk
framework, which examined its resilience under different scenarios and evaluating potential impacts on the Bank’s
Capital Adequacy. Insights from this work support the Bank’s long term strategic planning and align with emerging
supervisory expectations on climate risk integration.
The Internal Capital Adequacy Assessment Process (ICAAP) and Internal Liquidity Adequacy Assessment Process
(ILAAP) remain core elements of the Bank’s forward-looking planning. Conducted annually, they confirm that
capital and liquidity resources remain adequate given the Bank’s scale, nature and risk profile. Through rigorous
stress testing and reverse-testing exercises we assess the resilience of our buffers under severe yet plausible
scenarios, ensuring preparedness for potential shocks and supporting continued financial stability, even under
stressed conditions.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Chief Executive Officer’s Review (continued)
Human Resources
The new Collective Agreement (2025-2028) with the Malta Union of Bank Employees came into force in 2025. The
Agreement provides enhanced terms and benefits for staff and reflects the Bank’s continued commitment to
provide a supportive work environment which caters for the financial and mental well-being of staff members.
As at year end, our headcount stood at 214, with total Group staff at 1,030. The labour market remains increasingly
competitive and mobile, making the attraction, motivation and retention of talent a continuing priority.
Recruitment programmes were therefore strengthened, with a continued focus on building a diverse workforce
combining experienced professionals with individuals at the early stages of their careers.
We also continued to invest in staff development through structured learning and development initiatives aimed
at enhancing both technical and professional skills.
Training programmes were delivered through a combination of classroom-based sessions, on-the-job learning,
and external courses. Focus was placed on key areas such as risk management, compliance and fraud prevention,
reflecting the evolving regulatory and operational environment.
Our staff remains central to the achievement of business objectives, operational resilience and sustainable
performance.
Projects
During the year, we continued to invest significantly in technology to support operational resilience, business
transformation and regulatory compliance. Investment in technology was made in three main areas: renovation
of core elements of the infrastructure, addressing the specific needs of certain business lines and strengthening
capabilities in regulatory reporting and financial crime compliance.
A key initiative was the implementation of instant payments, which required substantial investment in systems,
processes and controls. This programme also involved the conclusion of agreements with multiple counterparty
service providers to ensure reachability and compliance with applicable European payment standards. The
implementation of instant payments necessitated close co-ordination across business, technology, compliance
and external stakeholders.
We concluded the selection process of a new Wealth Management System that is set to enhance client service
supporting a growing customer base and improve integration with other banking platforms. The selection process
focused on scalability, regulatory alignment, and the ability to support future growth.
We also became a VISA exclusive card issuer. This strategic transition involved extensive operational and
technological effort, including the issuance of new cards to all our cardholder base, updates to card processing
systems and comprehensive customer communications, while ensuring continuity of service and compliance with
scheme requirements.
Concurrently, we advanced the selection of a new core banking system as part of a broader effort to modernise
legacy infrastructure, improve processing efficiency and create a more flexible and resilient operating platform.
This initiative was closely aligned with the selection and enhancement of digital channels systems, aimed at
improving the customer experience across online and mobile platforms while strengthening security, monitoring
and control frameworks.
MaltaPost proceeded with the investment in its delivery channels by way of outlets, electric vehicles as well as
EasiPik Lockers, providing a convenient collection point on a 24/7 basis.
The 2025 Melita gold bullion coins issue, in conjunction with the Central Bank of Malta, was sold out soon after
released.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Chief Executive Officer’s Review (continued)
Corporate Social Responsibility
Our commitment to Corporate Social Responsibility is strongly endorsed by our stakeholders and is centred on
making a positive and lasting contribution to the communities where we operate and which share our values.
We place particular emphasis on preserving and enhancing cultural and historical heritage. We also encourage
and support our staff in their own community involvement, recognising and assisting initiatives undertaken by
those who, on a personal basis, champion worthy social, cultural and charitable causes. Consistent with our values,
these initiatives are undertaken discreetly, rather than by seeking publicity.
The Group also recognises its responsibility to minimise any potential adverse impact of its operations on society
and the environment. As part of our broader corporate social responsibility efforts, we actively pursue initiatives
that support sustainability and environmental protection, such as increasing the use of electric vehicles within our
fleet, waste separation and generation of electricity from renewable sources as well as water conservation. These
measures reflect our commitment to operating responsibly while contributing to a healthier and more sustainable
community.
Outlook
Our strategic priorities for the planning cycle commencing in 2026 are focused on positioning the Bank for
sustainable growth and consolidation by building on our proven strengths. Central to this is a comprehensive
digital transformation programme, including the implementation of a new core banking system, a wealth
management system and enhancement of our digital channels, to improve efficiency and customer experience.
Alongside this, we will continue to pursue prudent balance sheet growth, with particular focus on deposits and
lending, making full and effective use of our branch network and physical presence. We will continue to actively
manage and calibrate our assets to optimise the Bank’s capital resources.
Increasing brand awareness remains a priority, reinforcing our position as a trusted provider of personalised, high-
quality banking services.
These strategic priorities will be underpinned by continued investment in governance, risk and compliance,
ensuring that growth is achieved in line with our cautious approach to business. The successful adoption of
technology, supported by the professional commitment of our staff and streamlined processes that simplify
customer interaction, will be critical enablers. Together, these initiatives will ensure the Bank stays well positioned
to deliver sustainable value over the coming planning cycle.
Signed on behalf of the Bank's Board of Directors on 24 April 2026 by Joseph Said (Chief Executive Officer) as per
the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and
Financial Statements 2025.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report
The Group
The Lombard Bank Group (‘the Group’) consists of Lombard Bank Malta p.l.c. (‘the Bank’), Redbox Limited, and
the MaltaPost p.l.c. Group.
Review of Performance
An overview of the developments in the Group during the year under review, together with an indication of
likely future developments, may be found in the ‘Chief Executive Officer’s Review’ of this Annual Report.
Group profit before tax for the financial year ended 31 December 2025 amounted to €23.8 million (2024: €19.4
million), while Profit attributable to equity holders of the Bank reached €15.4 million (2024: €11.3 million).
Net interest income amounted to €26.1 million, representing a decrease of 4.2% compared with the previous
year. Growth in the lending portfolio led to an increase in interest income from loans and advances to customers.
This was partly offset by lower interest income from Treasury activities, reflecting the impact of lower interest
rates. At the same time, interest expense increased due to higher volumes of customer deposits and more
competitive interest rates offered. Net fee and commission income remained stable at €6.4 million, supported
by the Bank’s various business lines.
Net loans and advances to customers increased by 6.5% to €929.1 million, while customer deposits grew by 7.8%
to €1,207.3 million. Group post tax return on equity for 2025 increased 7.1% (2024: 5.6%). Group total assets
increased to €1,497.6 million (2024: €1,388.4 million). Total capital ratio at 19.9% (2024: 20.0%) exceeded the
minimum regulatory requirements.
The Bank cost efficiency ratio improved to 52.4% (2024: 54.5%), reflecting higher revenues which helped offset
the impact of increased human resources and other operating costs.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Expected Credit Losses (‘ECL’) as defined and determined by International Financial Reporting Standard 9 (IFRS
9), resulted in a net release of €1.0 million compared to a net release of €0.9 million in the previous year. This
release was primarily attributable to the full recovery of customer exposures previously classified as Stage 3,
reflecting the Bank’s effective credit risk management.
FY 2025 was a positive year for MaltaPost p.l.c., with the company continuing to deliver a resilient and positive
performance. The Automated Tariff Revision Mechanism, covering all services under the Universal Service
Obligation, applied for a full financial year and enabled MaltaPost to achieve improved financial planning and
returns. As the sector continued its shift from traditional letter mail to parcel volumes driven by e-commerce
activity, MaltaPost remained focused on strengthening its logistics operations, enhancing its last-mile delivery
network and investing in digital transformation initiatives. MaltaPost continues to be an important contributor
to the Group’s financial performance, registering a pre-tax profit of €6.4 million for FY 2025 (2024: €4.7 million).
Equity attributable to equity holders of the Bank stood at €223.7 million (2024: €209.4 million). Group net asset
value (NAV) per share increased to €1.45 (2024: €1.36), while Group earnings per share (EPS) amounted to €0.10.
Profits after taxation of €16.6 million and €13.5 million for the Group and the Bank respectively, were registered
for the twelve months ended 31 December 2025.
Based on the above, a gross dividend of 3.42 cent per nominal €0.125 share (net dividend of 2.22 cent for a total
amount of €3,436,000) for the twelve months ended 31 December 2025 is being proposed for approval by
shareholders at the 2026 Annual General Meeting, subject to regulatory approval.
Board of Directors and Senior Management
The composition of the Bank’s Board of Directors and Senior Management is shown in the section on ‘Company
Information’ on page 53 of this Annual Report and further information is given in the ‘Statement of Compliance
with the Principles of Good Corporate Governance’.
Risk Management
The Financial Risk Management note to the Financial Statements (note 2), illustrates the process of how the Group
identifies and manages its risks and uncertainties. The main categories of risk described in this note are credit
risk, market risk, liquidity risk, operational risk and capital risk. The same note includes extensive detail of the
processes undertaken by the Bank to manage these risks.
The Directors are required by the Companies Act, 1995 to prepare financial statements which give a true and fair
view of the state of affairs of the Group and the parent company as at the end of each reporting period and of
the profit or loss for that period.
Statement of Directors’ Responsibilities for the Financial Statements
In preparing the financial statements, the Directors are responsible for:
•
ensuring that the financial statements have been drawn up in accordance with International Financial
Reporting Standards as adopted by the EU;
•
selecting and applying appropriate accounting policies;
•
making accounting estimates that are reasonable in the circumstances; and
•
ensuring that the financial statements are prepared on the going concern basis unless it is inappropriate to
presume that the Group and the parent company will continue in business as a going concern.
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Annual Report and Financial Statements 2025
The Directors are also responsible for designing, implementing and maintaining such internal controls as they
deem necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error, and that comply with the Companies Act, 1995 and the Banking Act, 1994. They
are also responsible for safeguarding the assets of the Group and the parent company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The financial statements of the Bank for the year ended 31 December 2025 are included in this Annual Report
and are available on the Bank’s website and on the website of the Malta Stock Exchange (the Officially
Appointed Mechanism). The Directors are responsible for the maintenance and integrity of the Annual Report
on the website in view of their responsibility for the controls over, and the security of, the website. Access to
information published on the Bank’s website is available in other countries and jurisdictions where legislation
governing the preparation and dissemination of financial statements may differ from requirements or practice
in Malta.
Statement of the Directors pursuant to Capital Markets Rule 5.68
The Directors confirm that, to the best of their knowledge:
•
the financial statements give a true and fair view of the financial position of the Bank as at 31 December
2025, and of its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards as adopted by the EU; and
•
the Annual Report includes a fair review of the development and performance of the business and the
position of the Bank, together with a description of the principal risks and uncertainties that they faced.
Investment Services Rules for Investment Service Providers
In accordance with R1-2.2.3 of the Investment Services Rules for Investment Service Providers regulated by the
Malta Financial Services Authority, licence holders are required to disclose any regulatory breaches of the Rules
or other regulatory requirements in this Annual Report. The Directors confirm that during the reporting period,
there were no breaches of the Investment Services Rules or other regulatory requirements, which were subject
to an administrative penalty or other regulatory sanction other than those in the public domain.
Information provided in accordance with Capital Markets Rule 5.70.1
There were no material contracts to which the Bank, or any of its subsidiaries were a party, and in which any one
of the Bank’s Directors was directly or indirectly interested, except for transactions disclosed in the notes to the
financial statements.
Capital Markets Rules – Disclosures
In terms of Capital Markets Rule 5.64, the Directors are required to disclose the following information.
As at 31 December 2025, the authorised share capital of the Bank was €37,500,000 divided into 300,000,000
Ordinary Shares of a nominal value of €0.125 each. As at that date, the issued and fully paid-up share capital of the
Bank was €19,321,532.88 divided into 154,572,263 ordinary shares of a nominal value of €0.125 each, all of one
class.
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Annual Report and Financial Statements 2025
Directors’ Report (continued)
Amendments to the Memorandum and Articles of Association of the Bank are effected in conformity with the
provisions in the Companies Act, 1995. Furthermore, in terms of the Articles of Association:
•
Directors may be authorised by the Bank to issue shares subject to the provisions of the Memorandum and
Articles of Association and the Companies Act;
•
Directors may decline to register the transfer of a share (not being a fully paid share) to a person of whom
they do not approve;
•
Directors may decline to recognise any instrument of transfer, unless accompanied by the necessary
evidence;
•
no registration of transfers of shares shall be made and no new particulars shall be entered in the register of
members when the register is closed for inspection; and
•
the Bank may, from time to time, by extraordinary resolution reduce the share capital, any Capital Reserve
Fund, or any Share Premium Account in any manner.
Currently there are no matters that require disclosures in relation to:
•
holders of any securities with special rights;
•
employee share schemes;
•
restrictions on voting rights or relevant agreements thereto; or
•
significant agreements to which the Bank is a party, and which take effect, alter or terminate upon a change
of control of the Bank.
The Remuneration Report on page 48 refers to the financial contributions towards retirement gratuities that the
Board of Directors approves from time to time. The same Board had previously resolved that a retirement gratuity
be eventually paid on an ex-gratia basis to the Chief Executive Officer on his retirement.
The rules governing the changes in Board membership are contained in the ‘Statement of Compliance with the
Principles of Good Corporate Governance’.
Shareholders holding five per cent (5%) or more of the share capital of the Bank:
Shares in Lombard Bank Malta p.l.c.
31 December 2025
31 March 2026
National Development & Social Fund (NDSF)
49.01%
49.01%
Virtu Holdings Ltd
9.89%
9.89%
First Gemini p.l.c.
5.31%
5.31%
13
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Directors’ Interest in Group Companies
Joseph Said, who is a Director of the Bank, is also a Director of the following companies that have a
shareholding in the Group as follows:
Shares in Lombard
Bank Malta p.l.c.
Shares in MaltaPost p.l.c.
at 31 December 2025
at 31 December 2025
Safaco Ltd
147,611
96,991
First Gemini p.l.c.
8,201,836
78,775
Shares in Lombard
Bank Malta p.l.c.
Shares in MaltaPost p.l.c.
at 31 March 2026
at 31 March 2026
Safaco Ltd
147,611
96,991
First Gemini p.l.c.
8,201,836
78,775
In addition, Joseph Said holds preference shares in Safaco Ltd.
Audit & Risk Committee
The Audit & Risk Committee is composed of non-executive Directors and is intended to ensure effective internal
controls, compliance and accountability. The Committee also acts to ensure that high ethical standards are
maintained, as explained in the ‘Statement of Compliance with the Principles of Good Corporate Governance’ in
another section of this Annual Report.
Auditors
PricewaterhouseCoopers have expressed their willingness to continue in office as auditors of the Bank and a
resolution proposing their reappointment will be put at the forthcoming Annual General Meeting.
Events occurring after the end of the accounting period
There were no significant events affecting members of the Group which have occurred after 31 December 2025.
Other Information
Non-Financial Statement
The Companies Act requires that a non-financial statement be included in this report containing information on
the Group’s development, performance, position and impact of its activity, relating to, as a minimum,
environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters and
this in the form of particular disclosures on certain aspects.
14
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
1.
Business Model
The Bank is a Malta-based bank and for financial stability purposes is considered by the Central Bank of Malta
as a core domestic bank, catering mostly for the local economy, and therefore actively supporting economic
sectors in their activities. The lending activity of the Bank consists mainly of Commercial and Retail Lending.
Commercial Lending is largely characterised by loan facilities to the commercial sector with short-to-
medium-term maturities. Retail Lending consists mainly of home loan facilities with medium-to-long-term
maturities. Asset diversification strategy is intended to increase the resilience of the Bank’s loan book and
its lending capacity. The Bank is a Tied Insurance Intermediary for long-term insurance business and can
therefore provide its Home Loan customers a comprehensive service offering. Lending is funded by a
diversified deposit base and underpinned by solid financial fundamentals and stakeholder value. The Bank
has never relied, and does not intend to rely, on the interbank market for its funding requirements. In line
with strategic priorities the Bank seeks further prudent growth, while continuing to adhere to the highest
standards of professional conduct, as evidenced by the quality of its assets and relationships. The Bank
undertakes risk review processes to ensure that business is in line with its risk appetite frameworks and its
compliance standards, which themselves are also reviewed periodically in light of regulatory developments
and emerging risks. The Bank firmly believes that physical presence remains an important element of its
delivery channels, more so in respect of customers who demand a personalised service, being the service
delivery ethos of the Bank. In this manner the Bank seeks to foster new relationships across a wider
demographic spectrum. Presently the Bank operates 11 branches. A further 2 Bank owned properties are
earmarked to open as branches at the opportune time.
The Bank’s business model seeks to build stakeholder value by delivering financial services and solutions in
a prudent manner and by setting the highest standards in professional behaviour and implementing the
highest standards of compliance. The Bank’s competitive strengths are in its unique business operating
model, its conservative outlook towards risk and its robust fundamentals. The characteristics of its business
model give the Bank a competitive advantage, enabling it to continue to deliver value to all its stakeholders
in a challenging environment which remains highly competitive and increasingly regulated. The Bank’s brand,
which stands for the provision of personalised and tailored financial services, remains strong.
For the forthcoming planning cycle, the Bank’s strategic priorities will be consolidation and sustainable
growth. Consolidation strategy leverages the Bank’s proven business model, strong financial track record and
a trusted brand. The sustainable growth agenda will centre on sustaining profitability, leveraging favourable
economic conditions and delivering on our core strategic priorities, mainly improving operational efficiency,
enhancing customer engagement and investing in digital capabilities, thereby reinforcing resilience and
competitive advantage.
The Bank’s subsidiary, MaltaPost p.l.c. (‘MaltaPost’) is Malta’s leading postal services company, being the
sole licensed Universal Service Provider of postal services on the Maltese Islands in terms of the Postal
Services Act (Chapter 254 Laws of Malta) and under the auspices of the Universal Postal Union on behalf of
the Government of Malta. MaltaPost is regulated by the Communications Authority. The Company operates
a network of 7 Postal Hubs, 40 Post Offices and 19 Sub-Post Offices around Malta and Gozo providing an
extensive range of postal and financial services.
Postal services remain characterised by a decline in Letter Mail volumes and a shift to e-commerce activities,
which now have become a key driver of growth. Meanwhile, MaltaPost continues to pursue its diversification
into logistics, document management, insurance and financial services. In insurance, MaltaPost has a 25%
shareholding in IVALIFE Insurance Limited, a company licensed to conduct long-term business of insurance
and a 49% shareholding in PostaInsure Agency Limited, an insurance agency for MAPFRE Middlesea p.l.c.
Document management services are offered through a fully owned subsidiary, Tanseana Limited. While
MaltaPost remains committed to be the trusted postal and logistics operator offering a comprehensive
product portfolio, these investments in non-postal sectors are intended to supplement income streams from
the core activity.
15
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
As evident from the above disclosures, there were no notable changes to the core business strategies and
business models of Group entities.
2.
Anti-Corruption and Bribery Matters
The Group remains committed to a zero-tolerance policy to bribery and corruption, financial crime and
breaches of the relative laws and regulations. The Group developed and maintains robust policies designed
to prevent and detect potential bribery and corruption in the form of an Anti-Bribery and Corruption (‘ABC’)
Policy and Whistleblowing Policy.
The implementation of these policies is by means of processes and respective controls, which are embedded
in the Group’s structures and manuals in order to ensure that staff members act responsibly within the
workplace and outside. Guidelines and instructions regarding ABC and Whistleblowing are applicable and
available to all staff members. All staff members, including Directors and, where relevant, associated persons
are required to comply with the principles outlined. The Group supports a ‘speak-up attitude’ to encourage
reporting of concerns relating to what might appear to be suspected illegal, unethical or otherwise improper
acts or their concealment. The same standards are expected from any third parties providing services for or
on behalf of the Group. Staff members who fail to comply with the Group’s policies and standards may face
disciplinary action. Training sessions keep staff members abreast of their respective obligations at all times.
The Risk Management and Compliance functions exercise oversight of the implementation of respective
Policies, the former by including ABC in risk assessments and the latter by ensuring constant standards of
compliance. The Risk and Compliance functions also work together to ensure the proper functioning of these
policies, while the Internal Audit reviews results. Matters arising, if any, out of the adoption of these policies
are reported by the Compliance function in its reports to the Audit & Risk Committee and Board of Directors.
Policies are reviewed annually, or more often as required, by the relative business and internal control
functions with suitable recommendations, as is necessary, made to the Board of Directors. During the year
under review, there were no reported cases on the basis of the abovementioned policies and therefore no
necessary investigations.
3.
Social and Employee-related Matters
Social and employee matters are given full attention by the Group. The Group’s human capital is a key
resource for the carrying out of business, having an average of 1,000 employees throughout the year. The
ability to attract and retain human resources of the right skill-mix and experience condition to a large extent
the Group’s performance. The risk of not attracting or retaining the appropriate quality staff in line with the
Group’s business needs is mitigated generally by the approach to managing this resource. In this regard the
Group remains committed to fostering a culture that values common interest, inclusivity and both social and
mental well-being, enabled by a number of supporting measures. 38% of the MaltaPost workforce consists
of foreign nationals.
New Collective Agreements were signed by both the Bank and MaltaPost p.l.c., which between them account
for the larger part of the staff complement of the Group. The Collective Agreements set the conditions of
work and generally regulate the employer/employee relationship. The Agreements make available a number
of benefits to staff members including days of special paid leave additional to those stipulated at law, such
as Birthday Leave, Study Leave, Special Circumstances Leave and extended Bereavement Leave. Agreements
improve on the conditions of employment set at law, underlining the Group’s dedication to continually
improving working conditions and ensuring a fair and equitable work environment. The Group enjoys
harmonious industrial relations with the full co-operation of respective trade unions, staff members and their
representatives.
16
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Oversight of key indicators, by which human resource performance is evaluated is maintained by the Human
Resources function and reported to senior management and the Risk Management function as appropriate
for suitable action if and as required. Performance management takes into consideration leadership and
other competencies required by particular positions as well as the Group’s corporate values. The Group does
not place quotas on the number of staff members whose personal circumstances require them to work on
reduced hours or need to absent themselves from work for an extended period of time on Child Care Leave
or other absences related to immediate family matters. In this regard, the Group is committed to supporting
work-life balance.
The Bank also extends a number of products and services to Group staff members on favourable terms
including, among others, advantageous terms on home loans and other personal borrowing. The Group
keeps an active line of communication with staff members through circulars, branch/department staff
meetings and one-to-one meetings among others and is committed to maintaining a working environment
where staff is valued, respected and supported to fulfil potential.
All members of staff are treated on equal terms with regard to career development and appointments and
the Group supports and practices gender equality and diversity. The Group, however, does not set specific
targets in this regard, as it firmly believes that progress is dependent largely on skill, competencies, attributes
and performance, rather than gender and/or other diversity factors. Being the largest employer in the Group,
MaltaPost p.l.c. retained the Equality Certification Mark underscoring its dedication to upholding non-
discriminatory practices.
The Group abides by all applicable laws, rules and regulations relating to employment. While conscious of
the fact that the legal obligations are the minimum acceptable standard, the Group strives to surpass
standards in this area and continues to increase awareness among staff. MaltaPost p.l.c., for example, has
for the past 10 years operated a Document Management Services Centre, located in Xewkija, Gozo, with a
staff complement in the majority composed of persons with disabilities, showcasing the strong commitment
to inclusivity and to creating a positive impact in society. Remuneration levels are regularly reviewed to
ensure that they encourage retention and are in line with the Group’s Remuneration Policies.
Investment in human capital was and still remains a fundamental pillar of sustainability and to this effect the
Group has committed to invest in developing the skills of its workforce through both internal and external
training.
As in previous years, during 2025, Group staff members participated in several training sessions and on-the-
job training programmes. Training is driven by the requirement to meet identified training needs rather than
by the pursuit of specific numerical targets, which are therefore not set.
The Group remains committed towards extending its support to a number of charitable, social and cultural
organisations.
Regarding consumer relations and protection, the Group adheres to all respective regulatory requirements
such as, inter alia, those arising from Markets in Financial Instruments Directive II (MiFID II), as also reflected
in the MFSA Conduct of Business Rulebook, the Cross Border Payments Regulation II (CBPR II), Payment
Services Directive II (PSD II), Payment Accounts Directive (PAD) and Banking Rule BR/22 Complaints Handling
Procedures for Credit Institutions Authorised Under the Banking Act, 1994.
The Group Complaints Management policies and relevant details on respective web sites provide the
information required for a consumer to submit complaints. During 2025 the Bank had one complaint brought
in front of the Arbiter for Financial Services. Following mediation, the case was heard by the Arbiter, who
found in favour of the Bank. In the case of MaltaPost p.l.c., customer complaints accounted for 0.00002% of
all mail items handled.
17
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Group customers are free to select and use the preferred delivery channel and there are no incentives to
move customers away from physical delivery channels. Maintaining a presence in core community areas is
given importance so as to facilitate accessibility and delivery of important services to the community.
4.
Health and Safety
Maintaining the highest levels of health and safety and physical security of staff remains of paramount
importance. Measures for the management of health and safety are adopted by way of standards set in
Collective Agreements, policies, appointment of Health & Safety Officer and appointment of local first aiders
and fire wardens. Regular checks of related processes and systems are carried out with outcomes reported
accordingly, for action as and if required. Furthermore, health and safety risk assessments are carried out to
ensure that situations that may pose risks to the health and safety of staff and others on Group premises are
identified and mitigated. Occupational health awareness training is also provided. No Health and Safety
incidents were reported at the Bank, while MaltaPost Group recorded 47 lost time injuries resulting in a ‘Lost
1
Time Incident Rate’
of 6.56. Enhancement of safety measures across the Group continue to be implemented.
Some Group staff benefit from personal accident insurance cover and others benefit from private health care
insurance, as well as death in service cover.
5.
Human Rights
The Group is aware of the importance of ensuring that human rights are upheld across its operations. In this
respect the Group carries out its business without discrimination, respecting the standards set by national
law or higher standards as applicable, such as effective information and consultation processes, particularly
where these affect the place and conditions of work. Business conduct policies are in place to support this
stance, which extend also to counterparties. The Group avoids business with counterparties operating in
economic sectors that may be linked to or present a significant risk to violation of human rights or to social
vices. Additionally, the Bank’s AML/CFT processes, inter alia, assist in the identification of the proceeds of
potential human rights abuses. Any suspicions resulting from these processes are reported to law
enforcement as per current legislative requirements. Services that promote financial inclusion have been
introduced also by way of the PostaPay&Save account which serves as a basic payment account. With circa
13,500 active accounts, this account was introduced to encourage financial inclusion well before this was
required by regulation. The account allows persons who may have been unable to open bank accounts to
enjoy the facilities of basic payment accounts with relative services.
The Group did not encounter any issues, claims or reports on any human rights related matters and/or
violations. A grievance procedure is in place to provide effective remedies as and when needed. The Group
is committed to investigating any reports of human rights violations. As previously stated, the Bank has in
place a Whistleblowing Policy which covers among others, related issues. In accordance with this Policy
reports are submitted to Risk Management and Internal Audit. During the year ending 2025, no reports in
accordance with this Policy were submitted.
Premises, including self service areas and ATMs, meet all accessibility regulations, apart from where physical
restrictions make this impossible, in which case discussions with the relevant regulatory bodies are held.
__________________________
1
The Lost Time Incident Rate (LTIR) is calculated as the number of work-related incidents resulting in lost time per two million hours worked.
This multiplier reflects standard practice within MaltaPost to ensure comparability within the postal and logistics sector.
18
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
6.
Environmental Matters
The Group is mindful of the important role it has to play to contribute towards a sustainable environment and
economy.
During 2025, the Bank launched two new Green Home Loan products, one aimed at first-time and second-time
buyers purchasing a new home and another for renovations.
The Group makes use of 426 PV panels which in 2025 contributed to circa 27% (Bank) and 7% (MaltaPost) of the
electricity usage generated from renewable sources. Cards issued as part of the Bank’s credit and debit card
programmes are manufactured from fully recycled materials. Improvements in waste separation facilities and
recycling processes have also been implemented, supported by improved data collection processes that enables
better monitoring of the Group’s waste management performance.
MaltaPost continued increasing the number of electric vehicles to 172. These vehicles are now operational
across over 50 towns and villages in Malta and Gozo, eliminating the need for an additional 90 or more fossil
fuel vehicles, resulting in the avoidance of more than 200 tonnes of CO
2
emissions.
The Group continues with its efforts to preserve buildings of architectural importance now serving as modern
and functional branches/offices. ‘Restoration with respect’ continues to be the Group’s motto when acquiring
and renovating buildings of architectural heritage value, delivering them back to society in their original
splendour.
Preservation and reuse of such property reduce resources and material consumption, generate less waste and
consume less energy than developing greenfield and/or brownfield sites.
MaltaPost p.l.c. runs a postal museum also in a restored building in Valletta housing a collection of artefacts
related to Malta’s postal history. Additions to the collection of artefacts are made as opportunities arise, thereby
enriching further the country’s postal heritage.
The Group’s business is mostly carried out in Malta. The Malta climate-related risks are not expected to have a
consequence on the impairment or fair value of assets nor to give rise to credit losses and/or potential provisions
or contingent liabilities. Therefore, the impact of climate change on the financial performance is not expected
to be material. That said, like any other business the Group is however not shielded from the economic risks of
climate change, which in turn can have an impact on the financial performance.
The Bank is mindful of the increasing requirements emanating from the Environmental, Social & Governance
(ESG) regulatory framework. It continues following developments closely, improve understanding so as to
further determine how ESG considerations influence the manner in which it carries out its business and the
extent to which such considerations are incorporated within its risk management framework. ESG initiatives
geared towards the Bank meeting with regulatory expectations remain on-going. The ESG Working Group
continues to coordinate, advise and provide recommendations and related actions on ESG matters. This Working
Group is also responsible for ensuring compliance with regulatory expectations and liaising with Senior
Management, the Board-appointed Committees and the Board of Directors in this regard. The Group continues
to seek further enhancement in its data collection efforts so as to further widen the scope for the purposes of
ESG credentials. In this respect, the Bank developed an in-house methodology that assesses and quantifies the
Bank’s exposure to physical risks emanating from the climate and environment.
19
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
7.
Risk Reporting
An established Enterprise-Wide Risk Management Framework that forms the foundation of its risk reporting
activities is in place. This Framework undergoes constant evaluation to ensure its relevant with the business
environment, regulatory demands, and industry best standards.
Clear policies, procedures, and governance mechanisms, including a simple organisational structure with well-
defined reporting channels are in place. Established processes allow for the identification, monitoring, managing
and reporting risks, enhanced with strong internal controls that support our first line to safeguard resources and
follow internal guidelines.
To support these efforts, a number of Policies supporting various risk areas are in place. These are reviewed at
least on a yearly basis. These Policies form the basis of alignment of our Risk Appetite, fostering stakeholder
value while successfully executing our Strategy. The Risk Appetite specifies the risk level the Bank is willing to
accept to achieve its objectives and is subject to least a yearly review based on in-depth analysis of the risk
profile, business, priorities, economic trends, and regulatory shifts.
The Group faces various risks, with the primary ones listed and detailed below.
Capital Risk – Capital risk stems from the potential shortfall in capital to sustain operations, satisfy regulatory
requirements, fund growth activities, provide shareholder returns, and cover unexpected losses. Capital
levels are monitored continuously against regulatory and internal Risk Appetite limits. Where required, a
thorough capital planning process supports this, aligned with the Bank’s risk profile and regulatory needs.
Risk-weighted ratios capital ratios are reinforced by a volume-based leverage ratio to prevent excessive
leverage. (see Notes to the Financial Statements note 2.7).
Credit Risk – Credit risk emerges from declining credit quality of customers or counterparties, should they
default or fail to meet their existing obligations. Credit risk represents the largest risk due to the significant
exposure in our lending and securities portfolios, though our exposures to credit institutions are considered
low. Before approving facilities, repayment capabilities is thoroughly assessed, with tangible collateral
normally required. Collateral is reviewed regularly, ensuring compliance sanction letters, and ensuring
suitable coverage. (see Notes to the Financial Statements note 2.3).
Liquidity Risk – Liquidity risk results when the Bank fails to honour existing or anticipated obligations on time.
Positions are monitored against regulatory and internal Risk Appetite limits. The Bank’s liquidity profile is
managed by its Assets and Liabilities Committee, ensuring timely funding and cash flows, while oversight is
carried out by the Risk Management Department. The Bank holds ample liquidity buffers and stable funding,
ensuring that key metrics such as the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR)
continue to remain well above required levels. (see Notes to the Financial Statements note 2.5).
Market Risk – Market risk results from unfavourable shifts in interest rates, currencies, spreads, or equity
prices resulting in possible declines in interest income or adverse movements in asset and liability values.
The Bank does not maintain a Trading Book, so market risk is mainly limited to movements in interest rate,
foreign exchange, and equities. Measures are in place to mitigate the risks arising from adverse market
movements. Foreign exchange risk is mitigated via a natural hedge strategy whereas equity risk is negligible
since the Group’s equity is less than 1% of total assets. (see Notes to the Financial Statements note 2.4).
Macroeconomic and Market Conditions Risk – This covers negative economic shifts domestically or globally
that may harm business activity, asset quality, and performance. Prolonged downturns could significantly
impact financial performance and asset quality.
20
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Non-Financial Risks – These include operational, financial crime, compliance, fraud, and IT issues from
people, processes, or failed systems. These risks are thoroughly described in the Risk Management Policy
and the Risk Appetite Statement. These are also benchmarked against established parameters and reviewed
periodically.
Due to unpredictability nature of these risks, adequate insurance cover is in place. Also, as part of Capital
Risk management, a capital charge for unseen losses is held. (see Notes to the Financial Statements note
2.6).
Regulatory Compliance Risk – This risk arises from potential penalties, fines, or reputational harm due to
breaching regulations, codes of conduct, or best practices. Oversight of this risk is carried out by the
Regulatory Compliance Function, that acts within the second line of defence. The Bank fosters a culture that
promotes compliance through the organisation. The Function also serves as the central point for all
interaction with regulatory and supervisory bodies.
Financial Crime Compliance Risk – Financial Crime Compliance (FCC) Risk encompasses money laundering,
terrorist financing, fraud, bribery, abuse, insider trading, and sanctions violations. The Bank is committed to
combatting financial crime, ensuring that its products are not exploited for these types of risks. Adequate
policies and procedures are in place regarding the Bank’s appetite regarding customer onboarding, business
activities, and jurisdictions as per its Risk Appetite.
Information Security Risk – Information & Cyber Security Risk relates to potential losses arising from failures
in the confidentiality, integrity, availability, and reliability of data, systems, and information. Given the
pervasive role of IT, this risk impacts all other risk areas and requires an integrated management approach.
The Bank has established a formal ICT Risk Management Framework covering all ICT systems, infrastructure,
and data to minimise business disruption, protect sensitive information, and ensure regulatory compliance.
This framework is supported by Board-approved policies and procedures, including Information & Cyber
Security, Incident Management, Communication, Cloud Security, and ICT Third-Party Management policies,
as well as appropriately selected staff, suppliers, and technologies.
Recognising that all systems are inherently vulnerable, the Bank maintains business continuity and disaster
recovery arrangements. A Business Continuity Policy ensures the availability of systems supporting critical
functions through defined Recovery Time Objectives (RTOs) and Recovery Point Objectives (RPOs).
Additionally, a Data Protection Policy governs the lawful processing of personal data and ensures that
information is legitimate, secure, appropriately classified, retained, and managed in line with legal and
business requirements.
ESG Risks – These arise from Environmental, social, and governance matters, including climate change, social
matters, and human rights violations. Multiple data sources aid in the assessment and reporting of these
risks as data becomes available.
21
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Key Performance Indicators (KPIs)
Board-approved financial and non-financial KPIs in the Risk Appetite Statement are monitored regularly by
the Risk Management Department and reported to the Audit & Risk Committee for continuous oversight.
A selection of key metrics as at 31 December 2025 are presented hereunder.
Solvency
TCR
19.9%
Leverage
13.4%
Liquidity
LCR
380.5%
NSFR
158.5%
Profitability
ROAE*
7.1%
Asset Quality
NPL
4.7%
*After tax
KPIs appear in a risk scorecard using the established “traffic light approach” with the end of period metric
compared to the limits set out in our Risk Appetite Statement.
Additional Regulatory Disclosures
The Bank has prepared a separate Pillar 3 Disclosures Report 2025 in accordance with Banking Rule BR/07/2024
- Publication of Annual Report and Audited Financial Statements of Credit Institutions Authorised Under the
Banking Act 1994 as well as the requirements under Part Eight of Regulation (EU) 2019/876 which amends
Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential
requirements for credit institutions and investment firms (‘Capital Requirements Regulation’). This said Report
provides further detailed information on the Bank’s risk profile, risk management practices, capital adequacy,
governance arrangements and remuneration framework. It also includes disclosures on risk measurement
methodologies and regulatory capital requirements. This Pillar 3 Disclosures Report is intended to enhance
transparency and is available for viewing on the Bank’s website.
Consolidated disclosures pursuant to Article 8 of the EU Taxonomy Regulation
In order to achieve the targets established by the European Union (‘EU’) of reaching net zero greenhouse gas
(‘GHG’) emissions by 2050, with an interim target of reducing GHG emissions by 55% by 2030, compared to 1990
1
levels, the EU has developed the EU Taxonomy Regulation
(‘the EU Taxonomy’). This is a classification system
which establishes the criteria for determining whether an economic activity qualifies as environmentally
sustainable, in terms of six environmental objectives against which entities assess whether economic activities
qualify as environmentally sustainable.
To qualify as such, an economic activity must be assessed to substantially contribute to at least one of these
environmental objectives, whilst doing no significant harm to the remaining objectives. This is achieved by
reference to technical screening criteria established in delegated acts to the EU Taxonomy. The economic activity
is also required to meet minimum safeguards established in the EU Taxonomy.
1
EU Regulation 2020/852
22
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
The six environmental objectives established by the EU Taxonomy are the following, where climate-related
2
environmental objectives (1-2 below) are established in the Climate Delegated Act
(‘CDA’), whilst non-climate
3
environmental objectives (3-6 below) are established in the Environmental Delegated Act
(‘EDA’).
1. Climate change mitigation (‘CCM’)
2. Climate change adaptation (‘CCA’)
3. Sustainable use and protection of water and marine resources (‘WTR’)
4. Transition to a circular economy (‘CE’)
5. Pollution prevention and control (‘PPC’)
6. Protection and restoration of biodiversity and ecosystems (‘BIO’)
The EC adopted a Delegated Act supplementing Article 8 of the Taxonomy Regulation (‘the Disclosures Delegated
Act’) in 2021, which establishes the disclosure requirements of entities within the scope of the Taxonomy
Regulation. At this stage, this solely comprises entities subject to an obligation to publish non-financial
information pursuant to Article 19a or Article 29a of Directive 2013/34/EU (being those entities subject to the
Non-Financial Reporting Directive, ‘NFRD’).
In July 2025, the EC published a new Delegated Act amending Commission Delegated Regulation (EU) 2021/2178
(disclosures information and presentation) as regards the simplification of the content and presentation of
information to be disclosed concerning environmentally sustainable activities and Commission Delegated
Regulations (EU) 2021/2139 and (EU) 2023/2486 as regards simplification of certain technical screening criteria
for determining whether economic activities cause no significant harm to environmental objectives
In accordance with the newly published Delegated Act, and the Draft Commission Notice published by the EC in
December 2025 on the interpretation and implementation of certain legal provisions of the Disclosures
Delegated Act under Article 8 of the EU Taxonomy Regulation, as amended by the Omnibus Delegated Act, on
the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets (fourth notice),
specifically FAQ 5, the Bank avails itself of the opt out allowed to financial undertakings for financial year ending
31 December 2025 on the publication of taxonomy disclosures on the basis that no activities are claimed as
being associated with economic activities that qualify as environmentally sustainable under Articles 3 and 9 of
Regulation (EU) 2020/852 (the Taxonomy Regulation).
Despite the above, the Group acknowledges that the opt out applies solely the financial undertakings in scope
of taxonomy reporting and does not extend to non-financial undertakings. Therefore, given that the Bank’s
subsidiary, MaltaPost p.l.c, is classified as an NFRD entity, it remains obligated to report in accordance with the
Disclosures Delegated Act.
The following sections detail the disclosures obligations pursuant to Article 8 of the Taxonomy Regulation on
behalf of MaltaPost plc and its subsidiaries (‘MaltaPost Group’) as a parent non-financial undertaking.
Furthermore, at EU level, the NFRD has been replaced by the Corporate Sustainability Reporting Directive
(‘CSRD’). Whilst the legislative amendments transposing the original Corporate Sustainability Reporting
Directive (‘CSRD’) framework into Maltese law have been published, the commencement notice bringing these
provisions into force has not yet been issued.
In the interim, the Omnibus I Directive, which entered into force on 18 March 2026, is expected to result in
further revisions to national legislation to reflect the simplified reporting requirements and increased size
thresholds for companies in scope of such reporting obligations.
2
Commission Delegated Regulation 2021/2139
3
Commission Delegated Regulation 2023/2486
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Going forward, as from financial years starting 1st January 2026, the Disclosures Delegated Act will apply only
to those companies within the scope of the CSRD, with the Group not meeting the thresholds approved in the
Omnibus Directive.
Activities Overview
MaltaPost Group is required to disclose the share of its turnover, capital expenditure (CapEx) and operating
expenditure (OpEx) for its non-financial subsidiaries, which are associated with taxonomy eligible and taxonomy
aligned economic activities for all six environmental objectives.
Proportion of Taxonomy-eligible and Taxonomy-aligned economic activities in total turnover, CapEx and
OpEx in FY 2025
FY 2025
Total
Proportion of
Proportion of
Proportion of
(€000)
Taxonomy-eligible
Taxonomy-
Taxonomy non-
(non-aligned)
aligned economic
eligible economic
economic
activities
activities
activities
Turnover
42,662
85%
0%
15%
CapEx
4,338
73%
0%
27%
OpEx
1,473
83%
0%
17%
MaltaPost also provides comparatives for its financial year ended 30 September 2024:
Proportion of Taxonomy-eligible and Taxonomy-aligned economic activities in total turnover, CapEx and
OpEx in FY 2024
FY 2024
Total
Proportion of
Proportion of
Proportion of
(€000)
Taxonomy-eligible
Taxonomy-
Taxonomy non-
(non-aligned)
aligned economic
eligible economic
economic
activities
activities
activities
Turnover
40,144
86%
0%
14%
CapEx
2,104
42%
0%
58%
OpEx
1,401
82%
0%
18%
Definitions
‘Taxonomy-eligible economic activity' means an economic activity that is described in the delegated acts
supplementing the Taxonomy Regulation (that is, either the CDA or the EDA), irrespective of whether that
economic activity meets any or all of the technical screening criteria laid down in those delegated acts.
The CDA is structured in a way that Annex I contains a list of activities and the respective technical screening
criteria in relation to the CCM objective, whereas Annex II relates to the CCA objective, with potentially different
activities being considered in the different annexes.
The EDA similarly comprises respective lists of activities and technical screening criteria in relation to the non-
climate environmental objectives therein.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
‘Taxonomy-aligned economic activity’ refers to a Taxonomy-eligible activity which complies with the technical
screening criteria as defined in the CDA or EDA and it is carried out in compliance with the minimum safeguards
regarding human and consumer rights, anti-corruption and bribery, taxation and fair competition. To meet the
technical screening criteria, an economic activity must contribute substantially to one or more environmental
objectives while ‘doing no significant harm’ to any of the other environmental objectives. Furthermore, the
activity must be performed in a manner that meets minimum safeguards in relation to human rights, bribery
and corruption, fair competition and taxation.
‘Taxonomy non-eligible economic activity’ means any economic activity that is not described in the delegated
acts supplementing the Taxonomy Regulation.
Taxonomy eligibility of turnover generating
MaltaPost Group has examined all economic activities which it carries out to determine which of these are
Taxonomy eligible in accordance with Annexes I and II to the Climate Delegated Act and Annexes I to IV to the
Environmental Delegated Act. The table below indicates the activities performed by MaltaPost Group which
have been identified as Taxonomy eligible and the environmental objective with which the activity may be
associated. Given that none of MaltaPost Group’s economic activities in terms of turnover, CapEx, or OpEx are
Taxonomy aligned, no further detail with respect to Taxonomy alignment is provided.
Taxonomy eligible activities were identified by extracting the total turnover, CapEx and OpEx required to be
captured in the denominators of the respective KPIs and assessing the NACE code of the activities to which the
amounts relate. MaltaPost Group then assessed which of the identified NACE codes relate to activities included
within the annexes to the Climate Delegated Act. For the identified eligible activities, MaltaPost Group then
began the process to assess them against the technical screening criteria.
Through the activities highlighted in the following table, MaltaPost Group generates turnover and may incur
both CapEx and OpEx for such activities:
Economic Activity
Description
Turnover
CapEx
OpEx
Environmental
NACE
(%)*
(%)*
(%)*
objective(s)
code
6.4 Operation of
Postal revenue earned
personal mobility
through delivery of
11% 0% 0% CCM, CCA H53.10
devices, cycle logistics
post on foot and by e-
pedal cargo bikes
6.5 Transport by
Postal revenue earned
motorbikes,
through delivery
passenger cars and
services by
light commercial
motorbikes, cars and
55% 19% 75% CCM, CCA H53.10
vehicles
light commercial
vehicles including
electric vehicle
quadricycles
6.15 Infrastructure
Postal revenue earned
enabling low-carbon
through infrastructure
road transport and
and related activities in
public transport
sorting centres and
19% 0% 0% CCM, CCA H53.10
hubs essential to
minimise the transport
activities required
* of the total turnover, CapEx and OpEx included in the denominator of the respective KPI
Economic activities classified under activity 6.4 ‘Operation of personal mobility devices, cycle logistics relate to
on-foot deliveries and e-pedal cargo bikes, being two delivery methods used in MaltaPost Group’s Last Mile
Delivery which are eligible under such activity.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Economic activities classified under activity 6.5 ‘Transport by motorbikes, passenger cars and light commercial
vehicles’ relate to motorcycles, delivery vans and light cargo electric vehicles (Micro Logistics Electric Vehicles),
which are another three delivery methods used in MaltaPost Group’s Last Mile Delivery which are eligible under
this activity. In this respect, the CapEx classified as Taxonomy eligible entails capital investments pertaining to
the execution of such turnover-generating economic activity. Such CapEx relates to motor vehicle additions
throughout the year, whilst OpEx in this respect pertains to direct non-capitalised costs incurred in the day-to-
day servicing of such motor vehicles, namely running expenses relating to repair and maintenance, and short-
term operating leases.
Economic activities classified under activity 6.15 ‘Infrastructure enabling low-carbon road transport and public
transport’ relate to infrastructure and related activities in MaltaPost Group’s sorting centre and hubs, which are
considered essential to enable the efficient transport of letters, small packets and parcels, making it a driver in
minimising the required transport activities in the postal business.
The MaltaPost Group also operates four heavy vehicles in scope of activity 6.6 ‘Freight transport services by
road’, however these are considered not to directly contribute to turnover generation.
The MaltaPost Group assessed its turnover-generating economic activities in respect of the Environmental
Delegated Act; however, none are currently deemed to be eligible in this respect.
Whilst the MaltaPost Group currently assesses its operating activities in accordance with activities classified
under section 6 ‘Transport’ of the Climate Delegated Act, PostEurop, the trade association that represents
European public postal operators, submitted a position paper on the EU Taxonomy recommending that the
postal sector be captured under a specific sector, as opposed to ‘Transport’. Therefore, in the future, should the
Climate Delegated Act be amended a result such a proposal, the MaltaPost Group will re-assess the Taxonomy
eligibility of its turnover-generating activities.
Other turnover-generating activities classified as Taxonomy non-eligible
The MaltaPost Group’s Taxonomy non-eligible economic activities include warehousing services, document
management services, philatelic activities, retail sale of stamps, non-postal stationery and provision of non-
postal services.
Taxonomy eligibility of investment activities not directly related to turnover-generating activities
Further to the activities from which MaltaPost Group generates turnover, and generally incurs both CapEx and
OpEx, it also engages in investment activities not directly related to its turnover-generating activities as
highlighted in the following table:
Economic Activity
Description
CapEx
OpEx
Environmental
NACE code
(%)*
(%)*
objective(s)
7.7 Acquisition and
Additions to leased
ownership of
54% 8% CCM, CCA L68
property
buildings
* of the total CapEx and OpEx included in the denominator of the respective KPI
Economic activities classified under activity 7.7 Acquisition and ownership of buildings relate to additions to
leased property.
MaltaPost Group assessed its investment activities are not directly related to turnover-generating economic
activities in respect of the Environmental Delegated Act; however, none are currently deemed to be eligible in
this respect.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Taxonomy alignment
Determining whether an activity meets the requirements to be classified as Taxonomy-aligned requires
considerable detailed information about the activity in order to properly assess it against the established
technical screening criteria.
Over the past years, MaltaPost Group has been in the process of gathering the necessary information with the
aim of identifying which economic activities may be considered as Taxonomy-aligned. As a result of this ongoing
process, MaltaPost Group has not been able to substantiate the Taxonomy-alignment of any of its activities in
the reporting financial year.
Despite not being able to fully substantiate the Taxonomy-alignment of any of its activities, MaltaPost Group
has identified instances where partial alignment may be considered.
Economic activities classified under activity 6.4 ‘Operation of personal mobility devices, cycle logistics’ have been
assessed to meet the substantial contribution criteria under the CCM objective, being that both delivery
methods are used in MaltaPost Group’s Last Mile Delivery of postal and parcel items. However, an assessment
of elements pertaining to the DNSH criteria needs to be carried out to determine whether such criteria are met.
The same also applies to activities 6.5 ‘Transport by motorbikes, passenger cars and light commercial vehicles
and 6.15 ‘Infrastructure enabling low-carbon road transport and public transport’.
With regards to activity 7.7 ‘Acquisition and ownership of buildings’ MaltaPost has not yet identified any
instances of partial or full alignment.
Further to meeting technical screening criteria economic activities must meet minimum safeguards relating to
human and consumer rights, anti-corruption and bribery, taxation and fair competition in order to be Taxonomy-
aligned. Such assessment must be carried out in accordance with the OECD Guidelines for Multinational
Enterprises and the UN Guiding Principles on Business and Human Rights, as outlined in the Platform on
Sustainable Finance’s report on Minimum Safeguards published in October 2023. MaltaPost Group is in the
process of establishing a framework to comply with the necessary minimum safeguards.
As a result of no activities being considered as Taxonomy-aligned in the 2025 financial year, disclosure
requirements surrounding the assessment of Taxonomy-alignment in accordance with section 1.2.2.1 of the
Disclosures Delegated Act are not deemed to be applicable to MaltaPost Group.
KPIs and accounting policies
The key performance indicators (KPIs’) consist of the Turnover KPI, the CapEx KPI and the OpEx KPI. In presenting
the Taxonomy KPIs, MaltaPost uses the templates provided in Annex II to the Disclosures Delegated Act.
Moreover, since MaltaPost Group is not performing any of the activities related to fossil gas and nuclear energy
(activities 4.26 – 4.31), MaltaPost Group only publishes Template 1 of Annex II of the Disclosures Delegated Act
with regards to activities in certain energy sectors.
In section A.1 ‘Environmentally sustainable activities (Taxonomy-aligned)’ of respective Turnover, CapEx and
OpEx templates, columns 5 and 6 are marked as ‘N’ given that MaltaPost Group does not have any Taxonomy-
aligned balances, whilst the remaining columns 7 to 17 are marked as ‘-‘ since, under Substantial Contribution
criteria, Taxonomy-alignment reporting is not required for non-climate environmental objectives and under
DNSH criteria and Minimum Safeguards, there is no current Taxonomy-alignment assessment to be reported.
27
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Annex – Taxonomy Reporting Templates
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosure covering 2025
Financial year 2025
2025
Substantial Contribution Criteria
DNSH Cr ite ria (Do e s Not Signific an tly Ha rm)
Proportion of
Category
Category
Taxonomy
enabling
trans itional
aligned (A.1.) or
a ct ivity (1 9)
a ct ivity (2 0)
eligible (A.2.)
Turnover 2024
Proportion of
Economic Activities (1) Code (2) Turnover (3)
(18)
Turnover (4)
Y; N ;
Y; N ;
Y; N ;
Y; N ;
Y; N ;
Y; N ;
(€) 000 %
Y/ N Y/ N Y/ N Y/ N Y/ N Y/ N Y/ N % E T
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
A. TAXANOMY ELI G IBLE AC TI VI TE S
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Turnover of environmentally sustainable activites
0 0% N N - - - - - - - - - - - 0%
(Taxonomy-aligned) (A.1)
Of which Enabling
0 0% N N - - - - - - - - - - - 0% E
Of which Transitional
0 0% N - - - - - - - 0% T
A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
EL;
EL;
EL;
EL;
EL;
EL;
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
CCM 6.4
/
Operation of personal mobility devices, cycle logistics
4,746 11%
EL
EL N/EL N/EL N/EL N/EL 12%
CCA 6.4
Transport by motorbikes, passenger cars and light
CCM 6.5/
23,339 55%
EL EL N/EL N/EL N/EL N/EL 54%
commercial vehicles
CCA 6.5
Infrastructure enabling low-carbon road transport
CCM 6.15/
8,201
19%
EL EL N/EL N/EL N/EL N/EL 20%
and public transport
CCA 6.15
Turnover of Taxonomy-eligible but not
environmentally sustainable activties (not
36,286 85% 85% 0% 0% 0% 0% 0% 86%
Taxonomy aligned activites) (A.2)
A. Turnover of Taxonomy-eligible actvities (A.1+A.2)
36,286 85% 85% 0% 0% 0% 0% 0% 86%
B. TAXAN OMY N ON- E LI GI BLE AC TI VI TE S
Turnover of Taxonomy non-eligible actvities
6,376 15%
TOTAL
42,662 100%
Proportion of
turnover/Total turnover
Taxonomy
Taxonomy
aligned per
eligible p er
objective
objective
CCM 0% 85%
CCA 0% 85%
WTR
CE
PPC
BIO
Climate Change Mitigation (5)
Climate Change Adaptation (6)
Water and marine resources(7)
Polution (8)
Circular Economy (9)
Biodiversity (10)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water and marine resources (13)
Polution (14)
Circular Economy (15)
Biodiversity (16)
Minimum Safeguards (17)
28
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering 2025
Financial year 2025
2025
Substantial Contribution Criteria
DNSH Cr ite ria (Do e s Not Signific an tl y Har m)
Proportion of
Category
Category
Taxonomy
enabling
trans itional
aligned (A.1.) or
a ct ivity (1 9)
a ct ivity (2 0)
eligible (A.2.)
CapEx 2024 (18)
Proportion of
Economic Ac tivities (1) Code (2) CapEx (3)
CapEx (4)
Y; N ;
Y; N ;
Y; N ;
Y; N ;
Y; N ;
Y; N ;
(€) 000 %
Y/ N Y/ N Y/ N Y/ N Y/ N Y/ N Y/ N % E T
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
A. TAXAN OMY E LI G I BLE AC TI VI TE S
A.1. Environmentally sustainable activities (Taxonomy-aligned)
CapEx of environmentally sustainable activites
0 0% N N - - - - - - - - - - - 0%
(Taxonomy-aligned) (A.1)
Of which Enabling
0 0% N N - - - - - - - - - - - 0% E
Of which Transitional
0 0% N - - - - - - - 0% T
A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
EL;
EL;
EL;
EL;
EL;
EL;
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
CCM 6.4/
Operation of personal mobility devices, cycle logistics
0 0%
EL EL N/EL N/EL N/EL N/EL 0%
CCA 6.4
Transport by motorbikes, passenger cars and light
CCM 6.5/
815 19%
EL EL N/EL N/ EL N/EL N/ EL 41%
commercial vehicles
CCA 6.5
Infrastructure enabling low-carbon road transport
CCM 6.15/
0 0%
EL EL N/EL N/ EL N/EL N/ EL 0%
and public transport
CCA 6.15
CCM 7.7/
Acquisition and ownership of buildings
2,334
54%
EL EL N/EL N/ EL N/EL N/ EL 1%
CCA 7.7
CapEx of Taxonomy-eligible but not
environmentally sustainable activties (not
3,149 73% 73% 0% 0% 0% 0% 0% 42%
Taxonomy aligned activites) (A.2)
A. CapEx of Taxonomy-eligible actvities (A.1+A.2)
3,149 73% 73% 0% 0% 0% 0% 0% 42%
B. TAXAN OMY N ON - ELI GI BLE AC TI VI TE S
CapEx of Taxonomy non-eligible actvities
1,189 27%
TOTAL
4,338 100%
Proportion of CapEx/Total
Cap Ex
Taxonomy
Taxonomy
aligned per
eligible per
objective
objective
CCM 0% 73%
CCA 0% 73%
WTR
CE
PPC
BIO
Clim(niotaigitMgenaCheta5)
Climate Change Adaptation (6)
Water and marine resources(7)
Polution (8)
Circular Economy (9)
Biodiversity (10)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water and marine resources (13)
Polution (14)
Circular Economy (15)
Biodiversity (16)
Minimum Safeguards (17)
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering 2025
Financial year 2025
2025
Climniotaigit(5MnaChetage)
Substantial Contribution Criteria
Climate Change Adaptation (6)
DNSH Cr ite ria (Do e s Not Sign ific ant ly Ha rm)
Proportion of
Category
Category
Taxonomy
enabling
trans itional
aligned (A.1.) or
a ct ivity (1 9)
a ct ivity (2 0)
eligible (A.2.)
OpEx 2024 (18)
Proportion of
Economic Activities (1) Code (2) OpEx(3)
OpEx (4)
Y; N ;
Y; N ;
Y; N ;
Y; N ;
Y; N ;
Y; N ;
(€) 000 %
Y/ N Y/ N Y/ N Y/ N Y/ N Y/ N Y/ N % E T
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
A. TAXAN OMY E LI G I BLE AC TI VI TES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
OpEx of environmentally sustainable activites
0 0% N N - - - - - - - - - - - 0%
(Taxonomy-aligned) (A.1)
Of which Enabling
0 0% N N - - - - - - - - - - - 0% E
Of which Transitional
0 0% N - - - - - - - 0% T
A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
EL;
EL;
EL;
EL;
EL;
EL;
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
CCM 6.4/
Operation of personal mobility devices, cycle logistics
0 0%
EL EL N/ EL N/EL N/ EL N/EL 0%
CCA 6.4
Transport by motorbikes, passenger cars and light
CCM 6.5/
1,103 75%
EL EL N/ EL N/EL N/ EL N/EL 75%
commercial vehicles
CCA 6.5
Infrastructure enabling low-carbon road transport
CCM 6.15/
0 0%
EL EL N/ EL N/EL N/ EL N/EL 0%
and public transport
CCA 6.15
CCM 7.7/
Acquisition and ownership of buildings
123 8%
EL EL N/ EL N/EL N/ EL N/EL 7%
CCA 7.7
OpEx of Taxonomy-eligible but not environmentally
sustainable activties (not Taxonomy aligned
1,226 83% 83% 0% 0% 0% 0% 0% 82%
activite s) (A.2)
A. OpEx of Taxonomy-eligible actvities (A.1+A.2)
1,226 83% 83% 0% 0% 0% 0% 0% 82%
B. TAXAN OMY N ON - ELI GI BLE AC TI VI TE S
OpEx of Taxonomy non-eligible actvities
247 17%
TOTAL
1,473 100%
Proportion of OpEx/Total
Op Ex
Taxonomy
Taxonomy
aligned per
eligible per
objective
objective
CCM 0% 83%
CCA 0% 83%
WTR
CE
PPC
BIO
Water and marine resources(7)
Polution (8)
Circular Economy (9)
Biodiversity (10)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water and marine resources (13)
Polution (14)
Circular Economy (15)
Biodiversity (16)
Minimum Safeguards (17)
30
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Nuclear and fossil gas related activities for financial year 2025
Row Nuclear energy related activities
The undertaking carries out, funds or has exposures to research, development,
1
demonstration and deployment of innovative electricity generation facilities that
NO
produce energy from nuclear processes with minimal waste from the fuel cycle.
The undertaking carries out, funds or has exposures to construction and safe
operation of new nuclear installations to produce electricity or process heat,
2
including for the purposes of district heating or industrial processes, such as,
NO
hydrogen production, as well as their safety upgrades, using best available
technologies.
The undertaking carries out, funds or has exposures to safe operation of existing
nuclear installations that produce electricity or process heat, including for the
3
NO
purposes of district heating or industrial processes, such as, hydrogen production
from nuclear energy, as well as their safety upgrades.
Fossil gas related activities
The undertaking carries out, funds or has exposures to construction or operation
4
of electricity generation facilities that produce electricity using fossil gaseous
NO
fuels.
The undertaking carries out, funds or has exposures to construction,
5
refurbishment, and operation of combined heat/cool and power generation
NO
facilities using fossil gaseous fuels.
The undertaking carries out, funds or has exposures to construction,
6
refurbishment and operation of heat generation facilities that produce heat/cool
NO
using fossil gaseous fuels.
The specification of the KPIs is determined in accordance with Annex I to the Disclosures Delegated Act. MaltaPost
Group adopts the methodology to determine Taxonomy-alignment in accordance with the legal requirements and
describes its policies in this regard as follows:
Turnover KPI
Definition
The proportion of Taxonomy-aligned economic activities of the total turnover has been calculated as the part of
net turnover derived from products and services associated with Taxonomy-aligned economic activities
(numerator) divided by the net turnover (denominator), in each case for the Financial Year from 01 October 2024
to 30 September 2025. Given that MaltaPost Group has not identified any Taxonomy-aligned economic activities,
the current proportion of alignment is 0%.
Reconciliation
The 2025 MaltaPost Group’s consolidated net turnover captured in the denominator of the KPI of €42,662 million
reconciles with the amount disclosed in the ‘Revenue’ financial statement line item included in the ‘Income
Statements’ in the consolidated financial statements of MaltaPost’s Annual Financial Report and Consolidated
Financial Statements.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Amount
Turnover Reconciliation
(€’000)
Turnover as per KPI denominator 42,662
Turnover as per MaltaPost’s consolidated financial statements relating to:
- Postal 36,286
- Philatelic 280
- Insurance commission 658
- Other 5,438
Difference -
From the amounts disclosed above, the amount of €36,286,000 allocated to Postal activities is disclosed as
Taxonomy eligible under activities 6.4, 6.5 and 6.15 in the Turnover KPI, which represents the total taxonomy-
eligible revenue for the MaltaPost Group.
CapEx KPI
Definition
The CapEx KPI is defined as Taxonomy-aligned CapEx (numerator) divided by MaltaPost Group’s total CapEx
(denominator).
Total CapEx consists of additions to tangible and intangible fixed assets during the financial year, before
depreciation, amortisation, and any remeasurements, including those resulting from revaluations and
impairments, as well as excluding changes in fair value. It includes acquisitions of tangible fixed assets (IAS 16),
intangible fixed assets (IAS 38) and right-of-use assets (IFRS 16). Acquisitions of investment properties (IAS 40) and
additions as a result of business combinations would also be captured. For further details on our accounting
policies regarding MaltaPost Group’s CapEx, refer to disclosure Note 1.4 ‘Property, plant and equipment’, Note
1.5 ‘Intangible assets’ and Note 1.16 ‘Right-of-use’ in the MaltaPost’s consolidated financial statements of 30
September 2025.
The Disclosures Delegated Act established three categories under which to classify CapEx:
a) CapEx related to assets or processes that are associated with Taxonomy-aligned economic activities
(‘category a’). In this case, MaltaPost Group considers that assets and processes are associated with
Taxonomy-aligned economic activities where they are essential components necessary to execute an
economic activity.
MaltaPost Group follows the generation of external revenues as a guiding principle to identify economic
activities that are associated with CapEx under this category (a).
Eligible CapEx under this category has been disclosed in the table named ‘Taxonomy-eligible economic
activity’ in the ’Taxonomy-eligible and Taxonomy-aligned economic activities’ section above.
b) CapEx that is part of a plan to upgrade a Taxonomy-eligible economic activity to become Taxonomy-aligned
or to expand a Taxonomy-aligned economic activity (‘category b’).
MaltaPost Group has currently not developed such a plan, and therefore, no CapEx is considered to be eligible
under this category.
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Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
c) CapEx related to the purchase of output from Taxonomy-aligned economic activities and individual measures
enabling certain target activities to become low-carbon or to lead to GHG reductions (‘category c’).
MaltaPost Group distinguishes between the purchase of output and individual measures as follows:
- ‘Purchase of output’ relates to when MaltaPost Group just acquires the product or service that is
mentioned in the activity description.
- ‘Individual measure’ refers to when MaltaPost Group acquires a product through an activity that is
regularly performed by the supplier, but where MaltaPost Group controls the content and design of the
product in detail.
Eligible CapEx under this category has been disclosed in the table named ’Individually Taxonomy-eligible
CapEx/OpEx and the corresponding economic activities’ in the ‘Taxonomy-eligibility of investment activities
not directly related to turnover generating activities’ section above. The full amount of CapEx considered
under this category relates purely to ‘purchase of output’.
Purchases of output qualify as Taxonomy-aligned CapEx in cases where it can be verified that the respective
supplier performed a Taxonomy-aligned activity to produce the output that MaltaPost Group acquired. Since
Taxonomy-alignment also includes DNSH criteria and minimum safeguards, MaltaPost Group cannot assess
the Taxonomy-alignment on its own. For the purchased output in financial year 2025, MaltaPost could not
obtain any conclusive confirmation of Taxonomy-alignment.
To avoid double counting in the CapEx KPI, MaltaPost Group ensured that CapEx captured as part of ‘category
a’, which relates to turnover-generating activities, was not also included with the activities identified within
‘category c.
Reconciliation
The 2025 MaltaPost Group’s total CapEx captured in the denominator of the KPI can be reconciled to the
consolidated financial statements of MaltaPost Annual Financial Report of 30 September 2025, by reference to
the respective disclosures capturing the additions for property, plant and equipment, intangible assets, and right-
of-use assets.
Amount
CapEx Reconciliation
(€’000)
CapEx as per KPI denominator 4,338
Additions as per MaltaPost’s consolidated financial statements relating to:
- Property, plant and equipment Disclosure Note 4 1,430
- Intangible assets Disclosure Note 6 523
- Right-of-use assets Disclosure Note 5 2,385
Difference -
The following is a detailed breakdown of the property, plant and equipment, intangible assets, and right of use
assets amongst the different activities disclosed in the CapEx KPI.
33
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Amount
Detailed breakdown of property, plant and equipment additions
(€’000)
PPE additions as per MaltaPost’s consolidated financial statements 1,430
Allocation of PPE in the CapEx KPI
6.4 Operation of personal mobility devices, cycle logistics 0
6.5 Transport by motorbikes, passenger cars and light commercial vehicles 139
6.15 Infrastructure enabling low-carbon road transport and public transport 0
7.7 Acquisition and ownership of buildings 625
Taxonomy non-eligible 666
Difference 0
Amount
Detailed breakdown of intangible assets additions
(€’000)
Intangible asset additions as per MatalPost’s consolidated financial statements 523
Allocation of Intangibles in the CapEx KPI
6.4 Operation of personal mobility devices, cycle logistics 0
6.5 Transport by motorbikes, passenger cars and light commercial vehicles 0
6.15 Infrastructure enabling low-carbon road transport and public transport 0
7.7 Acquisition and ownership of buildings 0
Taxonomy non-eligible 523
Difference 0
Amount
Detailed breakdown of right-of-use asset additions
(€’000)
Right-of-use asset additions as per MaltaPost’s consolidated financial statements 2,385
Allocation of right-of-use in the CapEx KPI
6.4 Operation of personal mobility devices, cycle logistics 0
6.5 Transport by motorbikes, passenger cars and light commercial vehicles 676
6.15 Infrastructure enabling low-carbon road transport and public transport 0
7.7 Acquisition and ownership of buildings 1,709
Taxonomy non-eligible 0
Difference 0
34
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
OpEx KPI
Definition
The OpEx KPI is defined as Taxonomy-aligned OpEx (numerator) divided by MaltaPost Group’s total OpEx
(denominator).
Total OpEx consists of direct non-capitalised costs that relate to building renovation measures, short term leases
as well as forms of maintenance and repair. In general, this includes staff costs, costs for services and material
costs for daily servicing and also for regular and unplanned maintenance and repair measures. It does not include
expenses relating to the day-to-day operation of PPE, such as raw materials, cost of employees operating any
equipment and electricity or fluids that are necessary to operate the PPE. Amortisation and depreciation are also
not included in the OpEx KPI.
In addition to the OpEx items captured in the current denominator of the OpEx KPI, MaltaPost Group
acknowledges that certain additional staff costs should also be captured, given that certain employee
responsibilities relate to the servicing of PPE. Such costs have been excluded in the current year given that
MaltaPost Group is currently unable to allocate staff costs towards maintenance and repair activities. Once
MaltaPost Group develops an approach for allocating such staff costs, these will be captured as OpEx and as part
of the KPI accordingly.
MaltaPost also excludes direct costs for training and other human resources adaptation needs from the
denominator and the numerator. This is because Annex I to the Disclosures Delegated Act lists these costs only for
the numerator, which does not allow a mathematically meaningful calculation of the OpEx KPI.
Given that MaltaPost Group has not identified any CapEx as being Taxonomy-aligned, naturally, no OpEx is able to
be considered as Taxonomy-aligned.
35
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Directors’ Report (continued)
Reconciliation
The 2025 MaltaPost Group’s total OpEx captured in the denominator of the KPI cannot be directly reconciled to
the consolidated financial statements of MaltaPost Group included in its Annual Report, since the notes to the
financial statements comprise amounts which relate to both Taxonomy-eligible and Taxonomy non-eligible
activities. Therefore, the portion of Taxonomy-eligible OpEx within each item in Note 21 to MaltaPost’s financial
statements is identified below.
Amount in scope of
OpEx KPI
Full amount as per
denominator as per
Note 21 of
Note 21 of
MaltaPost’s
MaltaPost’s
consolidated
consolidated
financial statements
financial statements
OpEx reconciliation
(€’000)
(€’000)
OpEx as per EU Taxonomy KPI denominator
1,473
OpEx as per consolidated financial statements of which: 36,753 1,473
Employee benefits expense 18,753 -
Depreciation and amortisation 2,461 -
Foreign direct mail costs 9,852 -
Property operating lease rentals 123 123
Motor vehicle operating lease and rental costs 504 504
Movement in provision for expected credit loss 59 -
Other expenses 5,001 846
The amount of €123,000 classified as ‘Property operating lease rentals’ is allocated in full to economic activity 7.7
‘Acquisition and ownership of buildings’, whilst remaining amounts totalling to €1,103,000 classified as ‘Motor
vehicle operating lease and rental costs’ and ‘Other expenses’ are allocated in full to economic activity 6.5
‘Transport by motorbikes, passenger cars and light commercial vehicles’ in the OpEx KPI.
Signed on behalf of the Bank's Board of Directors on 24 April 2026 by Michael C. Bonello (Chairman) and Joseph Said
(Director and Chief Executive Officer) as per the Directors' Declaration on ESEF Annual Financial Report submitted
in conjunction with the Annual Report and Financial Statements 2025.
36
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statement of Compliance with the Principles of Good Corporate Governance
A.
INTRODUCTION
In terms of the Capital Markets Rules of the Malta Financial Services Authority (Rule 5.94), Lombard Bank Malta
p.l.c. (the ‘Bank’), as a company having its securities admitted to trading on a regulated market, is obliged to report
on the extent to which it has adopted the ‘Code of Principles of Good Corporate Governance’ (the ‘ Principles’)
embodied in Appendix 5.1 to Chapter 5 of the same Capital Markets Rules, as well as the measures which have
been taken by the Bank to ensure compliance with these Principles.
While the Principles are not mandatory, the Board of Directors of the Bank has endeavoured to ensure that they
are upheld to the fullest extent possible, and this while acknowledging that good corporate governance is indeed
beneficial to all the Bank’s stakeholders. The instances in which the Bank has departed from the Principles are
explained below under Section C - ‘Non- Compliance with the Code’.
After having carried out a review of the extent to which the Bank has been compliant with the Principles throughout
the financial year ended 31 December 2025, the Board of Directors, in terms of Capital Markets Rule 5.97, presents
its report as follows:
B.
COMPLIANCE WITH THE CODE
Principle 1: The Board
As at 31 December 2025, the Board of Directors of the Bank consisted of six (6) Directors, five (5) of whom being
non-executive Directors together with the Chief Executive Officer of the Bank being also a Director.
In order to assist it in the execution of its duties and responsibilities, the Board of Directors has set up a number
of committees. These include the Audit & Risk Committee and the Suitabilities & Evaluations Committee and this
apart from the management Committees appointed being the Assets & Liabilities Committee and the Credit
Committee. All board-appointed Committees are regulated by their own Terms of Reference as approved and
periodically reviewed by the Board.
Principle 2: Chairman and Chief Executive Officer
The roles of Chairman and Chief Executive Officer are held by different individuals, ensuring a clear division of
responsibilities. The Chairman is responsible for leading and managing the Board of Directors, while the Chief
Executive Officer oversees the day-to-day management and operations of the Bank. This separation of roles
prevents the concentration of power and authority in a single individual, distinguishing the governance and
leadership of the Board from the management of the Bank’s business.
The Chairman’s responsibilities, inter alia, include: (i) leading the Board and helping it reach its full potential,
particularly by facilitating the effective contribution of Directors and encouraging discussion; (ii) setting of the
Agenda for Board meetings; (iii) ensuring that the Directors receive precise, timely and objective information so
that they can make sound decisions and effectively monitor the performance of the Bank; (iv) ensuring that all
strategic and policy issues are appropriately discussed and formally approved; and (v) maintaining effective
communication with the Bank’s shareholders at all times. As stated below, the Chairman meets the independence
criteria set out in the Principles.
The Board of Directors appoints the Chief Executive Officer. The Chief Executive Officer is responsible for managing
the day-to-day business of the Bank in conformity with the agreed plans, policies and strategies approved by the
Board. The Board of Directors also appointed two Deputy Chief Executive Officers, who support the Chief Executive
Officer in the exercise of his duties while also leading the Credit and Operations functions respectively.
37
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statement of Compliance with the Principles of Good Corporate Governance (continued)
Principle 3: Composition of the Board
The following Directors served on the Board during the period under review:
Michael C. Bonello
John Bonello
Aldo-Joseph Giordano
Kimon Palamidis
Peter Perotti
Joseph Said
All Board members are Non-Executive Directors who are not engaged in the daily management of the Bank, with
the exception of Joseph Said who is also Chief Executive Officer of the Bank. Furthermore, the Board considers
Michael C. Bonello, John Bonello, Aldo-Joseph Giordano, Kimon Palamidis and Peter Perotti as independent
Directors. Michael C. Bonello and Kimon Palamidis are still considered to be independent despite the fact that they
have served on the Board for more than twelve consecutive years. In determining the independence of its
members, the Board takes into consideration the relevant criteria and Principles as well as what are generally
considered sound, acceptable standards. All Non-Executive Directors have declared in writing to the Board that
they undertake:
to maintain in all circumstances their independence of analysis, decision and action;
not to seek or accept any unreasonable advantages that could be considered as compromising their
independence; and
to clearly express their opposition in the event that they find that a decision of the Board may harm the Bank.
It is considered that the current size of the Board is appropriate for the requirements of the business and that it
reflects an appropriate balance of skills and experience, enabling it to effectively fulfil its duties and
responsibilities. This is considered so also taking into account, inter alia, the Bank’s simple model and the principle
of proportionality, based on the Bank’s size and the nature, scale and complexity of its activities and products.
The composition and election of the Board of Directors is determined by the Bank’s Articles of Association wherein
it is established that it is the shareholders who must appoint Directors to serve on the Board. Within these
parameters, options for further strengthening the Board are always considered. In addition, the Bank, by virtue of
the Board-appointed Suitabilities & Evaluations Committee, carries out suitability assessments of its existing
Directors and any new nominated Directors in order to ensure that the suitability, fit and proper criteria are
observed, pursuant to all applicable laws, rules, regulations and guidelines.
The overall composition of the Board and the collective knowledge, skills and experience required are evaluated
during individual suitability assessments and collective suitability assessments so as to ensure that the Board is
effectively discharging all its duties and obligations at all times.
Since the appointment of Directors to the Board is a matter that is reserved entirely to the Bank’s shareholders in
terms of the Memorandum and Articles of Association, diversity, to an extent, depends on the profiles of nominees
proposed and their suitability in terms of applicable laws, rules, regulations, guidelines, etc. The benefits of
diversity, including that in educational and professional backgrounds, age, gender, experience and geographical
provenance would be considered by the Suitability and Evaluations Committee in its assessment of suitability of
any nominees.
38
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statement of Compliance with the Principles of Good Corporate Governance (continued)
The Bank has a formal succession policy for directors (apart from senior management and heads of internal control
functions) - Succession Policy for the Board of Directors & Key Function Holders - which seeks to ensure continuity
of the roles by having in place the processes for orderly and planned succession. The Bank’s Suitabilities &
Evaluations Committee oversees the implementation and maintenance of this Policy, although the Chairman and
Board of Directors continue to remain ultimately responsible. While the right to appoint the Bank’s Directors is
vested in the shareholders, this Policy serves to set out the best efforts to be in place in order to advise and support
shareholders in the process, subject to the parameters of applicable laws, rules, regulations etc., and the Bank’s
Memorandum and Articles of Association and to consider appropriate succession planning that is consistent with
all legal requirements regarding composition, appointment or succession of the Board of Directors. Succession
planning is indeed considered by the Suitabilities & Evaluations Committee and the Board of Directors with
appropriate succession actions being identified for implementation.
The Board considers that as a policy and as reflected in its Board of Directors’ Charter, and its Succession Policy
for the Board of Directors and Key Function Holders, it endeavours to have a varied board, particularly in terms of
diverse educational and professional backgrounds and extensive and specialised experience of its members. The
Board is cognisant of the fact that the appropriate mix of Board Members ensures diverse perspectives, experience
and knowledge. It continues to remain committed to maintaining diversity among its members particularly in
terms of age, geographical provenance, gender, experience, educational and professional backgrounds. The Board
is confident that, also taking into account proportionality and the Bank’s size and the nature, scale and complexity
of its activities and products, it is appropriately diverse, not least in terms of skills, knowledge and experience. This
allows for a good understanding of current affairs, the Bank’s activities, business model, strategy and associated
risks, applicable regulatory framework and the environment in which the Bank operates and longer-term risks and
opportunities related to the Bank’s business. It also benefits from international expertise. The Board remains
committed to further formalising its Diversity Policy accordingly. The Board also seeks to supplement and enhance
its skillset for further effective oversight of certain specialised areas by the engagement of external advisors for
matters such as information and communication technology and security which serves to further enhance the
Board’s oversight functions.
Principle 4: The Responsibility of the Board
In pursuing the execution of the four basic roles of corporate governance, namely, accountability, monitoring,
strategy formulation and policy development, the Board of Directors, having the first level of responsibility for such
execution, inter alia:
regularly reviews and evaluates corporate strategy, major operational and financial plans, risk management
policies, performance objectives and monitors implementation and corporate performance within the
parameters of all relevant laws, regulations and codes of best business practice;
applies high ethical standards and takes into account the interests of stakeholders and acts responsibly and
with integrity and on a fully informed basis, in good faith, with due diligence and in the best interests of the
Bank and its shareholders;
recognises that the Bank’s success depends upon its relationship with all groups of its stakeholders, including
employees, suppliers, customers and the wider community in which the Bank operates;
monitors effectively the application and implementation by Management of its policies and strategy;
recognises and supports enterprise and innovation within Management and examines how best to motivate
the Bank’s Management;
seeks to establish an effective decision-making process in order to develop the Bank’s business efficiently; and
ensures that a balance is struck between enterprise and control in the Bank.
39
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statement of Compliance with the Principles of Good Corporate Governance (continued)
Furthermore, the Board of Directors, inter alia:
defines in clear and concise terms the Bank’s strategy, policies, management performance criteria and
business policies and effectively monitors the implementation of such by Management;
establishes a clear internal and external reporting system so that the Board has continuous access to
accurate, relevant and timely information;
has appointed Committees, including the Audit & Risk Committee, Credit Committee, Assets & Liabilities
Committee and Suitabilities & Evaluations Committee;
continuously assesses and monitors the present and future operations’ opportunities, threats and risks;
evaluates the Management’s implementation of corporate strategy and financial objectives;
ensures that the Bank has appropriate policies and procedures in place to assure that the Bank and its staff
members maintain the highest standards of corporate conduct, including compliance with applicable laws,
regulations, business and ethical standards;
ensures that the financial statements of the Bank and the annual audit thereof are completed within the
stipulated time periods; and
requires Management to constantly monitor performance and report fully and accurately to the Board.
Furthermore, Directors keep themselves updated on an ongoing basis of their statutory and fiduciary duties, the
Bank’s operations and prospects, the general business environment and skills and competences of Senior
Management. The expectations of the Board are also discussed regularly.
Principle 5: Board Meetings
The Board convened ten (10) times during the period under review with attendance of the Directors as follows:
Michael C. Bonello 10
John Bonello 10
Aldo-Joseph Giordano 10
Kimon Palamidis 8
Peter Perotti 10
Joseph Said 9
The dates when the Board meetings are scheduled to be held are determined prior to the beginning of the year in
question. When required, further meetings are scheduled.
Ahead of Board meetings an agenda and supporting documentation are made available to all Directors. Other than in
the case of meetings specially convened to discuss particular matters, generally the agendas of regular Board
meetings set out items of a long-term strategic nature, as well as performance-related issues, together with credit
applications which fall within the discretionary limits of the Board and regular updates from the various functions
of the Bank including the internal control functions. The continuously increasing regulatory requirements also
demand that agendas include several compliance and risk-related matters. During meetings, Directors are
encouraged to present their views pertinent to the subject matter and are given every opportunity to contribute to
the relevant issues on the agenda and to challenge each other and Management as necessary. Following each
meeting, minutes which record attendance as well as all decisions taken are circulated to all Board members.
40
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statement of Compliance with the Principles of Good Corporate Governance (continued)
Principle 6: Information and Professional Development
Each newly appointed Member of the Board is briefed by the Chief Executive Officer, Senior Management officials,
Heads of Internal Control Functions and any other staff members as necessary, on various aspects of the Bank’s
business and functions, while the Company Secretary provides each newly appointed Director with relevant
corporate governance information.
Board members are reminded that the Company Secretary is at their disposal to provide any advice or assistance that
may be required in the discharge of their duties and responsibilities. The Company Secretary is responsible for
advising the Board, through the Chairman, on all governance matters. The Secretary is responsible for ensuring that
Board procedures are complied with as well as that effective information flows within the Board, its committees and
with Senior Management. The Secretary also facilitates induction and assists with professional development, as
required. Directors are given the opportunity to update and develop their skills and knowledge, particularly through
detailed presentations, briefings and training by senior executives and other relevant Bank officials.
They are invited to attend training sessions organised specifically for the Board and are also informed of and
encouraged to attend externally run seminars throughout their directorship.
Furthermore, Directors have access to the advice and services of any advisors and also the External Auditors. The
External Auditors are invited to attend all Audit & Risk Committee meetings as well as Board meetings, when
required.
The Board continues to be mindful of the crucial importance of recruiting, retaining and motivating quality
management. The ongoing training and development of staff at all levels is considered of the utmost importance and
this also in the light of the need for orderly succession.
Principle 7: Evaluation of the Board’s Performance
An assessment exercise of the Board’s performance was carried out through a ‘self-evaluation’ questionnaire in which
Board members participated. Furthermore, assessment exercises of performance of the committees were also carried
out by virtue of ‘self-evaluation’ questionnaires completed by the members and some regular attendees of the Audit &
Risk Committee, the Assets & Liabilities Committee and the Credit Committee. These exercises also included an
evaluation of the Chairman of each respective Committee. These ‘self-evaluation’ questionnaires were then analysed
by the Suitabilities & Evaluations Committee established by the Board to report to the Board accordingly. This exercise
did not reveal the need for any material changes in the Bank’s governance structures and organisation.
Principle 8: Committees
The Board has appointed the following committees:
Audit & Risk Committee
The primary purpose of the Audit & Risk Committee is to further safeguard the interests of the Bank’s shareholders
and to assist the Directors in conducting their role effectively so that the Bank’s decision-making capability,
oversight of internal control functions and the accuracy of its reporting and financial results are maintained at a
high level at all times. The Committee assists the Board in fulfilling its supervisory and monitoring responsibility
for effective financial reporting, risk management, control and governance and this by, inter alia, reviewing any
financial information, statements and disclosures to be issued, systems of governance, systems of internal control
established by Management and the Board, the risk management processes, the external and internal audit
processes as well as the compliance processes.
The Audit & Risk Committee met six (6) times during the period under review.
The Committee, inter alia, reviews the Bank’s financials regularly with the Chief Financial Officer attending
meetings and explaining the Bank’s position as required. All financial results are reviewed by the Committee and
any recommendations for approval by the Board put forward.
41
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statement of Compliance with the Principles of Good Corporate Governance (continued)
With respect to Risk Management, the Committee, inter alia, reviews and challenges reports from the Risk
Management Function which enable the Committee (and the Board) to consider the process of risk identification,
management and mitigation, to assess the risks involved in the Bank’s business and to understand how they are
controlled and monitored by Management. The Committee also makes recommendations to the Board on the
Bank’s overall current and future risk appetite and strategy and assists the Board in overseeing the implementation
of that strategy by Management. Compliance Risk being one of the Bank’s main risks is also overseen by virtue of
regular reporting to the Committee by both the regulatory compliance and financial crime compliance functions.
The Committee examines and endorses material regulatory submissions prior to their presentation to the Board
for approval, including the Internal Capital Adequacy Assessment Process (ICAAP) and the Internal Liquidity
Adequacy Assessment Process (ILAAP). In doing so, it satisfies itself as to the completeness of these submissions
and their alignment with the Bank’s Risk Appetite.
The Committee also oversees the Internal Audit Function by, inter alia, reviewing internal audit reports and
overseeing the drawing up and implementation of documents such as the Internal Audit Charter, Internal Audit
Strategy and Audit Plan ensuring that it considers effectively the areas set out in the audit universe.
The Committee also oversees and monitors the effectiveness and independence of the Heads of Internal Control
Functions, including the Head of Internal Audit, the Chief Risk Officer, the Compliance Officer and the Money
Laundering & Reporting Officer, as well as the composition and performance of the respective functions, ensuring
that they continue to remain effective and robust, independent from the business and are adequately resourced.
The Audit & Risk Committee is also tasked with reviewing and overseeing the external auditor’s independence and
objectivity, as well as assessing the quality and effectiveness of the audit, taking into account applicable
professional standards, regulatory obligations, and other relevant requirements. In addition to reviewing the
external audit plan and other reports issued by the external auditor, the Committee also considers any proposed
non-audit services to ensure that these do not compromise the auditor’s independence or objectivity.
The Committee also reviews related party transactions to ensure that they are conducted on an arm’s length basis
and obtains adequate assurance that the Bank is complying with the relevant requirements set out in the
applicable Capital Markets Rules. Non-performing loans (NPLs) are also closely monitored by the Committee as
part of its ongoing oversight responsibilities.
During the year under review, the Audit & Risk Committee was composed of four (4) non-executive Board
members: Michael C. Bonello, Aldo-Joseph Giordano, Kimon Palamidis and Peter Perotti in accordance with the
Audit & Risk Committee’s Terms of Reference.
Kimon Palamidis is the Chairman of this Committee and is considered by the Board to be independent as explained
earlier on in this statement. Together with other independent members, he is also competent in accounting and /
or auditing in terms of the Capital Markets Rules. The Bank’s Head of Internal Audit and Chief Risk Officer attend
meetings of the Audit & Risk Committee. The Bank’s External Auditors and members of Senior Management and
others, including, inter alia, the Chief Executive Officer, the two Deputy Chief Executive Officers, the Chief Financial
Officer, and the Compliance Officer and Money Laundering Reporting Officer, are also invited to attend meetings
for certain agenda items or discussions as is deemed necessary by the Committee. The Company Secretary acts as
Secretary to the Audit & Risk Committee.
Assets & Liabilities Committee (ALCO)
Membership of this Committee is made up of a number of Chief Officers and senior officers, including from the
Finance and Treasury departments and the Corporate Advisory & Research and Asset and Fund Management
functions. The Chief Executive Officer chairs the ALCO whose main objective is to manage risks within approved
limits at the same time as maximising returns by efficient and judicious management of the Bank’s assets and
liabilities. The Chief Risk Officer is also invited to attend meetings. A Secretary is appointed by the Committee.
42
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statement of Compliance with the Principles of Good Corporate Governance (continued)
Credit Committee
The Credit Committee is responsible for considering and approving credit applications within delegated limits of
authority. It is composed of a number of management Chief Officers and senior officers. The Chief Executive Officer
chairs this Committee and a Secretary is appointed by the Committee.
Suitabilities & Evaluations Committee
The Suitabilities & Evaluations Committee is entrusted with the responsibility of conducting suitability assessments
in respect of nominated and existing Directors, Key Function Holders, and any other individuals as may be required
in terms of applicable regulatory or internal governance requirements. In discharging this function, the Committee
ensures that such individuals possess the requisite integrity, competence, experience, and time commitment
necessary for the proper discharge of their respective roles and responsibilities.
The Committee is also responsible for overseeing the annual performance evaluation of the Board of Directors
and its committees. Following the completion of the formal self-evaluation process undertaken by Board and
committee members, the Committee reviews the outcomes of such assessments, identifies areas for
enhancement, and makes appropriate recommendations aimed at strengthening overall Board effectiveness and
governance standards.
The Committee is also tasked with overseeing and implementing the Bank’s Succession Policy for the Board of
Directors and Key Function Holders, and with making such recommendations to the Board of Directors as may be
necessary to ensure effective governance, continuity, and compliance with prevailing regulatory standards.
Succession planning for both the Board of Directors and Key Function Holders forms an integral part of the
Committee’s mandate. In this regard, the Committee, together with the Board of Directors, considers succession
matters on an ongoing basis, ensuring continuity of leadership and the orderly transition of responsibilities.
Appropriate succession measures are identified and recommended for implementation in line with the Bank’s
strategic objectives and regulatory expectations.
Furthermore, where deemed appropriate, the Board of Directors delegates specific matters to the Suitabilities &
Evaluations Committee for its consideration and recommendation, such as matters relating to remuneration. In
carrying out its duties, the Committee remains guided at all times by applicable laws, rules, regulations, and
relevant governance guidelines.
The Chairman of the Committee, Peter Perotti, is an independent non-executive Director and Committee member
and the Company Secretary acts as Secretary.
Remuneration Committee
The functions of the Remuneration Committee by the Board of Directors in view of the fact that the remuneration
of Directors for the holding of their office on the Board is not performance-related. The Board, at times, delegates
some remuneration-related tasks to the Audit & Risk Committee and Suitabilities & Evaluations Committee.
A separate ‘Remuneration Report’ features on page 48 of this Annual Report in compliance with the Principles.
Principle 9 and 10: Relations with Shareholders and Markets and Institutional Shareholders
The Bank fully appreciates the importance of maintaining open lines of communication with shareholders, the
markets and institutional shareholders. The Board, in this regard, considers that throughout the period under
review the Bank has continued to communicate appropriately by means of regular company announcements and
press releases and its general meetings. The Office of the Company Secretary also continues to facilitate effective
communication between the Bank and its shareholders. The publication of the Bank’s Corporate Calendar, while
containing dates which could be subject to change, also serves to further enhance transparency, investor relations
and market preparedness.
The Bank also communicates with its shareholders with respect to its General Meetings. The documentation
relative to General Meetings is sent to all shareholders at least twenty-one (21) days prior to the holding of the
Meeting.
43
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statement of Compliance with the Principles of Good Corporate Governance (continued)
The Bank’s website (www.lombardmalta.com), contains information about the Bank and its business and is
updated regularly.
It is therefore the Bank’s policy:
to publish information that can have a significant effect on the Bank’s share price through the Malta Stock
Exchange and on the Bank’s website;
to make other published information available to the public on the Bank’s website;
to strive for open, transparent communications;
to ensure continuity and high quality in the information disclosed; and
to be accessible to all stakeholders.
Minority shareholders are entitled to call special meetings should a minimum threshold of share ownership be
established in accordance with the Bank’s Memorandum and Articles of Association. Furthermore, minority
shareholders may formally present an issue to the Board if they own the predefined minimum threshold of shares.
Principle 11: Conflicts of Interest
The Board of Directors recognises that its members have a primary responsibility to always act in the interest of
the Bank and its shareholders as a whole, irrespective of who appointed them to the Board.
Strict policies are in place, particularly in the Bank’s Articles of Association and Board of Directors’ Charter, to
enable the management of conflict of interest, both actual as well as potential, should the occasion arise.
In addition, the Bank’s Policy on the Prevention of Market Abuse was adopted and implemented in conformity
with Market Abuse laws and regulations. Directors and staff members are, upon appointment, and also regularly
reminded of their obligations when dealing in securities of the Bank and other scheduled financial instruments.
Joseph Said, who is a Director of the Bank, holds a directorship in two companies that have a shareholding in the
Group, as disclosed in the Directors’ Report.
In addition, the Board also has a Conflicts of Interest Policy which serves to ensure, inter alia, that the Bank has in
place the relative arrangements, processes and procedures to identify, assess, document, escalate, manage,
mitigate and prevent conflicts of interest as necessary and as applicable, both at an institutional level, as well as
at the level of its staff members.
Principle 12: Corporate Social Responsibility
The Bank recognises the importance of adhering to established principles of corporate social responsibility and
remains fully committed to conducting its operations in an ethical and responsible manner at all times. It strives
to contribute positively to economic and social development, while enhancing the quality of life of its staff
members and their families.
This commitment extends to key areas including data privacy and protection, diversity and inclusion, talent
management, customer relationships, innovation, community and employee engagement, and responsible
lending practices.
The Bank implements these principles of corporate social responsibility through strong governance and risk
management practices.
It extends support to various initiatives and projects together with direct community involvement. The Bank is also
sensitive to the fact that success in these areas requires investment in the community, customers and staff
members while not overlooking the impact that its activities may have on the environment.
44
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statement of Compliance with the Principles of Good Corporate Governance (continued)
C.
NON-COMPLIANCE WITH THE CODE
Principle 8a: (Remuneration Committee)
The Board did not establish a Remuneration Committee as specified in Code Provision 8.A.1. In terms of Code
Provision 8.A.2 of the Principles, given that the remuneration of Directors for the holding of their office on the
Board is not performance-related, the functions of the Remuneration Committee are carried out by the Board of
Directors. The Board, at times, delegates some remuneration-related tasks to the Audit & Risk Committee and
Suitabilities & Evaluation Committee.
Principle 8b: (Nomination Committee)
A Nomination Committee has not been set up since the appointment of Directors to the Board is a matter that is
reserved entirely to the Bank’s shareholders in terms of the Memorandum and Articles of Association.
In this connection every member of the Bank holding in the aggregate at least fifteen percent (15%) of the ordinary
issued share capital of the Bank shall be entitled to appoint one (1) Director for each and every fifteen percent
(15%) of the ordinary issued share capital owned by that member.
Any fractional shareholding in excess of fifteen percent (15%) not applied in appointing such a Director or
Directors, and only that fraction, shall be entitled to vote in the election of the remaining Directors together with
the remaining body of shareholders. These are entitled to appoint the remaining Board members in accordance
with the provisions of the Bank’s statute.
This notwithstanding, in light of regulatory requirements, the Suitabilities & Evaluations Committee referred to
above was set up specifically to carry out suitability assessments of nominated and existing Directors, key function
holders or any other persons as may be required and also to assess the Board’s annual performance and that of
its committees. This Committee remains guided by applicable laws, rules, regulations and guidelines. This
Committee is also tasked with implementing the Bank’s Succession Policy for the Board of Directors and Key
Function Holders and to make any appropriate recommendations to the Board of Directors and also to carry out
other duties as the Board of Directors may deem necessary, such as remuneration-related matters.
Principle 9: (Code Provision 9.3)
There are no procedures disclosed in the Bank’s Memorandum or Articles as recommended in Code Provision 9.3 to
resolve conflicts between minority shareholders and controlling shareholders.
D.
INTERNAL CONTROL (CAPITAL MARKETS RULE 5.97.4)
The Board is ultimately responsible for the Bank’s internal controls as well as their effectiveness, while authority to
operate the Bank is delegated to the Chief Executive Officer. The Bank’s system of internal controls is designed to
manage all the risks in the most appropriate manner. Such controls, however, cannot completely eliminate the
possibility of material error or fraud. The Board, therefore, assumes responsibility for executing the four basic roles
of corporate governance, i.e. accountability, monitoring, strategy formulation and policy development.
In summary, the Board is therefore responsible for:
reviewing the Bank’s strategy on an ongoing basis as well as setting the appropriate business objectives in
order to enhance value for all stakeholders;
appointing and monitoring the Chief Executive Officer whose function it is to manage the operations of the
Bank; and
identifying and ensuring that significant risks are managed satisfactorily.
Given the fiduciary responsibility involved, the Board of Directors also sets high business and ethical standards for
adoption right across the organisation.
45
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statement of Compliance with the Principles of Good Corporate Governance (continued)
The Board upholds a policy of clear demarcation between its role and responsibilities and those of Management. It
has defined the level of authority that it retains over strategy formulation and policy determination together with
delegated authority and has vested accountability for the Bank’s day-to-day business in the Assets & Liabilities
Committee, Credit Committee and in the management team comprising of the:
•
Chief Executive Officer;
•
Deputy Chief Executive Officers; and
•
Chief Officers and other officers.
The Board frequently participates in asset allocation decisions as well as credit proposals above a certain
threshold, after the appropriate recommendations have been made.
The Bank’s internal control framework covering all the Bank’s activities ensures:
•
effective and efficient operations and prudent conduct of business;
•
proper risk management;
•
reliable financial and non-financial information; and
•
compliance with all internal policies, processes and procedures, laws, rules and regulations.
To this effect, a three-lines-of-defence model has been adopted by the Bank as follows:
•
First line of defence - Business Units Operations: This is provided by front line staff members and business
unit management. The internal controls and systems, the culture and control environment developed and
implemented by these business units play a vital role in anticipating and managing operational risks.
•
Second line of defence - Risk Management & Compliance: The Bank maintains permanent and effective
compliance and risk management functions which report directly to the Audit & Risk Committee and Board of
Directors. The Compliance Function identifies, assesses and manages compliance risk. The Risk Management
Function is responsible for overseeing the Bank’s activities and for identifying, monitoring, controlling and
reporting such risk. Through the Bank’s Risk Management Framework, an appropriate balance is struck
between sound practices and profitability, by applying strict internal controls and discretionary limits, and
optimising the returns thereof, in line with the Bank’s risk appetite.
•
Third line of defence - Internal Audit: This is an integral part of the Bank’s control environment and provides
Management and the Audit & Risk Committee and Board of Directors with an independent and objective
review of the Bank’s business activities and support functions.
E.
GENERAL MEETINGS (CAPITAL MARKETS RULE 5.97.6)
General meetings are called by giving at least twenty-one (21) days’ notice and conducted in accordance with the
provisions contained in the Bank’s Articles of Association.
The ‘Ordinary Business’ which is dealt with at the Annual General Meeting consists of the adoption of the annual
financial statements, declaration of a dividend, appointment of Board members, appointment of auditors and the
fixing of their remuneration together with the voting of remuneration to the Directors for the holding of their
office. All other business shall be deemed ‘Special Business’.
All shareholders registered in the shareholders’ register on record date as defined in the Capital Markets Rules
have the right to attend, participate and vote in the general meeting.
46
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statement of Compliance with the Principles of Good Corporate Governance (continued)
A shareholder or shareholders holding not less than five per cent (5%) of the voting issued share capital of the Bank
may: (i) request the Bank to include items on the agenda and; (ii) table draft resolutions for items included in the
agenda of a general meeting. Such requests shall be submitted to the Bank at least forty-six (46) days before the
date set for the general meeting.
Every shareholder shall be entitled to appoint only one (1) person to act as proxy holder to attend and vote at a
general meeting instead of him. The proxy holder shall enjoy the same rights to speak and ask questions in the
general meeting as those to which the member thus represented would be entitled.
Signed on behalf of the Bank's Board of Directors on 24 April 2026 by Michael C. Bonello (Chairman) and Joseph
Said (Director and Chief Executive Officer) as per the Directors' Declaration on ESEF Annual Financial Report
submitted in conjunction with the Annual Report and Financial Statements 2025.
47
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Remuneration Report
As outlined in the Statement of Compliance with the Code of Principles of Good Corporate Governance, and in
accordance with the Code of Principles of Good Corporate Governance contained in the Capital Markets Rules
issued by the Malta Financial Services Authority, the Board of Directors assumes the role and responsibilities of a
Remuneration Committee. This approach is adopted on the basis that Directors’ remuneration for their service on
the Board is not linked to performance and does not comprise share options, pension benefits, profit-sharing
schemes, or any other emoluments contingent upon the Bank’s performance. Among the obligations set out in
the Capital Markets Rules, the Board, where applicable, performs the principal responsibilities contemplated in
the Supporting Principles under Principle 8A of the Code of Principles of Good Corporate Governance. The Board,
at times, delegates some remuneration-related tasks to the Audit & Risk Committee and Suitabilities & Evaluations
Committee. This Remuneration Report was approved by the Board of Directors at the Board Meeting held on 24
April 2026.
Directors
The Bank’s Remuneration Policy for Directors is drawn up in terms of the Capital Markets Rule 12.26A et seq and
sets out the Bank’s remuneration policy with respect to its Directors, Chief Executive Officer and Deputy Chief
Executive Officers with their remuneration being paid in accordance with the same. During 2023, this Policy was
revised as approved by the Annual General Meeting on 22 June 2023 (Refer to
https://www.lombardmalta.com/annual-general-meeting-2023).
This Policy is reviewed by the Board annually and, in terms of the Capital Markets Rules, is required to be put to
a vote by the General Meeting at every material change and, in any case, at least every four years. No changes are
being proposed for approval at the 2026 Annual General Meeting.
In terms of the Bank’s Memorandum and Articles of Association, the Bank’s shareholders determine the maximum
annual aggregate remuneration of the Directors. The maximum amount is determined by resolution at each
Annual General Meeting of the Bank. The aggregate amount fixed for this purpose during the 2025 Annual General
Meeting was one hundred and ninety thousand euro (€190,000).
As per policy, members of the Board, in their role as directors, only receive a fixed fee, the amount of which is
determined on the basis of market practice as well as the Bank’s size and internal organisation and the nature,
scale and complexity of its activities and business model.
The fees paid to Directors for the holding of their office during 2025 amounted to € 135,000 (2024: €102,173). This
amount is within the limit of €190,000 approved by the Annual General Meeting of 25 June 2025.
It is confirmed that none of the Directors in their role as directors of the Bank are entitled to profit-sharing, share
options, pension benefits, variable remuneration, any other remuneration or related payments. Only one of the
Directors has a service contract with the Bank, which Director is the only Executive Director and is the CEO Joseph
Said.
48
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Remuneration Report (continued)
In terms of Code Provisions 8.A.5 of the Malta Financial Services Authority Capital Markets Rules, the total
emoluments received by Directors relative to their directorship for the financial year 2025, as compared to 2024
and 2023, are specified below. The late Graham A. Fairclough is being included for comparative reporting
purposes.
€
€
€
2025
2024
2023
Michael C. Bonello (Chairman)
37,500
30,000
30,000
John Bonello*
19,500
15,000
2,794
Aldo-Joseph Giordano**
19,500
9,115
N/A
Joseph Said
19,500
15,000
15,000
Peter Perotti
19,500
15,000
15,000
Kimon Palamidis
19,500
15,000
15,000
Graham A. Fairclough***
N/A
3,058
15,000
Total
135,000
102,173
92,794
* John Bonello was appointed as a non-executive director of the Bank with effect from 23 October 2023.
** Aldo-Joseph Giordano was appointed as a non-executive director of the Bank with effect from 21 May 2024.
*** The late Graham A. Fairclough resigned from his position as non-executive director with effect from 13 March 2024.
In determining the remuneration of the CEO and Deputy CEOs, the Board of Directors considers factors which
include among others, professional qualifications, experience, initiative, acumen, number of years of service, the
design and implementation of the overall business strategy, objectives and risk appetite at Bank as well as Group
level. The remuneration of the CEO and Deputy CEOs is fixed with no variable remuneration other than a
discretionary annual bonus which may be awarded as set out in the above-mentioned Policy.
The CEO and Deputy CEOs are also entitled to the use of a company car, health insurance and a telecommunication
allowance.
In a previous financial year, the Bank had decided to grant the CEO an ex-gratia gratuity upon his eventual
retirement, which amount was fully provided for and reflected in the financial statements of previous years.
In terms of Code Provision 8.A.5 of the Capital Markets Rules, during financial year 2025, the total emoluments
received from the Group by the Executive Director amounted to €418,013 (2024: €400,513; 2023: €385,513), split
as follows:
€
€
€
2025
2024
2023
Gross annual, fixed salary & fixed role-based allowances
380,513
367,513
352,513
Director Fees - Lombard Bank Malta p.l.c.
19,500
15,000
15,000
Chairman / Director Fees MaltaPost p.l.c.
18,000
18,000
18,000
Further remuneration for 2025 received by two Non-Executive Directors from other companies within the Group
amounted to €7,500, split as follows:
€
€
€
2025
2024
2023
Director Fees - MaltaPost p.l.c.
N/A
1,681
8,850
Company Secretary Fees - MaltaPost p.l.c.
N/A
791
4,000
Director Fees - Lombard Select SICAV p.l.c.
N/A
1,973
10,000
€
€
€
2025
2024
2023
Director Fees - Lombard Select SICAV p.l.c.
€7,500
10,000
10,000
There is no formal provision for the reclamation of variable remuneration.
49
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Remuneration Report (continued)
During the financial year 2025, the total emoluments received by the Deputy Chief Executive Officers, from the
Group amounted to €392,026 split as follows:
€
€
€
2025
2024
2023
Gross annual & fixed salary
187,513
179,113
99,924*
Director Fees – MaltaPost p.l.c.
8,500
3,258**
N/A
€
€
€
2025
2024
2023
Gross annual & fixed salary
187,513
179,113
99,924*
Director Fees – MaltaPost p.l.c.
8,500
8,500
8,850
* From date of appointment on the 1 April 2023.
** From date of appointment on the 14 August 2024.
The above remuneration levels for 2025 comply with the provisions of the approved Remuneration Policy for
Directors and take into consideration the interests of all the Bank's stakeholders together with the external context
and there were no deviations from the procedure for the implementation of the said Policy.
Senior Management
Senior Management for the purposes of this section of the Remuneration Report, refers to the Chief Officers of
the Bank, excluding the Chief Executive Officer and Deputy Chief Executive Officers.
The Board of Directors is satisfied that the remuneration packages offered to Senior Management continue to
ensure that the Bank attracts and retains management staff with the necessary qualities and skills. The Bank’s
policy is to engage Senior Management on the basis of indefinite contracts of employment, following the
successful completion of a probationary period. The terms and conditions of employment for Senior Management
are set out in the respective employment contracts. Upon completion of probation, the applicable notice period
is that prescribed by the relevant legislation.
Share options, share incentive schemes and profit sharing do not feature in the Bank’s Remuneration Policy, and
the individual contracts of employment of Senior Management do not contain provisions for termination
payments and / or other payments linked to early termination other than as determined by the law.
From time to time the Board of Directors of the Bank approves the allocation of a financial contribution towards
retirement gratuities that it may decide to grant and contribute towards a staff pension fund that may be formally
established in the future. Gratuities that it may make, on an ex-gratia basis, to its employees are made accordingly.
Amounts contributed for this purpose in respect of 2025 amounted to €100,000 (2024: €100,000). Once
contributed, these amounts are held in a separate bank account that is not controlled by the Bank and are
therefore not included in the Bank’s financial statements. Amounts intended as contributions to a prospective
pension fund will be governed by rules to be determined in accordance with the applicable legislation.
No other pension benefits are currently payable by the Bank.
Senior Management staff are eligible for annual salary increases, which are not directly performance-related. The
remuneration of Senior Management staff members is determined also by the role, responsibilities covered,
market practice, seniority, experience and qualifications. Annual bonuses are paid to Senior Management staff
members according to individual overall performance during the previous financial year. Bonus payments do not
exceed 100% of the fixed component of the total remuneration for each individual.
Non-cash benefits include private health care insurance as well as death-in-service benefits and personal accident
insurance cover.
50
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Remuneration Report (continued)
Total emoluments received by Senior Management, excluding the CEO and Deputy CEOs, during the period under
review are as detailed below, in terms of Code Provision 8.A.5.
Fixed Remuneration
Variable Remuneration
Share Options
Others
2025
2024
2023
2025
2024
2023
2025
2024
2023
2025
2024
2023
€
€
€
€
€
€
€
€
€
€
€
€
525,565
481,563
478,146
85,000
74,000
116,000
-
-
-
-
-
-
For other employees, fixed pay is determined by a Collective Agreement and annual bonuses are differentiated by
individual performance and grade.
No changes were effected to the Bank’s Remuneration Policy during the financial year under review other than
minor changes for further alignment with regulatory requirements. Furthermore, the Bank does not plan to effect
changes in its Remuneration Policy in the forthcoming financial year, unless required to do so in terms of any
regulatory obligations or otherwise.
In terms of Chapter 12 of the Capital Markets Rules, this Remuneration Report is being put to an advisory vote at
the 2026 Annual General Meeting in accordance with the requirements of the Capital Markets Rule 12.26 L.
The Directors’ Remuneration Report for 2024 was approved at the Annual General Meeting held on 25 June 2025.
There were no issues raised on the Report during the said Annual General Meeting.
Other information on remuneration in terms of Appendix 12.1 of the Capital Markets Rules
In terms of the requirements within Appendix 12.1 of the Capital Markets Rules, the following tables present the
annual change regarding each individual director’s remuneration, the performance of the Bank, and of average
remuneration on a full-time equivalent basis of employees of the Bank, other than Directors over the three most
recent financial years. The late Graham A. Fairclough is being included for comparative reporting purposes.
2025
2024
2023
% change
% change
€
€
€
(2025-2024)
(2024-2023)
Michael C. Bonello (Chairman)
37,500
30,000
30,000
25%
0%
John Bonello*
19,500
15,000
2,794
30%
N/A
Aldo-Joseph Giordano**
19,500
9,115
N/A
N/A
N/A
Joseph Said
19,500
15,000
15,000
30%
0%
Kimon Palamidis
19,500
15,000
15,000
30%
0%
Peter Perotti
19,500
15,000
15,000
30%
0%
Graham A. Fairclough***
N/A
3,058
15,000
N/A
N/A
Total
135,000
102,173
92,794
* John Bonello was appointed as a non-executive director of the Bank with effect from 23 October 2023.
** Aldo-Joseph Giordano was appointed as a non-executive director of the Bank with effect from 21 May 2024.
*** The late Graham A. Fairclough resigned from his position as non-executive director with effect from 13 March 2024.
51
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Remuneration Report (continued)
% annual change of the
% annual change of the
% annual change of the
% annual change of the
Bank’s performance
Bank’s performance based
Bank’s performance based
Bank’s performance based
based on profit before tax
on profit before tax
on profit before tax
on profit before tax
(2025-2024)
(2024-2023)
(2023-2022)
(2022-2021)
18%
16%
(52%)
136%
% annual change of the
% annual change of the
% annual change of the
% annual change of the
average remuneration on
average remuneration on
average remuneration on
average remuneration on
a full-
time equivalent
a full-
time equivalent
a full-
time equivalent
a full-
time equivalent
basis of employees of the
basis of employees of the
basis of employees of the
basis of employees of the
Bank other than Directors
Bank other than Directors
Bank other than Directors
Bank other than Directors
(2025-2024)
(2024-2023)
(2023-2022)
(2022-2021)
1%
6%
0%
4%
€'000
2025
2024
% change
Group
Bank
Group
Bank
Group
Bank
Employee remuneration (excluding CEO)
27,918
9,191
26,161
9,145
7%
1%
CEO remuneration
381
381
368
368
4%
4%
Entity’s performance – Profit before tax
23,767
19,061
19,415
16,101
22%
18%
€'000
2024
2023
% change
Group
Bank
Group
Bank
Group
Bank
Employee remuneration (excluding CEO)
26,161
9,145
24,031
8,542
9%
7%
CEO remuneration
368
368
353
353
4%
4%
Entity’s performance – Profit before tax
19,415
16,101
14,527
13,850
34%
16%
The Group’s / Bank’s performance is measured using Profit before tax.
52
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Company Information
Number of shareholders analysed by range:
31 December 2025
31 March 2026
Range
Shareholders
Shares
Shareholders
Shares
1 – 500
118
21,974
118
21,974
501 – 1000
41
33,677
40
32,861
1001 – 5000
403
1,198,980
413
1,227,939
5001 and over
977
153,317,632
966
153,289,489
Total
1,539
154,572,263
1,537
154,572,263
The Bank has one class of shares and each share is entitled to one vote.
BOARD OF DIRECTORS
Michael C. Bonello
Chairman
John Bonello
Aldo-Joseph Giordano
Kimon Palamidis
Peter Perotti
Joseph Said
COMPANY SECRETARY
Helena Said
SENIOR MANAGEMENT
Joseph Said
Chief Executive Officer
Anthony Bezzina
Deputy Chief Executive Officer
Eugenio Farrugia
Deputy Chief Executive Officer
David Attard
Chief Officer - Group Corporate Services
Moira Balzan
Chief Financial Officer
Carlos Camenzuli
Chief Risk Officer
Helena Said
Chief Legal Officer
Anthony Zahra
Chief Information Officer
53
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Company Information (continued)
REGISTERED OFFICE
Tel: 25581 117
BRANCHES
43, Pitkali Road, Attard ATD 2219 Bertu Fenech Square, Balzan BZN 1409
Tel: 25581 560 Tel: 25581 500
82, St Sebastian Street, Qormi, QRM 2335 198, Naxxar Road, San Gwann SGN 9030
Tel: 25581 360 Tel: 25581 650
4, Fleur-De-Lys Junction, Santa Venera SVR 1587 41, Robert Arrigo Street, Sliema SLM 3174
Tel: 25581 300 Tel: 25581 251
225, Tower Road, Sliema SLM 1601 67, Republic Street, Valletta VLT 1117
Tel: 25581 260 Tel: 25581 100
Ninu Cremona Street, Victoria VCT 2561 19, Sanctuary Street, Zabbar, ZBR 1010
Tel: 25581 600 Tel: 25581 400
13, Gregorio Bonici Square, Zejtun ZTN 1051
Tel: 25581 245
CREDIT
9A St. Fredrick Street, Valletta VLT 1470
Tel: 25581 115
HOME LOANS
4 Main Street, Qormi QRM 1100
Tel: 25581 370
INTERNATIONAL BUSINESS BANKING
Graham Street, Sliema SLM 1711
Tel: 25581 226
LEGAL OFFICE
59 Republic Street, Valletta VLT 1117
Tel: 25581 116
TRADE SERVICES
43, Pitkali Road, Attard ATD 2219
Tel: 25581 576
WEALTH MANAGEMENT
Financial Advice & Stockbroking Services: 225A, Tower Road, Sliema SLM 1601
Tel: 25581 167
Portfolio Management: 225A, Tower Road, Sliema SLM 1601
Tel: 25581 288
Research & Corporate Advisory: 67, Republic Street, Valletta VLT 1117
Tel: 25581 814
54
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Financial Statements
Statements of Financial Position
Group | Bank | ||||
Notes | 2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | ||
Assets | |||||
Balances with Central Bank of Malta, treasury bills and cash | 5 | 181,858 | 153,361 | ||
Cheques in course of collection | 150 | 266 | |||
Financial investments | 6 | 211,126 | 205,978 | ||
Loans and advances to banks | 7 | 55,936 | 40,964 | ||
Loans and advances to customers | 8 | 929,120 | 872,690 | ||
Trade and other receivables | 16 | 7,238 | 3,443 | ||
Accrued income and other assets | 17 | 4,593 | 4,612 | ||
Assets classified as held for sale | 8 | 703 | 703 | ||
Current tax assets | 288 | - | |||
Inventories | 15 | 291 | 878 | ||
Investments in subsidiaries | 9 | - | - | 17,926 | 17,927 |
Investments in associates | 10 | 503 | 1,645 | ||
Intangible assets | 11 | 3 | 10 | ||
Property, plant and equipment | 12 | 43,670 | 44,798 | ||
Deferred tax assets | 14 | 6,248 | 7,772 | ||
Total assets | 1,459,653 | 1,355,047 |
55
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statements of Financial Position (continued)
Group
Bank
Notes | 2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | ||
Equity and Liabilities | |||||
Equity | |||||
Share capital | 18 | 19,322 | 19,322 | ||
Share premium | 19 | 56,534 | 56,534 | ||
Revaluation and other reserves | 19 | 9,404 | 7,048 | ||
Retained earnings | 129,910 | 119,917 | |||
Equity attributable to equity holders of the Bank | 215,170 | 202,821 | |||
Non-controlling interests | - | - | |||
Total equity | 215,170 | 202,821 | |||
Liabilities | |||||
Amounts owed to banks | 20 | 345 | 438 | ||
Amounts owed to customers | 21 | 1,210,294 | 1,121,816 | ||
Current tax liabilities | - | 597 | |||
Accruals and deferred income | 24 | 11,468 | 9,643 | ||
Other liabilities | 23 | 17,101 | 14,880 | ||
Provisions for liabilities and other charges | 22 | 2,023 | 1,573 | ||
Deferred tax liabilities | 14 | 3,252 | 3,279 | ||
Total liabilities | 1,244,483 | 1,152,226 | |||
Total equity and liabilities | 1,459,653 | 1,355,047 |
Memorandum items | |||||
Contingent liabilities | 25 | 22,055 | 19,827 | ||
Commitments | 25 | 356,852 | 292,833 |
The notes on pages 64 to 190 are an integral part of these financial statements.
56
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Income Statements
Group
Bank
Notes | 2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | ||
Interest receivable and similar income | |||||
- on loans and advances, balances with Central | |||||
Bank of Malta and treasury bills | 26 | 37,189 | 35,374 | ||
- on debt and other fixed income instruments | 26 | 2,722 | 2,627 | ||
Interest expense | 26 | ( | ( | (13,805) | (10,837) |
Net interest income | 26,106 | 27,164 | |||
Fee and commission income | 27 | 5,686 | 5,610 | ||
Fee and commission expense | 27 | ( | ( | (293) | (269) |
Net fee and commission income | 5,393 | 5,341 | |||
Postal sales and other revenues | 28 | 1,520 | 500 | ||
Dividend income | 29 | 5,229 | 1,910 | ||
Net trading income | 30 | 579 | 665 | ||
Other operating income | 122 | 18 | |||
Operating income | 38,949 | 35,598 | |||
Employee compensation and benefits | 31 | ( | ( | (9,572) | (9,513) |
Other operating costs | 33 | ( | ( | (9,672) | (8,707) |
Depreciation and amortisation | 11,12 | ( | ( | (1,160) | (1,166) |
Net movement in provisions for liabilities and other charges | 22 | ( | ( | (501) | (1,150) |
Net movement in expected credit losses | 32 | 1,017 | 1,039 | ||
Operating profit | 19,061 | 16,101 | |||
Share of profit/(loss) attributable to investment | |||||
accounted for using the equity method, net of tax | 10 | ( | - | - | |
Profit before taxation | 19,061 | 16,101 | |||
Income tax expense | 34 | ( | ( | (5,610) | (5,877) |
Profit for the year | 13,451 | 10,224 | |||
Attributable to: | |||||
Equity holders of the Bank | |||||
Non-controlling interests | |||||
Profit for the year | |||||
Earnings per share | 35 | € | € | ||
| The notes on pages 64 to 190 are an integral part of these financial statements. |
57
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statements of Comprehensive Income
Group
Bank
Notes
2025
2024
2025
2024 | |||||
€ 000 | € 000 | € 000 | € 000 | ||
Profit for the year | 13,451 | 10,224 | |||
Other comprehensive income | |||||
Items that may be subsequently reclassified to profit | |||||
or loss | |||||
Investments in debt securities measured at FVOCI | |||||
Net gains from changes in fair value, before tax | 6 | 3,257 | 8,858 | ||
Net movements in credit losses released to profit or loss, before tax | ( | ( | (5) | (247) | |
Income taxes relating to these items | 34 | ( | ( | (1,138) | (3,014) |
Items that will not be subsequently reclassified to profit or loss | |||||
Net gains/(losses) from changes in fair value of investments in equity instruments designated at FVOCI, before tax | 6 | ( | 257 | (74) | |
Remeasurements of defined benefit obligations, before tax | ( | - | - | ||
Surplus arising on revaluation of land and buildings, before tax | 12 | - | 3,162 | ||
Other items | 102 | - | |||
Income taxes relating to these items | 34 | ( | ( | (159) | (453) |
Other comprehensive income for the year, net of income tax | 2,314 | 8,232 | |||
Total comprehensive income for the year, net of income tax | 15,765 | 18,456 | |||
Attributable to: | |||||
Equity holders of the Bank | |||||
Non-controlling interests | |||||
Total comprehensive income for the year, net of income tax | |||||
| The notes on pages 64 to 190 are an integral part of these financial statements. |
58
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statements of Changes in Equity
Group
Attributable to equity holders of the Bank | ||||||||
Revaluation | Non- | |||||||
Share | Share | and other | Retained | controlling | Total | |||
capital | premium | reserves | earnings | Total | interests | Equity | ||
Notes | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |
At 1 January 2024 | ||||||||
Comprehensive income | ||||||||
Profit for the year | ||||||||
Other comprehensive income | ||||||||
Surplus on revaluation of land and buildings | ||||||||
Fair valuation of financial assets measured at FVOCI: | ||||||||
Net movements in fair value arising during the year | ||||||||
Reclassification adjustments: | ||||||||
- net movement attributable to changes in credit risk | ( | ( | ( | |||||
- net amounts reclassified to retained earnings on disposal | 6 | ( | ||||||
Remeasurements of defined benefit obligations | ( | ( | ( | ( | ||||
Total other comprehensive income for the year | ||||||||
Total comprehensive income for the year | ||||||||
Transfers and other movements | 19 | ( | ||||||
Transactions with owners, recorded directly in equity | ||||||||
Distributions to owners | ||||||||
Dividends to equity holders | 36 | ( | ( | ( | ( | |||
Changes in ownership interests in subsidiaries that do not result in loss of control | ||||||||
Impacts of change in non-controlling interests in subsidiary | ( | ( | ||||||
Total transactions with owners | ( | ( | ( | ( | ||||
At 31 December 2024 |
The notes on pages 64 to 190 are an integral part of these financial statements.
59
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statements of Changes in Equity (continued)
Group
Attributable to equity holders of the Bank
Revaluation | Non- | |||||||
Share | Share | and other | Retained | controlling | Total | |||
capital | premium | reserves | earnings | Total | interests | Equity | ||
Notes | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |
At 1 January 2025 | ||||||||
Comprehensive income | ||||||||
Profit for the year | ||||||||
Other comprehensive income | ||||||||
Fair valuation of financial assets measured at FVOCI: | ||||||||
Net movements in fair value arising during the year | ( | |||||||
Reclassification adjustment: | ||||||||
- net movement attributable to changes in credit risk | ( | ( | ( | |||||
Realisation of reserve upon disposal of revalued property | ( | |||||||
Remeasurements of defined benefit obligations | ||||||||
Other items | ||||||||
Total other comprehensive income for the year | ( | |||||||
Total comprehensive income for the year | ||||||||
Transfers and other movements | 19 | ( | ||||||
Transactions with owners, recorded directly in equity | ||||||||
Distributions to owners | ||||||||
Dividends to equity holders | 36 | ( | ( | ( | ( | |||
Total transactions with owners | ( | ( | ( | ( | ||||
At 31 December 2025 | ||||||||
| The notes on pages 64 to 190 are an integral part of these financial statements. |
60
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statements of Changes in Equity (continued)
Bank
Revaluation
Share
Share
and other
Retained
Total
capital
premium
reserves
earnings
Equity
Notes
€ 000
€ 000
€ 000
€ 000
€ 000
At 1 January 2024
19,322
56,534
(1,297)
111,444
186,003
Comprehensive income
Profit for the year
-
-
-
10,224
10,224
Other comprehensive income
Surplus on revaluation of land and buildings
-
-
2,683
-
2,683
Fair valuation of financial assets measured at FVOCI:
Net movements in fair value arising during the year
-
-
5,710
-
5,710
Reclassification adjustments:
- net movement attributable to changes in credit risk
-
-
(161)
-
(161)
- net amounts reclassified to retained earnings on disposal
6
-
-
(140)
140
-
Total other comprehensive income for the year
-
-
8,092
140
8,232
Total comprehensive income for the year
-
-
8,092
10,364
18,456
Transfers and other movements
19
-
-
253
(253)
-
Transactions with owners, recorded directly in equity
Distributions to owners
Dividends to equity holders
36
-
-
-
(1,638)
(1,638)
Total transactions with owners
-
-
-
(1,638)
(1,638)
At 31 December 2024
19,322
56,534
7,048
119,917
202,821
The notes on pages 64 to 190 are an integral part of these financial statements.
61
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statements of Changes in Equity (continued)
Bank
Revaluation
Share
Share
and other
Retained
Total
capital
premium
reserves
earnings
Equity
Notes
€ 000
€ 000
€ 000
€ 000
€ 000
At 1 January 2025
19,322
56,534
7,048
119,917
202,821
Comprehensive income
Profit for the year
-
-
-
13,451
13,451
Other comprehensive income
Fair valuation of financial assets measured at FVOCI:
Net movements in fair value arising during the year
-
-
2,215
-
2,215
Reclassification adjustment:
- net movement attributable to changes in credit risk
-
-
(3)
-
(3)
Realisation of reserve upon disposal of revalued property
-
-
(123)
123
-
Other items
-
-
-
102
102
Total other comprehensive income for the year
-
-
2,089
225
2,314
Total comprehensive income for the year
-
-
2,089
13,676
15,765
Transfers and other movements
19
-
-
267
(267)
-
Transactions with owners, recorded directly in equity
Distributions to owners
Dividends to equity holders
36
-
-
-
(3,416)
(3,416)
Total transactions with owners
-
-
-
(3,416)
(3,416)
At 31 December 2025
19,322
56,534
9,404
129,910
215,170
The notes on pages 64 to 190 are an integral part of these financial statements.
62
Lombard Bank Malta p.l.c.
Annual Report and Financial Statements 2025
Statements of Cash Flows
Group
Bank
2025
2024
2025
2024
Notes | € 000 | € 000 | € 000 | € 000 | |
Cash flows from operating activities | |||||
Interest, fees and commission receipts | 44,029 | 40,591 | |||
Receipts from customers relating to postal sales | |||||
and other revenue | 1,520 | 500 | |||
Interest, fees and commission payments | ( | ( | (11,672) | (9,864) | |
Payments to employees and suppliers | ( | ( | (18,596) | (17,122) | |
Cash flows attributable to funds collected on behalf of third parties | - | - | |||
Cash flows from operating profit before changes | |||||
in operating assets and liabilities | 15,281 | 14,105 | |||
Movements in operating assets: | |||||
Treasury bills | ( | (16,886) | 2,935 | ||
Balances with Central Bank of Malta | ( | ( | (240) | (132) | |
Loans and advances to banks and customers | ( | ( | (55,751) | (113,672) | |
Other receivables | 749 | 1,206 | |||
Movements in operating liabilities: | |||||
Amounts owed to banks and to customers | 88,479 | 100,562 | |||
Other payables | ( | 2,848 | (1,337) | ||
Net cash generated from operating activities, before tax | 34,480 | 3,667 | |||
Income tax paid | ( | ( | (6,192) | (5,888) | |
Net cash flows generated from/(used in) | |||||
operating activities | 28,288 | (2,221) | |||
Cash flows from investing activities | |||||
Dividends received | 2,529 | 465 | |||
Interest received from debt securities | 3,508 | 3,643 | |||
Purchase of financial investments | ( | ( | (13,596) | (12,631) | |
Proceeds from maturity/disposal of financial | |||||
investments | 9,842 | 29,839 | |||
Net proceeds from liquidation of subsidiary | 1 | 101 | |||
Proceeds from disposal of property, plant and equipment | 325 | 2 | |||
Purchase of property, plant and equipment | |||||
and intangible assets | ( | ( | (309) | (416) | |
Investment in associate | 10 | ( | ( | - | - |
Acquisition of subsidiary, net of cash acquired | ( | - | - | ||
Net cash flows (used in)/generated from investing | |||||
activities | ( | 2,300 | 21,003 | ||
Cash flows from financing activities | |||||
Principal elements of lease payments | ( | ( | (741) | (213) | |
Dividends paid to equity holders of the Bank | 36 | ( | ( | (3,416) | (1,638) |
Dividends paid to non-controlling interests | ( | ( | - | - | |
Net cash flows used in financing activities | ( | ( | (4,157) | (1,851) | |
Net movement in cash and cash equivalents | 26,431 | 16,931 | |||
Cash and cash equivalents at beginning of year | 185,367 | 168,436 | |||
Cash and cash equivalents at end of year | 37 | 211,798 | 185,367 | ||
| The notes on pages 64 to 190 are an integral part of these financial statements. |
63
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Notes to the Financial Statements
1.
Summary of material accounting policies ................................................................................................. 65
2. Financial risk management ....................................................................................................................... 80
3. Accounting estimates and judgements ................................................................................................... 152
4. Segmental information ............................................................................................................................ 155
5. Balances with Central Bank of Malta, treasury bills and cash................................................................. 156
6. Financial investments .............................................................................................................................. 156
7. Loans and advances to banks .................................................................................................................. 158
8. Loans and advances to customers ........................................................................................................... 159
9. Investments in subsidiaries ...................................................................................................................... 159
10. Investments in associates ........................................................................................................................ 161
11. Intangible assets ...................................................................................................................................... 163
12. Property, plant and equipment ............................................................................................................... 164
13. Leases ...................................................................................................................................................... 168
14. Deferred tax assets and liabilities ............................................................................................................ 171
15. Inventories ............................................................................................................................................... 173
16. Trade and other receivables .................................................................................................................... 173
17. Accrued income and other assets ............................................................................................................ 173
18. Share capital ............................................................................................................................................ 174
19. Reserves ................................................................................................................................................... 174
20. Amounts owed to banks .......................................................................................................................... 175
21. Amounts owed to customers ................................................................................................................... 175
22. Provisions for liabilities and other charges .............................................................................................. 175
23. Other liabilities ........................................................................................................................................ 177
24. Accruals and deferred income ................................................................................................................. 177
25. Commitments and contingent liabilities .................................................................................................. 177
26. Net interest income ................................................................................................................................. 178
27. Net fee and commission income .............................................................................................................. 179
28. Postal sales and other revenues .............................................................................................................. 179
29. Dividend income ...................................................................................................................................... 179
30. Net trading income .................................................................................................................................. 180
31. Employee compensation and benefits ..................................................................................................... 180
32. Net movement in expected credit losses ................................................................................................. 181
33. Profit before taxation .............................................................................................................................. 183
34. Income tax expense ................................................................................................................................. 184
35. Earnings per share ................................................................................................................................... 185
36. Dividends ................................................................................................................................................. 186
37. Cash and cash equivalents....................................................................................................................... 186
38. Related parties ........................................................................................................................................ 186
39. Regulatory compensation schemes ......................................................................................................... 189
40. Statutory information .............................................................................................................................. 190
64
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
65
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
1. Summary of material accounting policies (continued)
66
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
67
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
68
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
1. Summary of material accounting policies (continued)
69
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
1. Summary of material accounting policies (continued)
70
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
71
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
72
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
73
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Years | |
Buildings | 100 or over period of lease arrangement |
Leasehold property | Over period of lease arrangement |
Computer equipment | 4 |
Other | 4 – 8 |
74
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
75
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
76
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
77
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
78
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
79
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management
2.1 Introduction
2.1.1 Preamble
The Group’s business involves taking on risks in a targeted manner and managing them professionally. The
core functions of the Group’s risk management are to identify all key risks for the Group, measure these
risks, manage the risk positions and determine capital allocations. The Group regularly reviews its risk
management policies and systems to reflect changes in markets, products and best market practice. The
Group’s aim is to achieve an appropriate balance between risk and return and minimise
potential adverse
effects on the Group’s financial performance.
The Group defines risk as the possibility of losses or profits
foregone, which may be caused by
internal or external factors.
The Group considers risk management a core competency that helps produce consistently high returns for
its various stakeholders. The Group aims to manage all major types of risk by applying methods that meet
best practice. The Group considers it important to have a clear distribution of responsibilities within the
area of risk management. One of the main tasks of the Group’s executive management is to set the
framework for this area. An understanding of risk-taking and transparency in risk-taking are key elements
in the Group’s business strategy and thus in its ambition to be a strong financial entity. The Group’s internal
risk management processes support this objective.
Risk management within the Bank is mainly carried out on a unified basis, using an integrated and entity-
wide framework. This framework is based on local and international guidelines, such as the Basel IV Accord,
corresponding Directives and Regulations of the European Union, including technical standards, as well as
contemporary international banking practices. The Bank has adopted the Standardised Approach and the
Basic Method with respect to the calculation of capital requirements in relation to, and management of,
credit and market risks, and the Basic Indicator Approach with respect to operational risk. The Bank
regularly updates its Internal Capital and Liquidity Adequacy Assessment Processes (ICAAP and ILAAP), that
are approved by the Board of Directors.
2.1.2 Organisation
The Bank’s Board of Directors is responsible for ensuring that adequate processes and procedures exist to
ensure effective internal control systems for the Group. These internal control systems ensure that
decision-making capability and the accuracy of the reporting and financial results are maintained at a high
level at all times. The Board assumes responsibility for:
• setting business objectives, goals and the general strategic direction for Management with a view to
maximise value;
• selecting and appointing the Chief Executive Officer who is entrusted with the day-to-day operations of
the Group;
• management of the Group’s operations;
• ensuring that significant business risks are identified and appropriately managed; and
• setting the highest business standards and code for ethical behaviour, and monitoring adherence with
these.
In deciding how best to discharge its responsibilities, the Board upholds a policy of clear demarcation
between its role and responsibilities and those of Management. It has defined the level of authority that it
retains over strategy formulation and policy determination, and delegated authority and vested
accountability for the Bank’s day-to-day business in the Assets & Liabilities Committee and Credit
Committee, and, for the Group’s day-to-day operations, in an Executive Team comprising the Chief
Executive Officer, Deputy Chief Executive Officers and Chief Officers. The Audit & Risk Committee reviews
the processes and procedures to ensure the effectiveness of the Group’s system of internal control, as well
as the implementation of the Board’s risk strategy by management. The Audit & Risk Committee is
supported by the Internal Audit, Risk Management and Compliance functions.
80
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Authority to operate the Bank and its subsidiaries is delegated to the Chief Executive Officer within the
limits set by the Board. The Board is ultimately responsible for the Group’s system of internal control and
for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure
to achieve business objectives, and can provide only reasonable, and not absolute, assurance against
material misstatement or loss.
The Group is committed to the highest standards of business conduct and seeks to maintain these standards
across all operations. Group policies and procedures are in place for the reporting and addressing of
fraudulent activities.
The Group has an appropriate organisational structure for planning, executing, controlling and monitoring
business operations in order to achieve Group objectives.
2.1.3 Risk policies
The Bank’s Board of Directors is empowered to set out the overall risk policies and limits for all material risk
types. The Board also decides on the general principles for managing and monitoring risks. The Board
provides written principles for overall risk management, as well as written policies covering specific areas,
such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-
derivative financial instruments.
Internal controls, procedures and processes are managed within the following areas:
• Finance
• Treasury
• Credit
• Internal Audit
• Risk Management
• IT
• Compliance
• Anti-Money Laundering
2.1.4 Risk appetite
The risk appetite determines the maximum risk that the Group is willing to assume to meet business targets.
To ensure coherence between the Group’s strategic considerations regarding risk-taking and day-to-day
decisions, from time to time, the Group formulates and updates its risk appetite for the purposes of
strategic direction. The Group’s risk appetite is set in a process based on a thorough analysis of its current
risk profile. The Group identifies a number of key risk components and for each, determines a target that
represents the Group’s view of the component in question. The following are the key risk components:
• Credit risk
• Market risk
• Capital risk
• Liquidity risk
• Operational risk
• Information & cyber security risk
• Information technology risk
• Information management risk
• Financial crime risk
• Compliance risk
• Environmental, social and governance (‘ESG’) risk
81
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2.1.5 Reporting
The Group allocates considerable resources to ensure the ongoing compliance with approved limits and to
monitor its asset portfolio. In particular, the Bank has a fixed reporting cycle to ensure that the relevant
management bodies, including the Board of Directors and the Executive Team, are kept informed on an
ongoing basis of developments in the asset portfolio, on such matters as non-performing loans and other
relevant information.
2.2 Risk exposures
In terms of the Capital Requirement Regulation (‘CRR’), ‘an exposure’ is the amount at risk arising from the
reporting credit institution's assets and off-balance sheet items. Consistent with this, an exposure would
include the amount at risk arising from the Bank’s:
• claims on a customer including actual and potential claims which would arise from the drawing down
in full of undrawn advised facilities, which the Bank has committed itself to provide;
• contingent liabilities arising in the normal course of business, and those contingent liabilities which
would arise from the drawing down in full of undrawn advised facilities which the Bank has committed
itself to provide; and
• other on and off-balance sheet financial assets and commitments.
The Group is exposed to a number of risks, which it manages at different organisational levels.
The main categories of risk are:
• Credit risk: Credit risk stems from the possible non-prompt repayment or non-payment of existing and
contingent obligations by the Group’s counterparties, resulting in the loss of equity and profit. It is the
risk that deterioration in the financial condition of a borrower will cause the asset value to decrease or
be extinguished. Country risk and settlement risk are included in this category. Country risk refers to
the risk of losses arising from economic or political changes that affect the country from which the asset
originates. Settlement risk refers to the risk of losses through failure of the counterparty to settle
outstanding dues on the settlement date owing to bankruptcy or other causes.
• Market risk: Risk of losses arising from unfavourable changes in the level and volatility of interest rates,
foreign exchange rates or investment prices.
• Liquidity risk: Liquidity risk may be divided into two sub-categories:
• Market (product) liquidity risk: Risk of losses arising from difficulty in accessing a product or
market at the required time, price and amount.
• Funding liquidity risk: Risk of losses arising from a timing mismatch between investing,
placements and fund raising activities resulting in obligations missing the settlement date or
satisfied at higher than normal rates.
• Operational risk: Risk of loss resulting from the lack of skilful management or good governance within
the Group and the inadequacy of proper control, which might involve internal operations, personnel,
systems or external occurrences that in turn affect the income and capital funds of financial institutions.
The Bank has adopted an operational risk management framework and procedures, which provide for
the identification, assessment, management, monitoring and reporting of the Bank’s operational risks.
• ESG risk: ESG risks refer to the risks of any negative financial impact on the Group and/or Bank stemming
from environmental, social and governance factors that may have a negative impact on the financial
performance of the Group or solvency of the Bank. The Group continues to evaluate its potential
exposure towards climate and environmental risks.
The Bank’s approach to management of the above risks is addressed in this note.
82
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
83
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
84
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
85
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
86
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Stage 1 | Stage 2 | Stage 3 |
(Initial recognition) | (Significant increase in credit risk | (Credit-impaired financial |
since initial recognition) | assets) | |
12-month expected credit losses | Lifetime expected credit losses | Lifetime expected credit |
losses |
87
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
88
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Corporate and commercial exposures | Personal exposures | All exposures | |||
• | information obtained during periodic review of | • | internally collected | • | payment record – this |
| customer files – e.g. audited financial statements, | data on customer | includes overdue status | |||
| management accounts, budgets and projections. | behaviour – e.g. | as well as a range of | |||
| Examples of areas of particular focus are: gross | utilisation of credit | variables about payment | |||
| profit margins, financial leverage ratios, debt | card facilities; | ratios; | |||
| service coverage, compliance with contractual | • | affordability metrics; | • | utilization of the granted | |
| conditions, quality of management and senior | and | limit; | |||
| management changes; | • | external data from | • | requests for and | |
• | data from credit reference agencies, press articles; | credit reference | granting of forbearance; | ||
| and | agencies including | and | |||
• | actual and expected significant changes in the | industry-standard | • | existing and forecast | |
| political, regulatory and technological environment | credit scores. | changes in business, | |||
| of the borrower or in its business activities. | financial and economic | ||||
| conditions. | |||||
89
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
90
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
91
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
92
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
93
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
As of 31 December 2025 | |||
2026 | 2027 | 2028 | |
Gross Domestic Product, constant prices (YoY)* | |||
‘Base’ | 3.70% | 3.70% | 3.70% |
Range of forecasts for alternative scenarios | [0.6 - 6.9]% | [0.6 - 6.9]% | [0.6 - 6.9]% |
Unemployment rate (YoY)* | |||
‘Base’ | 2.8% | 2.8% | 2.8% |
Range of forecasts for alternative scenarios | [1.4 - 4.2]% | [1.4- 4.2]% | [1.4– 4.2]% |
Inflation rate (YoY)* | |||
‘Base’ | 2.3% | 2.1% | 2.1% |
Range of forecasts for alternative scenarios | [0.9 - 3.7]% | [0.7 - 3.5]% | [0.7 – 3.5]% |
As of 31 December 2024 | |||
2025 | 2026 | 2027 | |
Gross Domestic Product, constant prices (YoY)* | |||
‘Base’ | 3.90% | 3.90% | 3.90% |
Range of forecasts for alternative scenarios | [0.9 - 6.9]% | [0.9 - 6.9]% | [0.9 - 6.9]% |
Unemployment rate (YoY)* | |||
‘Base’ | 3.2% | 3.2% | 3.2% |
Range of forecasts for alternative scenarios | [1.8 - 4.6]% | [1.8 - 4.6]% | [1.8 - 4.6]% |
Inflation rate (YoY)* | |||
‘Base’ | 2.2% | 2.2% | 2.2% |
Range of forecasts for alternative scenarios | [0.8 - 3.6]% | [0.8 - 3.6]% | [0.8 - 3.6]% |
| *YoY = year on year % change |
94
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
95
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
| The Group’s credit risk exposures relating to on-balance sheet assets and off-balance sheet instruments, reflecting the maximum exposure to credit risk before collateral held or | ||||||||
| other credit enhancements, include the following: | ||||||||
Group | Bank | |||||||
2025 | 2024 | 2025 | 2024 | |||||
Gross | ECL | Gross | ECL | Gross | ECL | Gross | ECL | |
exposure | allowance | exposure | allowance | exposure | allowance | exposure | allowance | |
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |
Credit risk exposures relating to on-balance sheet assets: | ||||||||
Subject to IFRS 9 expected credit loss allowance | ||||||||
Financial assets measured at amortised cost: | ||||||||
Balances with Central Bank of Malta | ||||||||
and treasury bills | 174,922 | - | 146,872 | - | 174,921 | - | 146,872 | - |
Cheques in course of collection | 150 | - | 266 | - | 150 | - | 266 | - |
Debt securities | 33,903 | (13) | 21,132 | (25) | 33,903 | (13) | 21,132 | (25) |
Loans and advances to banks | 62,426 | (3) | 46,198 | (9) | 55,939 | (3) | 40,973 | (9) |
Loans and advances to customers | ||||||||
• Corporate and commercial | 608,846 | (6,773) | 594,777 | (7,486) | 608,846 | (6,773) | 594,777 | (7,486) |
• Personal | 327,621 | (583) | 286,325 | (934) | 327,630 | (583) | 286,333 | (934) |
Trade and other receivables | 16,690 | (263) | 13,182 | (203) | 7,238 | - | 3,443 | - |
Accrued income and other assets | 3,611 | - | 3,884 | - | 3,584 | - | 3,855 | - |
Debt securities measured at FVOCI | 170,965 | (219) | 178,828 | (224) | 168,955 | (219) | 176,696 | (224) |
Credit risk exposure | 1,399,134 | (7,854) | 1,291,464 | (8,881) | 1,381,166 | (7,591) | 1,274,347 | (8,678) |
Credit risk exposure relating to off-balance | ||||||||
sheet instruments: | ||||||||
Contingent liabilities | 22,055 | (11) | 19,827 | (11) | 22,055 | (11) | 19,827 | (12) |
Undrawn commitments to lend | 355,682 | (22) | 291,647 | (71) | 356,793 | (22) | 292,754 | (71) |
Credit risk exposure | 377,737 | (33) | 311,474 | (82) | 378,848 | (33) | 312,581 | (83) |
96
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Government | 145,416 | 147,232 | 144,339 | 146,029 |
Corporate | ||||
Tourism | 229 | 425 | 185 | 382 |
Property and construction | 908 | 918 | 563 | 569 |
Financial institutions | 21,602 | 27,415 | 21,058 | 26,878 |
Other sectors | 2,810 | 2,838 | 2,810 | 2,838 |
Gross financial investments measured at FVOCI | 170,965 | 178,828 | 168,955 | 176,696 |
Group and Bank | ||
2025 | 2024 | |
€ 000 | € 000 | |
Government | 25,600 | 14,875 |
Corporate | ||
Tourism | 270 | 72 |
Financial institutions | 7,733 | 5,884 |
Other sectors | 300 | 301 |
Gross financial investments measured at amortised cost | 33,903 | 21,132 |
97
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Manufacturing | 14,544 | 10,976 | 14,544 | 10,976 |
Tourism | 81,329 | 63,810 | 81,329 | 63,810 |
Trade | 50,865 | 51,497 | 50,865 | 51,497 |
Property and construction | 294,792 | 296,231 | 294,792 | 296,231 |
Personal, professional and home loans | 349,674 | 297,582 | 349,683 | 297,590 |
Financial institutions | 128,952 | 144,022 | 128,952 | 144,022 |
Other sectors | 16,311 | 16,984 | 16,311 | 16,984 |
Gross loans and advances to customers | 936,467 | 881,102 | 936,476 | 881,110 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Spain | 3,756 | 14,481 | 3,756 | 14,481 |
Germany | 19,892 | 3,455 | 19,892 | 3,455 |
Ireland | 9,605 | 10,884 | 9,605 | 10,884 |
Malta | 20,597 | 5,230 | 14,111 | 5 |
United States of America | 2,457 | 3,213 | 2,457 | 3,213 |
United Kingdom | 1,347 | 4,377 | 1,347 | 4,377 |
Italy | 2,838 | 2,153 | 2,838 | 2,153 |
Belgium | 433 | 478 | 433 | 478 |
Switzerland | 1,479 | 1,924 | 1,479 | 1,924 |
Other | 22 | 3 | 21 | 3 |
Gross loans and advances to banks | 62,426 | 46,198 | 55,939 | 40,973 |
98
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2025 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | ||
ECL | ECL | ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Balances with Central Bank of Malta and treasury | ||||
bills at amortised cost | ||||
Gross carrying amount | 174,921 | - | - | 174,921 |
Loss allowance | - | - | - | - |
Carrying amount – net of loss allowance | 174,921 | - | - | 174,921 |
2024 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | ||
ECL | ECL | ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Balances with Central Bank of Malta and treasury | ||||
bills at amortised cost | ||||
Gross carrying amount | 146,872 | - | - | 146,872 |
Loss allowance | - | - | - | - |
Carrying amount – net of loss allowance | 146,872 | - | - | 146,872 |
99
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2025 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | ||
ECL | ECL | ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Debt securities measured at FVOCI | ||||
AAA to AA- | 5,818 | - | - | 5,818 |
A+ to A- | 143,779 | - | - | 143,779 |
BBB+ to BBB- | 9,600 | - | - | 9,600 |
Unrated | 9,758 | - | - | 9,758 |
Carrying amount – fair value | 168,955 | - | - | 168,955 |
Loss allowance | (219) | - | - | (219) |
Debt securities measured at amortised cost | ||||
AAA to AA- | 7,912 | - | - | 7,912 |
A+ to A- | 24,157 | - | - | 24,157 |
Unrated | 1,834 | - | - | 1,834 |
Gross carrying amount | 33,903 | - | - | 33,903 |
Loss allowance | (13) | - | - | (13) |
Carrying amount – net of loss allowance | 33,890 | - | - | 33,890 |
Loans and advances to banks at amortised cost | ||||
AAA to AA- | 2,466 | - | - | 2,466 |
A+ to A- | 35,037 | - | - | 35,037 |
BBB+ to BBB- | 16,949 | - | - | 16,949 |
Lower than BB- | 7 | - | - | 7 |
Unrated | 1,475 | 5 | - | 1,480 |
Gross carrying amount | 55,934 | 5 | - | 55,939 |
Loss allowance | (3) | - | - | (3) |
Carrying amount – net of loss allowance | 55,931 | 5 | - | 55,936 |
100
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2024 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | ||
ECL | ECL | ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Debt securities measured at FVOCI | ||||
AAA to AA- | 11,423 | - | - | 11,423 |
A+ to A- | 144,140 | - | - | 144,140 |
BBB+ to BBB- | 15,312 | - | - | 15,312 |
Unrated | 5,821 | - | - | 5,821 |
Carrying amount – fair value | 176,696 | - | - | 176,696 |
Loss allowance | (224) | - | - | (224) |
Debt securities measured at amortised cost | ||||
AAA to AA- | 7,480 | - | - | 7,480 |
A+ to A- | 12,015 | - | - | 12,015 |
Unrated | 1,637 | - | - | 1,637 |
Gross carrying amount | 21,132 | - | - | 21,132 |
Loss allowance | (25) | - | - | (25) |
Carrying amount – net of loss allowance | 21,107 | - | - | 21,107 |
Loans and advances to banks at amortised cost | ||||
AAA to AA- | 3,215 | - | - | 3,215 |
A+ to A- | 34,141 | - | - | 34,141 |
BBB+ to BBB- | 2,153 | - | - | 2,153 |
Lower than BB- | 1 | - | - | 1 |
Unrated | 1,463 | - | - | 1,463 |
Gross carrying amount | 40,973 | - | - | 40,973 |
Loss allowance | (9) | - | - | (9) |
Carrying amount – net of loss allowance | 40,964 | - | - | 40,964 |
101
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
102
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2025 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
12-month ECL | Lifetime ECL | Lifetime ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Loans and advances to customers at amortised cost | ||||
Corporate and commercial | ||||
P1 | 420,563 | 6,269 | - | 426,832 |
P2 | - | 121,783 | - | 121,783 |
P3 | - | 4,388 | - | 4,388 |
PF | - | 16,296 | - | 16,296 |
NP | - | - | 1,324 | 1,324 |
NF | - | - | 32,879 | 32,879 |
NR | - | - | 5,344 | 5,344 |
Gross carrying amount | 420,563 | 148,736 | 39,547 | 608,846 |
Loss allowance | (399) | (639) | (5,735) | (6,773) |
Carrying amount | 420,164 | 148,097 | 33,812 | 602,073 |
Personal | ||||
P1 | 317,472 | 239 | - | 317,711 |
P2 | - | 2,884 | - | 2,884 |
P3 | - | 513 | - | 513 |
PF | - | 147 | - | 147 |
NP | - | - | 1,044 | 1,044 |
NF | - | - | 5,230 | 5,230 |
NR | - | - | 101 | 101 |
Gross carrying amount | 317,472 | 3,783 | 6,375 | 327,630 |
Loss allowance | (279) | (115) | (189) | (583) |
Carrying amount | 317,193 | 3,668 | 6,186 | 327,047 |
Total | ||||
P1 | 738,035 | 6,508 | - | 744,543 |
P2 | - | 124,667 | - | 124,667 |
P3 | - | 4,901 | - | 4,901 |
PF | - | 16,443 | - | 16,443 |
NP | - | - | 2,368 | 2,368 |
NF | - | - | 38,109 | 38,109 |
NR | - | - | 5,445 | 5,445 |
Gross carrying amount | 738,035 | 152,519 | 45,922 | 936,476 |
Loss allowance | (678) | (754) | (5,924) | (7,356) |
Carrying amount | 737,357 | 151,765 | 39,998 | 929,120 |
103
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2024 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
12-month ECL | Lifetime ECL | Lifetime ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Loans and advances to customers at amortised cost | ||||
Corporate and commercial | ||||
P1 | 422,210 | 2,400 | - | 424,610 |
P2 | - | 89,758 | - | 89,758 |
P3 | - | 24,123 | - | 24,123 |
PF | - | 12,146 | - | 12,146 |
NP | - | - | 5,316 | 5,316 |
NF | - | - | 33,223 | 33,223 |
NR | - | - | 5,601 | 5,601 |
Gross carrying amount | 422,210 | 128,427 | 44,140 | 594,777 |
Loss allowance | (712) | (412) | (6,362) | (7,486) |
Carrying amount | 421,498 | 128,015 | 37,778 | 587,291 |
Personal | ||||
P1 | 277,054 | 942 | - | 277,996 |
P2 | - | 164 | - | 164 |
P3 | - | 367 | - | 367 |
PF | - | 1,259 | - | 1,259 |
NP | - | - | 1,199 | 1,199 |
NF | - | - | 5,087 | 5,087 |
NR | - | - | 261 | 261 |
Gross carrying amount | 277,054 | 2,732 | 6,547 | 286,333 |
Loss allowance | (268) | (34) | (632) | (934) |
Carrying amount | 276,786 | 2,698 | 5,915 | 285,399 |
Total | ||||
P1 | 699,264 | 3,342 | - | 702,606 |
P2 | - | 89,922 | - | 89,922 |
P3 | - | 24,490 | - | 24,490 |
PF | - | 13,405 | - | 13,405 |
NP | - | - | 6,515 | 6,515 |
NF | - | - | 38,310 | 38,310 |
NR | - | - | 5,862 | 5,862 |
Gross carrying amount | 699,264 | 131,159 | 50,687 | 881,110 |
Loss allowance | (980) | (446) | (6,994) | (8,420) |
Carrying amount | 698,284 | 130,713 | 43,693 | 872,690 |
104
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2025 | 2024 | |
€ 000 | € 000 | |
Manufacturing | 148 | 156 |
Trade | 4,147 | 4,794 |
Property and construction | 33,511 | 37,516 |
Personal, professional and home loans | 6,405 | 6,574 |
Financial institutions | 1,453 | 1,313 |
Other sectors | 258 | 334 |
Gross impaired advances to customers | 45,922 | 50,687 |
Non-forborne | Forborne | ||
exposures | exposures | Total | |
2025 | 2025 | 2025 | |
€ 000 | € 000 | € 000 | |
Performing - Stage 1 | |||
Loans which are not past due | 722,096 | - | 722,096 |
Loans which are past due up to 30 days | 15,939 | - | 15,939 |
738,035 | - | 738,035 | |
Performing - Stage 2 | |||
Loans which are not past due | |||
P1 | 6,460 | - | 6,460 |
P2 | 119,073 | - | 119,073 |
P3 | 2,926 | - | 2,926 |
PF | - | 16,143 | 16,143 |
Loans which are past due up to 90 days | |||
Past due between 1 and 30 days | 4,478 | 300 | 4,778 |
Past due between 31 to 90 days | 3,139 | - | 3,139 |
136,076 | 16,443 | 152,519 | |
Non-performing - Stage 3 | |||
Past due loans by 90 days or more and credit-impaired loans | 7,813 | 38,109 | 45,922 |
Gross loans and advances | 881,924 | 54,552 | 936,476 |
Expected credit losses | |||
12-month ECL | (678) | - | (678) |
Lifetime ECL | (4,580) | (2,098) | (6,678) |
Net loans and advances | 876,666 | 52,454 | 929,120 |
105
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Non-forborne | Forborne | ||
exposures | exposures | Total | |
2024 | 2024 | 2024 | |
€ 000 | € 000 | € 000 | |
Performing - Stage 1 | |||
Loans which are not past due | 689,885 | - | 689,885 |
Loans which are past due up to 30 days | 9,379 | - | 9,379 |
699,264 | - | 699,264 | |
Performing - Stage 2 | |||
Loans which are not past due | |||
P1 | 994 | - | 994 |
P2 | 81,011 | - | 81,011 |
P3 | 24,265 | - | 24,265 |
PF | - | 12,567 | 12,567 |
Loans which are past due up to 90 days | |||
Past due between 1 and 30 days | 4,155 | 838 | 4,993 |
Past due between 31 to 90 days | 7,329 | - | 7,329 |
117,754 | 13,405 | 131,159 | |
Non-performing – Stage 3 | |||
Past due loans by 90 days or more and credit-impaired loans | 6,515 | 38,310 | 44,825 |
| Past due loans by 90 days or more and credit-impaired loans | |||
| that are subject to judicial action | 5,629 | 233 | 5,862 |
12,144 | 38,543 | 50,687 | |
Gross loans and advances | 829,162 | 51,948 | 881,110 |
Expected credit losses | |||
12-month ECL | (980) | - | (980) |
Lifetime ECL | (5,224) | (2,216) | (7,440) |
Net loans and advances | 822,958 | 49,732 | 872,690 |
106
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
107
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Forborne exposures | ||
2025 | 2024 | |
€ 000 | € 000 | |
At 1 January | 51,948 | 61,441 |
Loans to which forbearance measures have been extended during the year | 16,001 | 15,633 |
Repayments | (1,457) | (10,439) |
Retired from forborne | (11,940) | (14,687) |
At 31 December | 54,552 | 51,948 |
2025 | 2024 | |
€ 000 | € 000 | |
Trade | 4,138 | 7,152 |
Property and construction | 30,814 | 37,176 |
Personal, professional and home loans | 5,377 | 6,346 |
Financial institutions | 14,223 | 1,013 |
Other sectors | - | 261 |
54,552 | 51,948 |
108
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
109
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
| The following tables explain the changes in the Group’s loss allowance between the beginning and the end | ||||
| of the annual period: | ||||
2025 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | Total | |
ECL | ECL | ECL | ||
€ 000 | € 000 | € 000 | € 000 | |
Debt securities measured at FVOCI | ||||
Loss allowance as at 1 January 2025 | 224 | - | - | 224 |
Changes to risk parameters (model inputs: PDs/LGDs/EADs) | (5) | - | - | (5) |
Total net income statement credit during the year | (5) | - | - | (5) |
Loss allowance as at 31 December 2025 | 219 | - | - | 219 |
Debt securities measured at amortised cost | ||||
Loss allowance as at 1 January 2025 | 25 | - | - | 25 |
Changes to risk parameters (model inputs: PDs/LGDs/EADs) | (12) | - | - | (12) |
Total net income statement credit during the year | (12) | - | - | (12) |
Loss allowance as at 31 December 2025 | 13 | - | - | 13 |
Loans and advances to banks at amortised cost | ||||
Loss allowance as at 1 January 2025 | 9 | - | - | 9 |
Changes to risk parameters (model inputs: PDs/LGDs/EADs) | (6) | - | - | (6) |
Total net income statement credit during the year | (6) | - | - | (6) |
Loss allowance as at 31 December 2025 | 3 | - | - | 3 |
Undrawn commitments | ||||
Loss allowance as at 1 January 2025 | 70 | - | 1 | 71 |
Changes to risk parameters (model inputs: PDs/LGDs/EADs) | (70) | - | 21 | (49) |
Total net income statement (credit)/charge during the year | (70) | - | 21 | (49) |
| Loss allowance as at 31 December 2025 | - | - | 22 | 22 |
Contingent liabilities | ||||
Loss allowance as at 1 January 2025 | 11 | - | - | 11 |
Changes to risk parameters (model inputs: PDs/LGDs/EADs) | - | - | - | - |
Total net income statement (credit)/charge during the year | - | - | - | - |
Loss allowance as at 31 December 2025 | 11 | - | - | 11 |
110
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2025 | ||||
| Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | Total | |
| ECL | ECL | ECL | ||
€ 000 | € 000 | € 000 | € 000 | |
Loans and advances to customers at amortised cost | ||||
Corporate and commercial | ||||
Loss allowance as at 1 January 2025 | 714 | 411 | 6,361 | 7,486 |
Transfers of financial instruments | ||||
Transfer from Stage 1 to Stage 2 | (65) | 65 | - | - |
Transfer from Stage 2 to Stage 1 | 17 | (17) | - | - |
Transfer from Stage 3 to Stage 2 | - | 9 | (9) | - |
Net remeasurement of ECL arising from stage | ||||
transfers | (13) | 165 | - | 152 |
Total remeasurement of loss allowance arising | ||||
from transfers in stages | (61) | 222 | (9) | 152 |
New financial assets originated | 139 | 157 | 44 | 340 |
| Changes to risk parameters (model inputs: | ||||
PDs/LGDs/EADs)* | (361) | (144) | 326 | (179) |
Financial assets derecognised | (32) | (7) | (775) | (814) |
Total net income statement (credit)/charge | ||||
during the year | (315) | 228 | (414) | (501) |
Other movements | ||||
Write-offs | - | - | (386) | (386) |
Unwinding of discount | - | - | 174 | 174 |
Loss allowance as at 31 December 2025 | 399 | 639 | 5,735 | 6,773 |
111
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2025 | ||||
| Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | Total | |
| ECL | ECL | ECL | ||
€ 000 | € 000 | € 000 | € 000 | |
Loans and advances to customers at amortised cost | ||||
Personal | ||||
Loss allowance as at 1 January 2025 | 265 | 35 | 634 | 934 |
Transfers of financial instruments | ||||
Transfer from Stage 2 to Stage 1 | 5 | (5) | - | - |
Transfer from Stage 3 to Stage 1 | 82 | - | (82) | - |
Transfer from Stage 3 to Stage 2 | - | 18 | (18) | - |
Net remeasurement of ECL arising from stage | ||||
transfers | (86) | 79 | 12 | 5 |
Total remeasurement of loss allowance arising | ||||
from transfers in stages | 1 | 92 | (88) | 5 |
New financial assets originated | 93 | - | 2 | 95 |
Changes to risk parameters (model inputs: | ||||
PDs/LGDs/EADs)* | (68) | (5) | (649) | (722) |
Financial assets derecognised | (12) | (7) | (1) | (20) |
| Total net income statement charge/(credit) | ||||
during the year | 14 | 80 | (736) | (642) |
Other movements | ||||
Unwinding of discount | - | - | 291 | 291 |
| Loss allowance as at 31 December 2025 | 279 | 115 | 189 | 583 |
112
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2025 | ||||
| Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | Total | |
| ECL | ECL | ECL | ||
€ 000 | € 000 | € 000 | € 000 | |
Loans and advances to customers at amortised cost | ||||
Total | ||||
Loss allowance as at 1 January 2025 | 979 | 446 | 6,995 | 8,420 |
Transfers of financial instruments | ||||
Transfer from Stage 1 to Stage 2 | (65) | 65 | - | - |
Transfer from Stage 2 to Stage 1 | 22 | (22) | - | - |
Transfer from Stage 3 to Stage 1 | 82 | - | (82) | - |
Transfer from Stage 3 to Stage 2 | - | 27 | (27) | - |
Net remeasurement of ECL arising from stage | ||||
transfers | (99) | 244 | 12 | 157 |
| Total remeasurement of loss allowance arising | ||||
from transfers in stages | (60) | 314 | (97) | 157 |
New financial assets originated | 232 | 157 | 46 | 435 |
Changes to risk parameters (model inputs: | ||||
| PDs/LGDs/EADs)* | (429) | (149) | (323) | (901) |
Financial assets derecognised | (44) | (14) | (776) | (834) |
Total net income statement (credit)/charge during the year | (301) | 308 | (1,150) | (1,143) |
Other movements | ||||
Write-offs | - | - | (386) | (386) |
Unwinding of discount | - | - | 465 | 465 |
Loss allowance as at 31 December 2025 | 678 | 754 | 5,924 | 7,356 |
113
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
| The following tables explain the changes in the Group’s loss allowance between the beginning and the end | ||||
| of the annual period: | ||||
2024 | ||||
| Stage 1 | Stage 2 | Stage 3 | ||
12 -month ECL | Lifetime | Lifetime | Total | |
ECL | ECL | |||
€ 000 | € 000 | € 000 | € 000 | |
Debt securities measured at FVOCI | ||||
Loss allowance as at 1 January 2024 | 471 | - | - | 471 |
Changes to risk parameters (model inputs: PDs/LGDs/EADs) | (247) | - | - | (247) |
Total net income statement credit during the year | (247) | - | - | (247) |
Loss allowance as at 31 December 2024 | 224 | - | - | 224 |
Debt securities measured at amortised cost | ||||
Loss allowance as at 1 January 2024 | 72 | - | - | 72 |
Changes to risk parameters (model inputs: PDs/LGDs/EADs) | (47) | - | - | (47) |
Total net income statement credit during the year | (47) | - | - | (47) |
Loss allowance as at 31 December 2024 | 25 | - | - | 25 |
Loans and advances to banks at amortised cost | ||||
Loss allowance as at 1 January 2024 | - | - | - | - |
Changes to risk parameters (model inputs: PDs/LGDs/EADs) | 9 | - | - | 9 |
Total net income statement charge during the year | 9 | - | - | 9 |
Loss allowance as at 31 December 2024 | 9 | - | - | 9 |
Undrawn commitments | ||||
Loss allowance as at 1 January 2024 | - | 5 | 1 | 6 |
Changes to risk parameters (model inputs: PDs/LGDs/EADs) | 70 | (5) | - | 65 |
Total net income statement charge/(credit) during the year | 70 | (5) | - | 65 |
| Loss allowance as at 31 December 2024 | 70 | - | 1 | 71 |
Contingent liabilities | ||||
Loss allowance as at 1 January 2024 | 23 | - | - | 23 |
Changes to risk parameters (model inputs: PDs/LGDs/EADs) | (11) | - | - | (11) |
Total net income statement credit during the year | (11) | - | - | (11) |
Loss allowance as at 31 December 2024 | 12 | - | - | 12 |
114
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2024 | ||||
| Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | Total | |
| ECL | ECL | ECL | ||
€ 000 | € 000 | € 000 | € 000 | |
Loans and advances to customers at amortised cost | ||||
Corporate and commercial | ||||
Loss allowance as at 1 January 2024 | 1,270 | 1,020 | 7,858 | 10,148 |
Transfers of financial instruments | ||||
Transfer from Stage 1 to Stage 2 | (14) | 14 | - | - |
Transfer from Stage 2 to Stage 1 | 22 | (22) | - | - |
Transfer from Stage 2 to Stage 3 | - | (483) | 483 | - |
Transfer from Stage 3 to Stage 2 | - | 31 | (31) | - |
Net remeasurement of ECL arising from stage | ||||
transfers | (19) | (28) | 96 | 49 |
| Total remeasurement of loss allowance arising | ||||
from transfers in stages | (11) | (488) | 548 | 49 |
New financial assets originated | 441 | 38 | 1 | 480 |
| Changes to risk parameters (model inputs: | ||||
PDs/LGDs/EADs)* | (733) | (75) | 366 | (442) |
Financial assets derecognised | (253) | (84) | (231) | (568) |
Total net income statement (credit)/charge | ||||
during the year | (556) | (609) | 684 | (481) |
Other movements | ||||
Write-offs | - | - | (2,379) | (2,379) |
Unwinding of discount | - | - | 198 | 198 |
| Loss allowance as at 31 December 2024 | 714 | 411 | 6,361 | 7,486 |
115
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2024 | ||||
| Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | Total | |
| ECL | ECL | ECL | ||
€ 000 | € 000 | € 000 | € 000 | |
Loans and advances to customers at amortised cost | ||||
Personal | ||||
Loss allowance as at 1 January 2024 | 310 | 867 | 126 | 1,303 |
Transfers of financial instruments | ||||
Transfer from Stage 1 to Stage 2 | (1) | 1 | - | - |
Transfer from Stage 1 to Stage 3 | (1) | - | 1 | - |
Transfer from Stage 2 to Stage 1 | 8 | (8) | - | - |
Transfer from Stage 2 to Stage 3 | - | (826) | 826 | - |
Transfer from Stage 3 to Stage 1 | 10 | - | (10) | - |
Net remeasurement of ECL arising from stage | ||||
transfers | (17) | 8 | 53 | 44 |
| Total remeasurement of loss allowance arising | ||||
from transfers in stages | (1) | (825) | 870 | 44 |
New financial assets originated | 151 | - | 90 | 241 |
Changes to risk parameters (model inputs: | ||||
PDs/LGDs/EADs)* | (187) | (7) | (396) | (590) |
Financial assets derecognised | (8) | - | (64) | (72) |
| Total net income statement (credit)/charge | ||||
during the year | (45) | (832) | 500 | (377) |
Other movements | ||||
Unwinding of discount | - | - | 8 | 8 |
| Loss allowance as at 31 December 2024 | 265 | 35 | 634 | 934 |
116
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2024
Stage 1
Stage 2
Stage 3
12-month
Lifetime
Lifetime
Total
ECL
ECL
ECL
€ 000
€ 000
€ 000
€ 000
Loans and advances to customers at amortised cost
Total
Loss allowance as at 1 January 2024
1,580
1,887
7,984
11,451
Transfers of financial instruments
Transfer from Stage 1 to Stage 2
(15)
15
-
-
Transfer from Stage 1 to Stage 3
(1)
-
1
-
Transfer from Stage 2 to Stage 1
30
(30)
-
-
Transfer from Stage 2 to Stage 3
-
(1,309)
1,309
-
Transfer from Stage 3 to Stage 1
10
-
(10)
-
Transfer from Stage 3 to Stage 2
-
31
(31)
-
Net remeasurement of ECL arising from stage
transfers
(36)
(20)
149
93
Total remeasurement of loss allowance arising
from transfers in stages
(12)
(1,313)
1,418
93
New financial assets originated
592
38
91
721
Changes to risk parameters (model inputs:
PDs/LGDs/EADs)*
(920)
(82)
(30)
(1,032)
Financial assets derecognised
(261)
(84)
(295)
(640)
Total net income statement (credit)/charge during
the year
(601)
(1,441)
1,184
(858)
Other movements
Write-offs
-
-
(2,379)
(2,379)
Unwinding of discount
-
-
206
206
Loss allowance as at 31 December 2024
979
446
6,995
8,420
The movements reflected within the line item “Changes to risk parameters” have been analysed and
described in notes 2.3.4.3, 2.3.4.4 and 2.3.9.
*The movements reflected within the line item “Changes to risk parameters” reflect changes in ECL due to
improvements in macroeconomic variables impacting Stage 1 and Stage 2 PDs.
117
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2025 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | ||
ECL | ECL | ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Balances with Central Bank of Malta and treasury | ||||
bills | ||||
Gross carrying amount as at 1 January 2025 | 146,872 | - | - | 146,872 |
New financial assets originated | 3,920,284 | - | - | 3,920,284 |
Financial assets derecognised | (3,892,234) | - | - | (3,892,234) |
Gross carrying amount as at 31 December 2025 | 174,922 | - | - | 174,922 |
Debt securities measured at FVOCI | ||||
Gross carrying amount as at 1 January 2025 | 178,828 | - | - | 178,828 |
Financial assets derecognised | (9,647) | - | - | (9,647) |
Fair value and other movements | 1,784 | - | - | 1,784 |
Gross carrying amount as at 31 December 2025 | 170,965 | - | - | 170,965 |
Debt securities measured at amortised cost | ||||
Gross carrying amount as at 1 January 2025 | 21,132 | - | - | 21,132 |
New financial assets originated | 13,596 | - | - | 13,596 |
Other movements | (825) | - | - | (825) |
Gross carrying amount as at 31 December 2025 | 33,903 | - | - | 33,903 |
Loans and advances to banks at amortised cost | ||||
Gross carrying amount as at 1 January 2025 | 46,198 | - | - | 46,198 |
New financial assets originated | 5,110,967 | - | - | 5,110,967 |
Financial assets derecognised | (5,094,739) | - | - | (5,094,739) |
Gross carrying amount as at 31 December 2025 | 62,426 | - | - | 62,426 |
118
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2025
Stage 1
Stage 2
Stage 3
12-month
Lifetime
Lifetime
ECL
ECL
ECL
Total
€ 000
€ 000
€ 000
€ 000
Loans and advances to customers at
amortised cost
Corporate and commercial
Gross carrying amount as at 1 January 2025
422,211
128,426
44,140
594,777
Transfers of financial instruments
Transfer from Stage 1 to Stage 2
(42,530)
42,530
-
-
Transfer from Stage 2 to Stage 1
24,419
(24,419)
-
-
Transfer from Stage 2 to Stage 3
-
(94)
94
-
Transfer from Stage 3 to Stage 2
-
1,265
(1,265)
-
Total changes in gross carrying amounts arising from
transfers in stages
(18,111)
19,282
(1,171)
-
New financial assets originated
78,132
14,487
191
92,810
Changes in gross carrying amount in respect of facilities
present as at 1 January 2025
(29,609)
92
883
(28,634)
Financial assets derecognised
(32,055)
(13,556)
(4,110)
(49,721)
Write-offs
-
-
(386)
(386)
Total net change during the year
(1,643)
20,305
(4,593)
14,069
Gross carrying amount as at 31 December 2025
420,568
148,731
39,547
608,846
119
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2025 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | ||
ECL | ECL | ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Loans and advances to customers at amortised cost | ||||
Personal | ||||
Gross carrying amount as at 1 January 2025 | 277,046 | 2,732 | 6,547 | 286,325 |
Transfers of financial instruments | ||||
Transfer from Stage 1 to Stage 2 | (624) | 624 | - | - |
Transfer from Stage 1 to Stage 3 | (175) | - | 175 | - |
Transfer from Stage 2 to Stage 1 | 115 | (115) | - | - |
Transfer from Stage 3 to Stage 1 | 82 | - | (82) | - |
Transfer from Stage 3 to Stage 2 | - | 132 | (132) | - |
Total changes in gross carrying amounts arising from transfers in stages | (602) | 641 | (39) | - |
New financial assets originated | 57,442 | 622 | 2 | 58,066 |
Changes in gross carrying amount in respect of facilities | ||||
present as at 1 January 2025 | (3,130) | 291 | (134) | (2,973) |
Financial assets derecognised | (13,292) | (504) | (1) | (13,797) |
Total net change during the year | 40,418 | 1,050 | (172) | 41,296 |
Gross carrying amount as at 31 December 2025 | 317,464 | 3,782 | 6,375 | 327,621 |
120
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2025 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | ||
ECL | ECL | ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Loans and advances to customers at amortised cost | ||||
Total | ||||
Gross carrying amount as at 1 January 2025 | 699,257 | 131,158 | 50,687 | 881,102 |
Transfers of financial instruments | ||||
Transfer from Stage 1 to Stage 2 | (43,154) | 43,154 | - | - |
Transfer from Stage 1 to Stage 3 | (175) | - | 175 | - |
Transfer from Stage 2 to Stage 1 | 24,534 | (24,534) | - | - |
Transfer from Stage 2 to Stage 3 | - | (94) | 94 | - |
Transfer from Stage 3 to Stage 1 | 82 | - | (82) | - |
Transfer from Stage 3 to Stage 2 | - | 1,397 | (1,397) | - |
Total changes in gross carrying amounts arising from transfers in stages | (18,713) | 19,923 | (1,210) | - |
New financial assets originated | 135,574 | 15,109 | 193 | 150,876 |
Changes in gross carrying amount in respect of facilities | ||||
present as at 1 January 2025 | (32,739) | 383 | 749 | (31,607) |
Financial assets derecognised | (45,347) | (14,060) | (4,111) | (63,518) |
Write-offs | - | - | (386) | (386) |
Total net change during the year | 38,775 | 21,355 | (4,765) | 55,365 |
Gross carrying amount as at 31 December 2025 | 738,032 | 152,513 | 45,922 | 936,467 |
121
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2024 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | ||
ECL | ECL | ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Balances with Central Bank of Malta and treasury bills | ||||
Gross carrying amount as at 1 January 2024 | 138,157 | - | - | 138,157 |
New financial assets originated | 6,016,795 | - | - | 6,016,795 |
Financial assets derecognised | (6,008,080) | - | - | (6,008,080) |
Gross carrying amount as at 31 December 2024 | 146,872 | - | - | 146,872 |
Debt securities measured at FVOCI | ||||
Gross carrying amount as at 1 January 2024 | 199,965 | - | - | 199,965 |
Financial assets derecognised | (29,283) | - | - | (29,283) |
Fair value and other movements | 8,146 | - | - | 8,146 |
Gross carrying amount as at 31 December 2024 | 178,828 | - | - | 178,828 |
Debt securities measured at amortised cost | ||||
Gross carrying amount as at 1 January 2024 | 8,357 | - | - | 8,357 |
New financial assets originated | 12,542 | - | - | 12,542 |
Other movements | 233 | - | - | 233 |
Gross carrying amount as at 31 December 2024 | 21,132 | - | - | 21,132 |
Loans and advances to banks at amortised cost | ||||
Gross carrying amount as at 1 January 2024 | 38,139 | - | - | 38,139 |
New financial assets originated | 4,319,694 | - | - | 4,319,694 |
Financial assets derecognised | (4,311,635) | - | - | (4,311,635) |
Gross carrying amount as at 31 December 2024 | 46,198 | - | - | 46,198 |
122
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2024 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | ||
ECL | ECL | ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Loans and advances to customers at amortised cost | ||||
Corporate and commercial | ||||
Gross carrying amount as at 1 January 2024 | 379,074 | 122,035 | 27,943 | 529,052 |
Transfers of financial instruments | ||||
Transfer from Stage 1 to Stage 2 | (43,190) | 43,190 | - | - |
Transfer from Stage 1 to Stage 3 | (2,407) | - | 2,407 | - |
Transfer from Stage 2 to Stage 1 | 13,310 | (13,310) | - | - |
Transfer from Stage 2 to Stage 3 | - | (27,511) | 27,511 | - |
Transfer from Stage 3 to Stage 2 | - | 1,951 | (1,951) | - |
Total changes in gross carrying amounts arising from transfers in stages | (32,287) | 4,320 | 27,967 | - |
New financial assets originated | 116,054 | 15,156 | 2,004 | 133,214 |
Changes in gross carrying amount in respect of facilities | ||||
present as at 1 January 2024 | (17,735) | (4,505) | (6,352) | (28,592) |
Financial assets derecognised | (22,895) | (8,580) | (4,801) | (36,276) |
Write-offs | - | - | (2,621) | (2,621) |
Total net change during the year | 43,137 | 6,391 | 16,197 | 65,725 |
Gross carrying amount as at 31 December 2024 | 422,211 | 128,426 | 44,140 | 594,777 |
123
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2024 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | ||
ECL | ECL | ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Loans and advances to customers at amortised cost | ||||
Personal | ||||
Gross carrying amount as at 1 January 2024 | 232,239 | 7,189 | 1,275 | 240,703 |
Transfers of financial instruments | ||||
Transfer from Stage 1 to Stage 2 | (789) | 789 | - | - |
Transfer from Stage 1 to Stage 3 | (420) | - | 420 | - |
Transfer from Stage 2 to Stage 1 | 799 | (799) | - | - |
Transfer from Stage 2 to Stage 3 | - | (3,868) | 3,868 | - |
Transfer from Stage 3 to Stage 1 | 11 | - | (11) | - |
Total changes in gross carrying amounts arising from transfers in stages | (399) | (3,878) | 4,277 | - |
New financial assets originated | 62,704 | 3 | 1,391 | 64,098 |
Changes in gross carrying amount in respect of facilities | ||||
present as at 1 January 2024 | (10,219) | (501) | 125 | (10,595) |
Financial assets derecognised | (7,279) | (81) | (521) | (7,881) |
Total net change during the year | 44,807 | (4,457) | 5,272 | 45,622 |
Gross carrying amount as at 31 December 2024 | 277,046 | 2,732 | 6,547 | 286,325 |
124
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2024 | ||||
Stage 1 | Stage 2 | Stage 3 | ||
| 12-month | Lifetime | Lifetime | ||
ECL | ECL | ECL | Total | |
€ 000 | € 000 | € 000 | € 000 | |
Loans and advances to customers at amortised cost | ||||
Total | ||||
Gross carrying amount as at 1 January 2024 | 611,313 | 129,224 | 29,218 | 769,755 |
Transfers of financial instruments | ||||
Transfer from Stage 1 to Stage 2 | (43,979) | 43,979 | - | - |
Transfer from Stage 1 to Stage 3 | (2,827) | - | 2,827 | - |
Transfer from Stage 2 to Stage 1 | 14,109 | (14,109) | - | - |
Transfer from Stage 2 to Stage 3 | - | (31,379) | 31,379 | - |
Transfer from Stage 3 to Stage 1 | 11 | - | (11) | - |
Transfer from Stage 3 to Stage 2 | - | 1,951 | (1,951) | - |
Total changes in gross carrying amounts arising from transfers in stages | (32,686) | 442 | 32,244 | - |
New financial assets originated | 178,758 | 15,159 | 3,395 | 197,312 |
Changes in gross carrying amount in respect of facilities | ||||
present as at 1 January 2024 | (27,954) | (5,006) | (6,227) | (39,187) |
Financial assets derecognised | (30,174) | (8,661) | (5,322) | (44,157) |
Write-offs | - | - | (2,621) | (2,621) |
Total net change during the year | 87,944 | 1,934 | 21,469 | 111,347 |
Gross carrying amount as at 31 December 2024 | 699,257 | 131,158 | 50,687 | 881,102 |
125
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
126
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
As at 31 December 2025 | |||||
Gross | Impairment | Carrying | Extendible value | ||
exposure | allowance | amount | of collateral held | ||
Credit-impaired assets | € 000 | € 000 | € 000 | € 000 | |
Corporate and commercial | |||||
- | Overdrafts | 5,088 | 597 | 4,491 | 15,398 |
- Personal | Term loans | 33,892 | 5,094 | 28,798 | 154,297 |
- | Term loans | 1,498 | 85 | 1,413 | 3,466 |
- | Overdrafts | 1 | - | 1 | 6 |
Total credit-impaired assets | 40,479 | 5,776 | 34,703 | 173,167 |
As at 31 December 2024 | |||||
Gross | Impairment | Carrying | Extendible value | ||
exposure | allowance | amount | of collateral held | ||
Credit-impaired assets | € 000 | € 000 | € 000 | € 000 | |
Corporate and commercial | |||||
- | Overdrafts | 5,721 | 819 | 4,902 | 15,997 |
- Personal | Term loans | 37,988 | 5,497 | 32,491 | 165,445 |
- | Term loans | 1,467 | 178 | 1,289 | 3,029 |
Total credit-impaired assets | 45,176 | 6,494 | 38,682 | 183,471 |
As at 31 December 2025 | ||||
Gross | Impairment | Carrying | ||
exposure | allowance | amount | ||
€ 000 | € 000 | € 000 | ||
Credit-impaired assets | ||||
Corporate and commercial | ||||
- | Overdrafts | 563 | 43 | 520 |
- Personal | Credit cards | 4 | 1 | 3 |
- | Overdrafts | 101 | 80 | 21 |
- | Term loans | 4,756 | 5 | 4,751 |
- | Credit cards | 19 | 19 | - |
Total credit-impaired assets | 5,443 | 148 | 5,295 |
127
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
As at 31 December 2024 | ||||
Gross | Impairment | Carrying | ||
exposure | allowance | amount | ||
€ 000 | € 000 | € 000 | ||
Credit-impaired assets | ||||
Corporate and commercial | ||||
- | Overdrafts | 428 | 46 | 382 |
- Personal | Credit cards | 3 | - | 3 |
- | Overdrafts | 110 | 86 | 24 |
- | Term loans | 4,957 | 355 | 4,602 |
- | Credit cards | 13 | 13 | - |
Total credit-impaired assets | 5,511 | 500 | 5,011 |
128
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
| The following tables show the distribution of LTV ratios for the Bank’s loans and advances to customers. | ||||||
Corporate and commercial | ||||||
Non-forborne | Forborne | Non-forborne | Forborne | |||
exposures | exposures | Total | exposures | exposures | Total | |
2025 | 2025 | 2025 | 2024 | 2024 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |
Performing – Stage 1 | ||||||
Not collateralised | 37,552 | - | 37,552 | 57,785 | - | 57,785 |
Fully collateralised: | ||||||
Less than 50% LTV | 300,867 | - | 300,867 | 265,156 | - | 265,156 |
51% to 75% LTV | 51,802 | - | 51,802 | 79,859 | - | 79,859 |
76% to 90% LTV | 11,138 | - | 11,138 | 6,925 | - | 6,925 |
91% to 100% LTV | 9,926 | - | 9,926 | 9,561 | - | 9,561 |
373,733 | - | 373,733 | 361,501 | - | 361,501 | |
Partially collateralised | ||||||
Greater than 100% LTV | 9,278 | - | 9,278 | 2,924 | - | 2,924 |
Total performing – Stage 1 | 420,563 | - | 420,563 | 422,210 | - | 422,210 |
Underperforming – Stage 2 | ||||||
Not collateralised | 11,482 | 12 | 11,494 | 2,531 | - | 2,531 |
Fully collateralised: | ||||||
Less than 50% LTV | 97,490 | 3,084 | 100,574 | 81,210 | 4,965 | 86,175 |
51% to 75% LTV | 19,226 | - | 19,226 | 12,065 | 6,876 | 18,941 |
76% to 90% LTV | 2,395 | - | 2,395 | 4,968 | - | 4,968 |
91% to 100% LTV | - | - | - | 417 | - | 417 |
119,111 | 3,084 | 122,195 | 98,660 | 11,841 | 110,501 | |
Partially collateralised | ||||||
Greater than 100% LTV | 1,847 | 13,200 | 15,047 | 15,089 | 306 | 15,395 |
Total underperforming – Stage 2 | 132,440 | 16,296 | 148,736 | 116,280 | 12,147 | 128,427 |
Non-performing – Stage 3 | ||||||
Not collateralised | 563 | 3 | 566 | 427 | 4 | 431 |
Fully collateralised: | ||||||
Less than 50% LTV | 843 | 28,173 | 29,016 | 1,161 | 27,450 | 28,611 |
51% to 75% LTV | 1,023 | 4,703 | 5,726 | 4,151 | 5,769 | 9,920 |
76% to 90% LTV | 10 | - | 10 | 956 | - | 956 |
91% to 100% LTV | 1,035 | - | 1,035 | 31 | 233 | 264 |
2,911 | 32,876 | 35,787 | 6,299 | 33,452 | 39,751 | |
Partially collateralised | ||||||
Greater than 100% LTV | 3,194 | - | 3,194 | 3,958 | - | 3,958 |
Total non-performing – Stage 3 | 6,668 | 32,879 | 39,547 | 10,684 | 33,456 | 44,140 |
At 31 December | 559,671 | 49,175 | 608,846 | 549,174 | 45,603 | 594,777 |
129
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Personal | ||||||
Non-forborne | Forborne | Non-forborne | Forborne | |||
exposures | exposures | Total | exposures | exposures | Total | |
2025 | 2025 | 2025 | 2024 | 2024 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |
Performing – Stage 1 | ||||||
Not collateralised | 9,272 | - | 9,272 | 14,408 | - | 14,408 |
Fully collateralised: | ||||||
Less than 50% LTV | 94,612 | - | 94,612 | 77,548 | - | 77,548 |
51% to 75% LTV | 98,787 | - | 98,787 | 72,340 | - | 72,340 |
76% to 90% LTV | 110,110 | - | 110,110 | 108,026 | - | 108,026 |
91% to 100% LTV | 3,878 | - | 3,878 | 3,281 | - | 3,281 |
307,387 | - | 307,387 | 261,195 | - | 261,195 | |
Partially collateralised | ||||||
Greater than 100% LTV | 813 | - | 813 | 1,451 | - | 1,451 |
Total performing – Stage 1 | 317,472 | - | 317,472 | 277,054 | - | 277,054 |
Underperforming – Stage 2 | ||||||
Not collateralised | 210 | - | 210 | 122 | - | 122 |
Fully collateralised: | ||||||
Less than 50% LTV | 2,571 | - | 2,571 | 641 | 988 | 1,629 |
51% to 75% LTV | 123 | 147 | 270 | - | 270 | 270 |
76% to 90% LTV | 732 | - | 732 | 711 | - | 711 |
3,426 | 147 | 3,573 | 1,352 | 1,258 | 2,610 | |
Total underperforming – Stage 2 | 3,636 | 147 | 3,783 | 1,474 | 1,258 | 2,732 |
Non-performing – Stage 3 | ||||||
Not collateralised | 105 | 4,772 | 4,877 | 181 | 4,899 | 5,080 |
Fully collateralised: | ||||||
Less than 50% LTV | 258 | 458 | 716 | 486 | 188 | 674 |
51% to 75% LTV | 569 | - | 569 | 185 | - | 185 |
76% to 90% LTV | 213 | - | 213 | 347 | - | 347 |
1,040 | 458 | 1,498 | 1,018 | 188 | 1,206 | |
Partially collateralised | ||||||
Greater than 100% LTV | - | - | - | 261 | - | 261 |
Total non-performing – Stage 3 | 1,145 | 5,230 | 6,375 | 1,460 | 5,087 | 6,547 |
At 31 December | 322,253 | 5,377 | 327,630 | 279,988 | 6,345 | 286,333 |
130
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Total | ||||||
Non-forborne | Forborne | Non-forborne | Forborne | |||
exposures | exposures | Total | exposures | exposures | Total | |
2025 | 2025 | 2025 | 2024 | 2024 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |
Performing – Stage 1 | ||||||
Not collateralised | 46,824 | - | 46,824 | 72,193 | - | 72,193 |
Fully collateralised: | ||||||
Less than 50% LTV | 395,479 | - | 395,479 | 342,704 | - | 342,704 |
51% to 75% LTV | 150,589 | - | 150,589 | 152,199 | - | 152,199 |
76% to 90% LTV | 121,248 | - | 121,248 | 114,951 | - | 114,951 |
91% to 100% LTV | 13,804 | - | 13,804 | 12,842 | - | 12,842 |
681,120 | - | 681,120 | 622,696 | - | 622,696 | |
Partially collateralised | ||||||
Greater than 100% LTV | 10,091 | - | 10,091 | 4,375 | - | 4,375 |
Total performing – Stage 1 | 738,035 | - | 738,035 | 699,264 | - | 699,264 |
Underperforming – Stage 2 | ||||||
Not collateralised | 11,692 | 12 | 11,704 | 2,653 | - | 2,653 |
Fully collateralised: | ||||||
Less than 50% LTV | 100,061 | 3,084 | 103,145 | 81,851 | 5,953 | 87,804 |
51% to 75% LTV | 19,349 | 147 | 19,496 | 12,065 | 7,146 | 19,211 |
76% to 90% LTV | 3,127 | - | 3,127 | 5,679 | - | 5,679 |
91% to 100% LTV | - | - | - | 417 | - | 417 |
122,537 | 3,231 | 125,768 | 100,012 | 13,099 | 113,111 | |
Partially collateralised | ||||||
Greater than 100% LTV | 1,847 | 13,200 | 15,047 | 15,089 | 306 | 15,395 |
Total underperforming – Stage 2 | 136,076 | 16,443 | 152,519 | 117,754 | 13,405 | 131,159 |
Non-performing – Stage 3 | ||||||
Not collateralised | 668 | 4,775 | 5,443 | 608 | 4,903 | 5,511 |
Fully collateralised: | ||||||
Less than 50% LTV | 1,101 | 28,631 | 29,732 | 1,647 | 27,638 | 29,285 |
51% to 75% LTV | 1,592 | 4,703 | 6,295 | 4,336 | 5,769 | 10,105 |
76% to 90% LTV | 223 | - | 223 | 1,303 | - | 1,303 |
91% to 100% LTV | 1,035 | - | 1,035 | 31 | 233 | 264 |
3,951 | 33,334 | 37,285 | 7,317 | 33,640 | 40,957 | |
Partially collateralised | ||||||
Greater than 100% LTV | 3,194 | - | 3,194 | 4,219 | - | 4,219 |
Total non-performing – Stage 3 | 7,813 | 38,109 | 45,922 | 12,144 | 38,543 | 50,687 |
At 31 December | 881,924 | 54,552 | 936,476 | 829,162 | 51,948 | 881,110 |
131
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
132
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
133
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Group | Average | ||||||
| effective | Between | Between | |||||
| Carrying | interest | Less than | 3 months | 1 year | More than | Non-interest | |
amount | rate | 3 months | and 1 year | and 5 years | 5 years | bearing | |
As at 31 December 2025 | € 000 | % | € 000 | € 000 | € 000 | € 000 | € 000 |
Financial assets | |||||||
Balances with Central Bank of Malta, treasury bills and cash | 182,564 | 1.97 | 164,004 | 10,918 | - | - | 7,642 |
Debt and other fixed income instruments measured at FVOCI | 170,965 | 1.06 | 571 | 46,047 | 83,687 | 40,660 | - |
Debt and other fixed income instruments measured at amortised cost | 33,890 | 3.70 | - | 3,001 | 24,364 | 6,525 | - |
Loans and advances to banks | 62,423 | 1.49 | 61,923 | 500 | - | - | - |
Loans and advances to customers | 929,111 | 3.80 | 752,013 | 79,574 | 93,894 | 1,870 | 1,760 |
Total financial assets | 1,378,953 | 978,511 | 140,040 | 201,945 | 49,055 | 9,402 | |
Financial liabilities | |||||||
Amounts owed to banks | 345 | 0.16 | 336 | - | - | - | 9 |
Amounts owed to customers | 1,207,256 | 1.38 | 497,571 | 105,606 | 313,140 | 81,082 | 209,857 |
Total financial liabilities | 1,207,601 | 497,907 | 105,606 | 313,140 | 81,082 | 209,866 | |
Interest repricing gap | 480,604 | 34,434 | (111,195) | (31,027) | |||
Cumulative gap | 480,604 | 515,038 | 403,843 | 371,816 |
134
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Group | Average | ||||||
| effective | Between | Between | |||||
| Carrying | interest | Less than | 3 months | 1 year | More than | Non-interest | |
amount | rate | 3 months | and 1 year | and 5 years | 5 years | bearing | |
As at 31 December 2024 | € 000 | % | € 000 | € 000 | € 000 | € 000 | € 000 |
Financial assets | |||||||
Balances with Central Bank of Malta, treasury bills and cash | 154,480 | 3.12 | 146,872 | - | - | - | 7,608 |
Debt and other fixed income instruments measured at FVOCI | 178,828 | 1.06 | 2,661 | 6,224 | 118,170 | 51,773 | - |
Debt and other fixed income instruments measured at amortised cost | 21,107 | 4.30 | - | - | 14,000 | 7,107 | - |
Loans and advances to banks | 46,189 | 2.43 | 45,189 | 1,000 | - | - | - |
Loans and advances to customers | 872,682 | 3.73 | 694,909 | 44,822 | 129,975 | 433 | 2,543 |
Total financial assets | 1,273,286 | 889,631 | 52,046 | 262,145 | 59,313 | 10,151 | |
Financial liabilities | |||||||
Amounts owed to banks | 438 | 0.15 | 410 | - | - | - | 28 |
Amounts owed to customers | 1,120,006 | 1.29 | 515,217 | 66,702 | 275,996 | 49,231 | 212,860 |
Total financial liabilities | 1,120,444 | 515,627 | 66,702 | 275,996 | 49,231 | 212,888 | |
Interest repricing gap | 374,004 | (14,656) | (13,851) | 10,082 | |||
Cumulative gap | 374,004 | 359,348 | 345,497 | 355,579 |
135
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Bank
Effective
Between
Between
Carrying
interest
Less than
3 months
1 year
More than
Non-interest
amount
rate
3 months
and 1 year
and 5 years
5 years
bearing
As at 31 December 2025
€ 000
%
€ 000
€ 000
€ 000
€ 000
€ 000
Financial assets
Balances with Central Bank of Malta, treasury bills and cash
181,858
1.97
164,003
10,918
-
-
6,937
Debt and other fixed income instruments measured at FVOCI
168,955
1.01
571
46,047
82,651
39,686
-
Debt and other fixed income instruments measured at amortised cost
33,890
3.70
-
3,001
24,364
6,525
-
Loans and advances to banks
55,936
1.67
55,936
-
-
-
-
Loans and advances to customers
929,120
3.80
752,023
79,574
93,893
1,870
1,760
Total financial assets
1,369,759
972,533
139,540
200,908
48,081
8,697
Financial liabilities
Amounts owed to banks
345
0.16
336
-
-
-
9
Amounts owed to customers
1,210,294
1.38
497,670
106,006
313,140
81,082
212,396
Total financial liabilities
1,210,639
498,006
106,006
313,140
81,082
212,405
Interest repricing gap
474,527
33,534
(112,232)
(33,001)
Cumulative gap
474,527
508,061
395,829
362,828
136
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Bank
Average
effective
Between
Between
Carrying
interest
Less than
3 months
1 year
More than
Non-interest
amount
rate
3 months
and 1 year
and 5 years
5 years
bearing
As at 31 December 2024
€ 000
%
€ 000
€ 000
€ 000
€ 000
€ 000
Financial assets
Balances with Central Bank of Malta, treasury bills and cash
153,361
3.12
146,872
-
-
-
6,489
Debt and other fixed income instruments measured at FVOCI
176,696
1.01
2,661
6,224
118,070
49,741
-
Debt and other fixed income instruments measured at amortised cost
21,107
4.30
-
-
14,000
7,107
-
Loans and advances to banks
40,964
2.74
40,964
-
-
-
-
Loans and advances to customers
872,690
3.73
694,916
44,822
129,975
433
2,544
Total financial assets
1,264,818
885,413
51,046
262,045
57,281
9,033
Financial liabilities
Amounts owed to banks
438
0.15
410
-
-
-
28
Amounts owed to customers
1,121,816
1.29
515,504
67,102
275,996
49,231
213,983
Total financial liabilities
1,122,254
515,914
67,102
275,996
49,231
214,011
Interest repricing gap
369,499
(16,056)
(13,951)
8,050
Cumulative gap
369,499
353,443
339,492
347,542
137
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Group | Fixed rate | Variable rate | ||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Interest-bearing assets | ||||
Balances with Central Bank of Malta and treasury bills | 166,130 | 138,320 | 8,792 | 8,552 |
Debt and other fixed income instruments measured at: | ||||
FVOCI | 170,965 | 178,828 | - | - |
Amortised cost | 33,890 | 21,107 | - | - |
Loans and advances to banks | 41,429 | 27,243 | 20,994 | 18,946 |
Loans and advances to customers | 183,705 | 185,170 | 743,646 | 684,969 |
596,119 | 550,668 | 773,432 | 712,467 | |
Interest-bearing liabilities | ||||
Amounts owed to banks | 23 | - | 313 | 410 |
Amounts owed to customers | 550,973 | 484,266 | 446,426 | 422,880 |
550,996 | 484,266 | 446,739 | 423,290 |
At the end of the reporting periods the interest rate profile of the Bank’s interest-bearing financial
instruments was:
Bank
Fixed rate
Variable rate
2025
2024
2025
2024
€ 000
€ 000
€ 000
€ 000
Interest-bearing assets
Balances with Central Bank of Malta and treasury bills
166,130
138,320
8,791
8,552
Debt and other fixed income instruments measured at:
FVOCI
168,955
176,696
-
-
Amortised cost
33,890
21,107
-
-
Loans and advances to banks
39,929
24,743
16,007
16,221
Loans and advances to customers
183,714
185,170
743,646
684,976
592,618
546,036
768,444
709,749
Interest-bearing liabilities
Amounts owed to banks
23
-
313
410
Amounts owed to customers
551,373
484,666
446,525
423,167
551,396
484,666
446,838
423,577
138
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Group | 2025 | 2024 |
€ 000 | € 000 | |
(+) 250 bp | 8,167 | 7,229 |
(-) 250 bp | (8,167) | (7,229) |
Bank
2025
2024
€ 000
€ 000
(+) 250 bp
8,040
7,154
(-) 250 bp
(8,040)
(7,154)
139
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Group | Total | EUR | GBP | USD | Other |
€ 000 | € 000 | € 000 | € 000 | € 000 | |
As at 31 December 2025 | |||||
Financial assets | |||||
Balances with Central Bank of Malta, treasury bills and cash | 182,564 | 182,039 | 179 | 316 | 30 |
Financial investments measured at FVOCI | 179,246 | 173,240 | 2,796 | 3,210 | - |
Financial investments measured at amortised cost | 33,890 | 23,832 | 3,393 | 6,665 | - |
Loans and advances to banks | 62,423 | 22,711 | 5,839 | 31,998 | 1,875 |
Loans and advances to customers | 929,111 | 925,064 | 3,156 | 891 | - |
Other assets | 19,134 | 17,680 | 167 | 940 | 347 |
Total financial assets | 1,406,368 | 1,344,566 | 15,530 | 44,020 | 2,252 |
Financial liabilities | |||||
Amounts owed to banks | 345 | 345 | - | - | - |
Amounts owed to customers | 1,207,256 | 1,147,688 | 15,367 | 42,612 | 1,589 |
Other liabilities | 48,400 | 46,117 | 302 | 1,482 | 499 |
Total financial liabilities | 1,256,001 | 1,194,150 | 15,669 | 44,094 | 2,088 |
Net currency position | 150,416 | (139) | (74) | 164 | |
Commitments and contingent liabilities | 377,704 | 377,704 | - | - | - |
Group | Total | EUR | GBP | USD | Other |
€ 000 | € 000 | € 000 | € 000 | € 000 | |
As at 31 December 2024 | |||||
Financial assets | |||||
Balances with Central Bank of Malta, treasury bills and cash | 154,480 | 132,038 | 202 | 22,210 | 30 |
Financial investments measured at FVOCI | 187,003 | 177,187 | 4,024 | 5,792 | - |
Financial investments measured at amortised cost | 21,107 | 13,627 | - | 7,480 | - |
Loans and advances to banks | 46,189 | 9,346 | 18,888 | 15,987 | 1,968 |
Loans and advances to customers | 872,682 | 868,368 | 3,727 | 587 | - |
Other assets | 16,074 | 12,591 | 380 | 2,252 | 851 |
Total financial assets | 1,297,535 | 1,213,157 | 27,221 | 54,308 | 2,849 |
Financial liabilities | |||||
Amounts owed to banks | 438 | 424 | - | - | 14 |
Amounts owed to customers | 1,120,006 | 1,039,443 | 27,058 | 51,553 | 1,952 |
Other liabilities | 41,600 | 39,623 | 273 | 1,234 | 470 |
Total financial liabilities | 1,162,044 | 1,079,490 | 27,331 | 52,787 | 2,436 |
Net currency position | 133,667 | (110) | 1,521 | 413 | |
Commitments and contingent liabilities | 311,392 | 310,859 | 3 | 530 | - |
140
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
The following tables summarise the Bank’s exposures to foreign currency risk. Included in the tables are
the entity’s financial instruments which are subject to foreign exchange risk at carrying amounts,
categorised by currency.
Bank
Total
EUR
GBP
USD
Other
€ 000
€ 000
€ 000
€ 000
€ 000
At 31 December 2025
Financial assets
Balances with Central Bank of Malta,
treasury bills and cash
181,858
181,333
179
316
30
Financial investments measured at FVOCI
177,236
171,230
2,796
3,210
-
Financial investments measured at amortised cost
33,890
23,832
3,393
6,665
-
Loans and advances to banks
55,936
16,238
5,839
31,984
1,875
Loans and advances to customers
929,120
925,073
3,156
891
-
Other assets
9,919
9,725
34
160
-
Total financial assets
1,387,959
1,327,431
15,397
43,226
1,905
Financial liabilities
Amounts owed to banks
345
345
-
-
-
Amounts owed to customers
1,210,294
1,150,723
15,367
42,615
1,589
Other liabilities
28,569
28,021
119
417
12
Total financial liabilities
1,239,208
1,179,089
15,486
43,032
1,601
Net currency position
148,342
(89)
194
304
Commitments and contingent liabilities
378,815
378,815
-
-
-
141
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Bank
Total
EUR
GBP
USD
Other
€ 000
€ 000
€ 000
€ 000
€ 000
At 31 December 2024
Financial assets
Balances with Central Bank of Malta,
treasury bills and cash
153,361
130,919
202
22,210
30
Financial investments measured at FVOCI
184,871
175,055
4,024
5,792
-
Financial investments measured at amortised cost
21,107
13,627
-
7,480
-
Loans and advances to banks
40,964
4,257
18,888
15,851
1,968
Loans and advances to customers
872,690
868,376
3,727
587
-
Other assets
6,510
6,057
58
395
-
Total financial assets
1,279,503
1,198,291
26,899
52,315
1,998
Financial liabilities
Amounts owed to banks
438
424
-
-
14
Amounts owed to customers
1,121,816
1,041,251
27,058
51,554
1,953
Other liabilities
25,120
24,791
103
213
13
Total financial liabilities
1,147,374
1,066,466
27,161
51,767
1,980
Net currency position
131,825
(262)
548
18
Commitments and contingent liabilities
312,499
311,966
3
530
-
Under the scenario that the euro appreciates by 20% against all currencies the effect would result in a
decrease of €82,000 (2024: €61,000) in the carrying amount of financial instruments with the adverse
impact recognised in profit or loss. Should the euro depreciate against all currencies by 20%, the effect
would result in a gain of €82,000 (2024: €61,000) in the carrying amount of financial instruments and the
favourable impact would be recognised in profit or loss.
142
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Further details on the LCR and NSFR presented above are disclosed in the Bank’s Pillar 3 Disclosures Report.
143
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
144
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Group | Between | Between | ||||
| Less than | 3 months | 1 year and | More than | No maturity | ||
3 months | and 1 year | 5years | 5 years | date | Total | |
As at 31 December 2025 | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 |
Financial assets | ||||||
Balances with Central Bank of Malta, treasury bills and cash | 162,854 | 10,918 | - | - | 8,792 | 182,564 |
Financial investments measured at FVOCI | 571 | 46,047 | 83,687 | 40,660 | 8,281 | 179,246 |
Financial investments measured at amortised cost | - | 3,001 | 24,364 | 6,525 | - | 33,890 |
Loans and advances to banks | 61,923 | 500 | - | - | - | 62,423 |
Loans and advances to customers | 128,997 | 69,994 | 170,453 | 559,667 | - | 929,111 |
Other assets | 12,967 | 6,123 | - | - | 44 | 19,134 |
Total financial assets | 367,312 | 136,583 | 278,504 | 606,852 | 17,117 | 1,406,368 |
Financial liabilities | ||||||
Amounts owed to banks | 345 | - | - | - | - | 345 |
Amounts owed to customers | 707,428 | 105,606 | 313,140 | 81,082 | - | 1,207,256 |
Other liabilities | 23,089 | 667 | 2,611 | 11,420 | 10,613 | 48,400 |
Total financial liabilities | 730,862 | 106,273 | 315,751 | 92,502 | 10,613 | 1,256,001 |
Maturity gap | (363,550) | 30,310 | (37,247) | 514,350 | - | - |
Cumulative gap | (363,550) | (333,240) | (370,487) | 143,863 | - | - |
As at 31 December 2024 | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 |
Financial assets | ||||||
Balances with Central Bank of Malta, treasury bills and cash | 145,928 | - | - | - | 8,552 | 154,480 |
Financial investments measured at FVOCI | 2,661 | 6,224 | 118,170 | 51,773 | 8,175 | 187,003 |
Financial investments measured at amortised cost | - | - | 14,000 | 7,107 | - | 21,107 |
Loans and advances to banks | 45,189 | 1,000 | - | - | - | 46,189 |
Loans and advances to customers | 149,781 | 70,137 | 157,808 | 494,956 | - | 872,682 |
Other assets | 13,419 | 2,379 | - | - | 276 | 16,074 |
Total financial assets | 356,978 | 79,740 | 289,978 | 553,836 | 17,003 | 1,297,535 |
Financial liabilities | ||||||
Amounts owed to banks | 438 | - | - | - | - | 438 |
Amounts owed to customers | 728,077 | 66,702 | 275,996 | 49,231 | - | 1,120,006 |
Other liabilities | 22,340 | 624 | 1,863 | 8,333 | 8,440 | 41,600 |
Total financial liabilities | 750,855 | 67,326 | 277,859 | 57,564 | 8,440 | 1,162,044 |
Maturity gap | (393,877) | 12,414 | 12,119 | 496,272 | ||
Cumulative gap | (393,877) | (381,463) | (369,344) | 126,928 |
145
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Bank
Between
Between
Less than
3 months
1 year and
More than
No maturity
3 months
and 1 year
5 years
5 years
date
Total
As at 31 December 2025
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
Financial assets
Balances with Central Bank of Malta, treasury bills and cash
162,149
10,917
-
-
8,792
181,858
Financial investments measured at FVOCI
571
46,047
82,651
39,686
8,281
177,236
Financial investments measured at amortised cost
-
3,001
24,364
6,525
-
33,890
Loans and advances to banks
55,936
-
-
-
-
55,936
Loans and advances to customers
129,005
69,995
170,453
559,667
-
929,120
Other assets
3,753
6,122
-
-
44
9,919
Total financial assets
351,414
136,082
277,468
605,878
17,117
1,387,959
Financial liabilities
Amounts owed to banks
345
-
-
-
-
345
Amounts owed to customers
710,066
106,006
313,140
81,082
-
1,210,294
Other liabilities
11,669
667
2,611
7,366
6,256
28,569
Total financial liabilities
722,080
106,673
315,751
88,448
6,256
1,239,208
Maturity gap
(370,666)
29,409
(38,283)
517,430
Cumulative gap
(370,666)
(341,257)
(379,540)
137,890
Bank
Between
Between
Less than
3 months
1 year and
More than
No maturity
3 months
and 1 year
5 years
5 years
date
Total
As at 31 December 2024
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
Financial assets
Balances with Central Bank of Malta, treasury bills and cash
144,809
-
-
-
8,552
153,361
Financial investments measured at FVOCI
2,661
6,224
118,070
49,741
8,175
184,871
Financial investments measured at amortised cost
-
-
14,000
7,107
-
21,107
Loans and advances to banks
40,964
-
-
-
-
40,964
Loans and advances to customers
149,789
70,137
157,808
494,956
-
872,690
Other assets
3,855
2,379
-
-
276
6,510
Total financial assets
342,078
78,740
289,878
551,804
17,003
1,279,503
Financial liabilities
Amounts owed to banks
438
-
-
-
-
438
Amounts owed to customers
729,487
67,102
275,996
49,231
-
1,121,816
Other liabilities
12,117
624
1,863
6,280
4,236
25,120
Total financial liabilities
742,042
67,726
277,859
55,511
4,236
1,147,374
Maturity gap
(399,964)
11,014
12,019
496,293
Cumulative gap
(399,964)
(388,950)
(376,931)
119,362
146
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
Group | Between | Between | |||
| Less than | 3 months | 1 year | More than | ||
3 months | and 1 year | and 5 years | 5 years | Total | |
As at 31 December 2025 | € 000 | € 000 | € 000 | € 000 | € 000 |
Financial liabilities | |||||
Amounts owed to banks | 345 | - | - | - | 345 |
Amounts owed to customers | 708,625 | 107,940 | 339,329 | 98,555 | 1,254,449 |
Other liabilities | 24,739 | 1,294 | 3,307 | 2,941 | 32,281 |
Total financial liabilities | 733,709 | 109,234 | 342,636 | 101,496 | 1,287,075 |
As at 31 December 2024 | € 000 | € 000 | € 000 | € 000 | € 000 |
Financial liabilities | |||||
Amounts owed to banks | 438 | - | - | - | 438 |
Amounts owed to customers | 728,887 | 68,674 | 301,387 | 57,162 | 1,156,110 |
Other liabilities | 12,850 | 1,519 | 3,709 | 6,367 | 24,445 |
Total financial liabilities | 742,175 | 70,193 | 305,096 | 63,529 | 1,180,993 |
Bank
Between
Between
Less than
3 months
1 year
More than
3 months
and 1 year
and 5 years
5 years
Total
As at 31 December 2025
€ 000
€ 000
€ 000
€ 000
€ 000
Financial liabilities
Amounts owed to banks
345
-
-
-
345
Amounts owed to customers
711,262
108,344
339,329
98,555
1,257,490
Other liabilities
13,187
757
1,382
733
16,059
Total financial liabilities
724,794
109,101
340,711
99,288
1,273,894
As at 31 December 2024
€ 000
€ 000
€ 000
€ 000
€ 000
Financial liabilities
Amounts owed to banks
438
-
-
-
438
Amounts owed to customers
730,909
68,492
298,339
61,418
1,159,158
Other liabilities
12,127
1,349
2,728
5,078
21,282
Total financial liabilities
743,474
69,841
301,067
66,496
1,180,878
147
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2.6 Operational risk
Operational risk is the risk of losses due to:
• deficient or erroneous internal procedures;
• human or system errors;
• external events, including legal events;
• internal and external fraud;
• employment practices and workplace safety;
• clients, products and business practices;
• damage to physical assets;
• business disruption and system failures; and
• execution, delivery and process management.
Operational risk is thus often associated with specific and one-off events, such as failure to observe business
or working procedures, defects or breakdowns of the technical infrastructure, criminal acts, fire and storm
damage or litigation. Operational risks are non-financial risks. Operational risk management relies on a
framework of policies implemented by the different operational functions and which implementation is
overseen by the Risk Management Function.
With respect to 2025, a financial measurement of this risk is arrived at by the Bank for the purpose of
allocating risk capital using the standardised approach for operational risk as prescribed under the CRR3
framework. Under this approach, the capital requirement for operational risk is determined on the basis of
the Bank’s Business Indicator (BI), a financial-statement-derived proxy reflecting the scale and nature of the
Bank’s activities, which is then mapped to the Business Indicator Component (BIC) through a set of
progressive regulatory coefficients. The capital requirement for operational risk under this method was
calculated at €4,330,000.
For 2024, using the Basic Indicator Approach as outlined in the CRR2 framework, the capital requirement
for operational risk under this method was calculated at €4,907,000.
148
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
149
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
150
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
2.9 Encumbered and unencumbered assets
Banking Rule 07 transposed the provisions of the EBA Guidelines on Disclosure of Encumbered and
Unencumbered Assets (EBA/GL/2014/03) and introduced the requirement to disclose information about
asset encumbrance.
This disclosure is meant to facilitate an understanding of available and unrestricted assets that could be
used to support potential future funding and collateral needs. An asset is defined as encumbered if it has
been pledged as collateral against an existing liability, and as a result is no longer available to the group to
secure funding, satisfy collateral needs or be sold to reduce the funding requirement.
151
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2. Financial risk management (continued)
The disclosure is not designed to identify assets which would be available to meet the claims of creditors or
to predict assets that would be available to creditors in the event of a resolution or bankruptcy.
Bank
Carrying
Carrying
amount of
Fair value of
amount of
Fair value of
encumbered
encumbered
unencumbered
unencumbered
assets
assets
assets
assets
€ 000
€ 000
€ 000
€ 000
At 31 December 2025
Equity instruments
-
-
8,281
8,281
Debt securities
7,676
7,676
196,141
196,397
Other assets
2,836
2,836
1,244,719
1,244,719
Total
10,512
10,512
1,449,141
1,449,397
At 31 December 2024
Equity instruments
-
-
8,175
8,175
Debt securities
8,013
8,013
190,780
191,073
Other assets
2,613
2,613
1,145,466
1,145,466
Total
10,626
10,626
1,344,421
1,344,714
The Bank does not encumber any collateral received. As at 31 December 2025, the Bank did not have any
outstanding liabilities associated with encumbered assets and collateral received.
The Bank undertakes the following types of encumbrance:
i. Pledging of a deposit with the Central Bank of Malta in favour of the Depositor Compensation Scheme.
ii. Pledging of Malta Government Stocks held in terms of Directive No. 8 (Chapter 204 of the Central Bank
of Malta Act) as security for a facility not currently utilised.
152
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
3. Accounting estimates and judgements (continued)
153
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
3. Accounting estimates and judgements (continued)
154
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Banking services | Postal services | Total | ||||
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |
Interest receivable | 39,908 | 37,996 | 126 | 147 | 40,034 | 38,143 |
Interest expense | (13,795) | (10,826) | (111) | (57) | (13,906) | (10,883) |
Postal sales and other revenue | 968 | 72 | 41,681 | 39,111 | 42,649 | 39,183 |
Net fee and commission income | 5,391 | 5,340 | 982 | 1,033 | 6,373 | 6,373 |
Other operating income | 1,034 | 1,246 | 315 | 233 | 1,349 | 1,479 |
Segment operating income | 33,506 | 33,828 | 42,993 | 40,467 | 76,499 | 74,295 |
Depreciation and amortisation | (1,127) | (1,132) | (2,461) | (2,492) | (3,588) | (3,624) |
Net movement in expected | ||||||
credit losses | 1,017 | 1,039 | (57) | (112) | 960 | 927 |
Employee compensation | ||||||
and benefits | (9,572) | (9,513) | (18,727) | (17,016) | (28,299) | (26,529) |
Other costs | (9,570) | (9,383) | (15,541) | (16,229) | (25,111) | (25,612) |
Operating profit | 14,254 | 14,839 | 6,207 | 4,618 | 20,461 | 19,457 |
Share of profit/(loss) attributable to investment accounted for using the equity method, net | ||||||
of tax | 3,112 | (101) | 194 | 59 | 3,306 | (42) |
Profit before taxation | 17,366 | 14,738 | 6,401 | 4,677 | 23,767 | 19,415 |
Income tax expense | (4,907) | (5,548) | (2,277) | (1,709) | (7,184) | (7,257) |
Profit for the year | 12,459 | 9,190 | 4,124 | 2,968 | 16,583 | 12,158 |
Segment total assets | 1,439,636 | 1,335,804 | 57,985 | 52,618 | 1,497,621 | 1,388,422 |
Capital expenditure during the year | 310 | 416 | 2,166 | 2,104 | 2,476 | 2,520 |
Segment total liabilities | 1,241,221 | 1,150,144 | 22,540 | 19,357 | 1,263,761 | 1,169,501 |
155
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Balances with Central Bank of Malta | 132,171 | 146,872 | 132,170 | 146,872 |
Malta Government treasury bills at amortised cost | 42,751 | - | 42,751 | - |
Cash in hand | 7,642 | 7,608 | 6,937 | 6,489 |
182,564 | 154,480 | 181,858 | 153,361 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Measured at FVOCI | ||||
Debt and other fixed income instruments | 170,965 | 178,828 | 168,955 | 176,696 |
Equity instruments | 8,281 | 8,175 | 8,281 | 8,175 |
Measured at amortised cost | ||||
Debt and other fixed income instruments | 33,890 | 21,107 | 33,890 | 21,107 |
213,136 | 208,110 | 211,126 | 205,978 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Issued by public bodies: | ||||
- local government | 139,855 | 141,008 | 138,778 | 139,805 |
- foreign governments | 5,561 | 6,224 | 5,561 | 6,224 |
- supranational | 1,106 | 4,010 | 1,106 | 4,010 |
Issued by public issuers: | ||||
- local banks | 11,814 | 12,197 | 11,270 | 11,660 |
- local corporates | 2,601 | 2,836 | 2,212 | 2,444 |
- foreign banks | 4,742 | 7,243 | 4,742 | 7,243 |
- foreign corporates | 5,286 | 5,310 | 5,286 | 5,310 |
170,965 | 178,828 | 168,955 | 176,696 |
156
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Issued by public bodies: | ||||
- local government | 22,012 | 12,016 | 22,012 | 12,016 |
- foreign governments | 3,588 | 2,860 | 3,588 | 2,860 |
- supranational | 2,994 | 2,695 | 2,994 | 2,695 |
Issued by public issuers: | ||||
- local banks | 224 | 224 | 224 | 224 |
- local corporates | 1,610 | 1,412 | 1,610 | 1,412 |
- foreign banks | 3,475 | 1,925 | 3,475 | 1,925 |
Expected credit loss allowances | (13) | (25) | (13) | (25) |
33,890 | 21,107 | 33,890 | 21,107 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
At 1 January | 178,828 | 199,965 | 176,695 | 197,700 |
Amortisation | (792) | (883) | (790) | (881) |
Redemptions/disposals | (9,943) | (29,642) | (9,844) | (29,423) |
Fair value movement | 3,235 | 8,946 | 3,257 | 8,858 |
Foreign exchange differences | (363) | 442 | (363) | 442 |
At 31 December | 170,965 | 178,828 | 168,955 | 176,696 |
157
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
6. Financial investments (continued)
Group and Bank | ||
2025 | 2024 | |
€ 000 | € 000 | |
At 1 January | 21,107 | 8,285 |
Acquisitions | 13,596 | 12,542 |
Amortisation | 23 | 12 |
Foreign exchange differences | (848) | 221 |
Expected credit loss allowances | 12 | 47 |
At 31 December | 33,890 | 21,107 |
Group and Bank | ||
2025 | 2024 | |
€ 000 | € 000 | |
At 1 January | 8,175 | 8,520 |
Acquisitions | - | 88 |
Disposals | - | (416) |
Fair value movement | 257 | (74) |
Foreign exchange differences | (151) | 57 |
At 31 December | 8,281 | 8,175 |
| 7. Loans and advances to banks | ||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Repayable on call and at short notice | 20,997 | 18,955 | 16,010 | 16,230 |
Term loans and advances | 41,429 | 27,243 | 39,929 | 24,743 |
Gross loans and advances to banks | 62,426 | 46,198 | 55,939 | 40,973 |
Credit loss allowances | (3) | (9) | (3) | (9) |
Net loans and advances to banks | 62,423 | 46,189 | 55,936 | 40,964 |
158
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Repayable on call and at short notice | 120,297 | 114,456 | 120,306 | 114,464 |
Term loans and advances | 816,170 | 766,646 | 816,170 | 766,646 |
Gross loans and advances to customers | 936,467 | 881,102 | 936,476 | 881,110 |
Credit loss allowances | (7,356) | (8,420) | (7,356) | (8,420) |
Net loans and advances to customers | 929,111 | 872,682 | 929,120 | 872,690 |
Credit loss allowances | ||||
Stage 1 | 678 | 979 | 678 | 979 |
Stage 2 | 754 | 446 | 754 | 446 |
Stage 3 | 5,924 | 6,995 | 5,924 | 6,995 |
7,356 | 8,420 | 7,356 | 8,420 |
9. Investments in subsidiaries
Country of | ||||||
Name of company | incorporation | Nature of business | Equity interest | Carrying amount | ||
2025 | 2024 | 2025 | 2024 | |||
% | % | € 000 | € 000 | |||
Redbox Limited | Malta | Holding company | 100 | 100 | 17,926 | 17,926 |
Lombard Select SICAV p.l.c. | Malta | Collective Investment | - | 100 | - | 1 |
Scheme |
The registered office of these entities is situated at 67, Republic Street, Valletta, Malta.
At 31 December 2025 and 2024, Redbox Limited held 73.0% of the equity share capital and voting rights of
MaltaPost p.l.c., a listed company incorporated and operating in Malta, comprising the Group’s postal
services reportable segment (see note 4). The remaining 27.0% is held by the general public.
Lombard Select SICAV p.l.c.
During 2025, Lombard Select SICAV p.l.c. voluntarily surrendered its license. The Bank, acting as the sole
shareholder of Lombard Select SICAV p.l.c. had approved the voluntary dissolution and consequential
winding up of the company. The effects of this development on the Bank’s financial statements are
insignificant.
159
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
MaltaPost p.l.c. subsidiaries are shown below:
Subsidiary | Registered office | Percentage of | Nature of business |
shares held | |||
Tanseana Limited | 305, Qormi Road, | 100% of ordinary | Document management |
Marsa, MTP 1001, | shares | ||
Malta | |||
Ciabro Limited | 22, Warehouse il-Moll | 100% of ordinary | Warehousing |
tal -Pont, | shares | ||
Marsa, MRS1400, | |||
Malta | |||
PostaInsure Agency Limited | 4, Triq l-Ifran, | 49% of ordinary | General insurance agent |
Valletta, VLT 1450, | shares (rights to | ||
Malta | appoint 60% of | ||
the investee’s | |||
Board of | |||
Directors) | |||
Dormax Press Company Limited | B55, Triq Giuseppe | 99.99% of | Printing services |
Garibaldi, | ordinary shares | ||
Qasam Industrijali, | |||
Marsa, Malta |
The end of the reporting period of the audited financial statements of MaltaPost p.l.c. and its associate
IVALIFE Insurance Limited that have been utilised in the preparation of these consolidated financial
statements is 30 September 2025, since the financial statements prepared as of this date constitute the
most recent audited financial statements of the respective companies. The Bank has considered the
utilisation of the subsidiary’s financial information as at 31 December 2025 as impractical for the purposes
of preparation of its consolidated financial statements.
Dormax Press Company Limited
On 17 February 2025, MaltaPost entered into a share purchase agreement with the previous shareholders
of Dormax Press Company Limited (Dormax), a limited liability company registered in Malta under the
Companies Act (Cap.386) with registration number C 27512, for the purchase of 99.99% of the issued share
capital for a consideration of €300,000. The transfer of shares was completed on 17 February 2025, at
which date MaltaPost also obtained control over the company.
The purchase consideration was deemed equivalent to the fair value of the 99.99% equity holding in
Dormax as at acquisition date.
160
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
9. Investments in subsidiaries (continued)
The estimated fair values of identifiable assets and liabilities of Dormax as at date of acquisition were as
follows:
€ 000 | |
Non-current assets (principally property, plant and equipment) (Note 12) | 111 |
Current assets (principally inventory and trade and other receivables) | 418 |
Cash and cash equivalents | 21 |
Trade and other payables | (313) |
Identifiable net assets acquired | 237 |
Goodwill (Note 11) | 63 |
Purchase consideration | 300 |
| 10. Investments in associates | ||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
At 1 January | 4,250 | 3,292 | 1,645 | 1,645 |
Additions | 1,000 | 1,000 | - | - |
Share of results | 3,306 | (42) | - | - |
Dividend received | (2,700) | - | - | - |
Reduction in share capital | (1,142) | - | (1,142) | - |
At 31 December | 4,714 | 4,250 | 503 | 1,645 |
At 31 December | ||||
Cost | 5,378 | 5,520 | 503 | 1,645 |
Share of reserves | (664) | (1,270) | - | - |
Carrying amount | 4,714 | 4,250 | 503 | 1,645 |
161
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
10. Investments in associates (continued)
Country of | Nature of | Group | ||||
Name of company | incorporation | business | Equity interest | carrying amount | ||
2025 | 2024 | 2025 | 2024 | |||
% | % | € 000 | € 000 | |||
Gozo Hotels | ||||||
Company Limited | Malta Accommodation | 33.3 | 33.3 | 745 | 1,475 | |
IVALIFE Insurance | ||||||
Limited | Malta | Insurance | 25.0 | 25.0 | 3,969 | 2,775 |
162
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Group | Bank | ||||
Other | |||||
| Computer | intangible | Computer | |||
Goodwill | software | assets | Total | software | |
€ 000 | € 000 | € 000 | € 000 | € 000 | |
At 1 January 2024 | |||||
Cost | 857 | 8,449 | 140 | 9,446 | 3,449 |
Accumulated amortisation | - | (7,200) | (54) | (7,254) | (3,430) |
Net book amount | 857 | 1,249 | 86 | 2,192 | 19 |
Year ended 31 December 2024 | |||||
At 1 January 2024 | 857 | 1,249 | 86 | 2,192 | 19 |
Additions | - | 578 | - | 578 | - |
Amortisation for the year | - | (567) | (17) | (584) | (9) |
At 31 December 2024 | 857 | 1,260 | 69 | 2,186 | 10 |
At 31 December 2024 | |||||
Cost | 857 | 9,027 | 140 | 10,024 | 3,449 |
Accumulated amortisation | - | (7,767) | (71) | (7,838) | (3,439) |
Net book amount | 857 | 1,260 | 69 | 2,186 | 10 |
Year ended 31 December 2025 | |||||
At 1 January 2025 | 857 | 1,260 | 69 | 2,186 | 10 |
Additions | - | 524 | - | 524 | - |
Acquisition of subsidiary (Note 9) | 63 | - | - | 63 | - |
Amortisation for the year | - | (619) | (18) | (637) | (7) |
At 31 December 2025 | 920 | 1,165 | 51 | 2,136 | 3 |
At 31 December 2025 | |||||
Cost | 920 | 9,551 | 140 | 10,611 | 3,449 |
Accumulated amortisation | - | (8,386) | (89) | (8,475) | (3,446) |
Net book amount | 920 | 1,165 | 51 | 2,136 | 3 |
163
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Land and | Computer | |||
Group | buildings | equipment | Other | Total |
€ 000 | € 000 | € 000 | € 000 | |
At 1 January 2024 | ||||
Cost or valuation | 65,117 | 5,972 | 16,159 | 87,248 |
Accumulated depreciation | (4,709) | (4,743) | (11,285) | (20,737) |
Net book amount | 60,408 | 1,229 | 4,874 | 66,511 |
Year ended 31 December 2024 | ||||
At 1 January 2024 | 60,408 | 1,229 | 4,874 | 66,511 |
Revaluation surplus arising during the year: | ||||
Effect on cost or valuation | 3,839 | - | - | 3,839 |
Effect on accumulated depreciation | 1,219 | - | - | 1,219 |
Additions | 120 | 582 | 1,362 | 2,064 |
Disposals | (120) | (237) | (184) | (541) |
Adjustments to right-of-use assets | 857 | - | - | 857 |
Depreciation charge for the year | (1,430) | (533) | (1,077) | (3,040) |
Depreciation released on disposals | 120 | 237 | 184 | 541 |
Other adjustment | ||||
Effect on cost or valuation | - | - | (24) | (24) |
Effect on accumulated depreciation | - | - | 24 | 24 |
At 31 December 2024 | 65,013 | 1,278 | 5,159 | 71,450 |
At 31 December 2024 | ||||
Cost or valuation | 69,813 | 6,317 | 17,313 | 93,443 |
Accumulated depreciation | (4,800) | (5,039) | (12,154) | (21,993) |
Net book amount | 65,013 | 1,278 | 5,159 | 71,450 |
Year ended 31 December 2025 | ||||
At 1 January 2025 | 65,013 | 1,278 | 5,159 | 71,450 |
Additions | 2,590 | 463 | 1,354 | 4,407 |
Acquisition of subsidiary | 76 | - | 35 | 111 |
Disposals | (963) | (22) | (161) | (1,146) |
Adjustments to right-of-use assets | 7 | - | - | 7 |
Depreciation charge for the year | (1,134) | (585) | (1,232) | (2,951) |
Depreciation released on disposals | 617 | 18 | 122 | 757 |
At 31 December 2025 | 66,206 | 1,152 | 5,277 | 72,635 |
At 31 December 2025 | ||||
Cost or valuation | 71,547 | 6,758 | 19,236 | 97,541 |
Accumulated depreciation | (5,341) | (5,606) | (13,959) | (24,906) |
Net book amount | 66,206 | 1,152 | 5,277 | 72,635 |
164
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
12. Property, plant and equipment (continued)
Bank
Land and
Computer
buildings
equipment
Other
Total
€ 000
€ 000
€ 000
€ 000
At 1 January 2024
Cost or valuation
43,255
3,675
3,405
50,335
Accumulated depreciation
(2,594)
(2,763)
(2,723)
(8,080)
Net book amount
40,661
912
682
42,255
Year ended 31 December 2024
At 1 January 2024
40,661
912
682
42,255
Revaluation surplus arising during the year:
Effect on cost or valuation
2,580
-
-
2,580
Effect on accumulated depreciation
582
-
-
582
Additions
96
250
192
538
Disposals
(120)
(5)
(37)
(162)
Depreciation charge for the year
(595)
(368)
(194)
(1,157)
Depreciation released on disposals
120
5
37
162
At 31 December 2024
43,324
794
680
44,798
At 31 December 2024
Cost or valuation
45,811
3,920
3,560
53,291
Accumulated depreciation
(2,487)
(3,126)
(2,880)
(8,493)
Net book amount
43,324
794
680
44,798
Year ended 31 December 2025
At 1 January 2025
43,324
794
680
44,798
Additions
49
220
116
385
Disposals
(330)
(10)
(49)
(389)
Depreciation charge for the year
(579)
(374)
(200)
(1,153)
Depreciation released on disposals
2
10
17
29
At 31 December 2025
42,466
640
564
43,670
At 31 December 2025
Cost or valuation
45,530
4,130
3,627
53,287
Accumulated depreciation
(3,064)
(3,490)
(3,063)
(9,617)
Net book amount
42,466
640
564
43,670
165
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
12. Property, plant and equipment (continued)
In 2024, the adjustments to the Group’s right-of-use assets referred to in the table above, comprise the
impacts of the reassessment of the lease term in respect of lease extensions attributable to lease
agreements of MaltaPost p.l.c, which resulted in an increase in right-of-use assets of €857,000.
Land and buildings presented in the tables above include improvements to leasehold properties as follows:
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
At 1 January | 1,774 | 2,016 | 1,424 | 1,529 |
Additions | 513 | 8 | - | 8 |
Acquisition of subsidiary | 76 | - | - | |
Disposals | - | (120) | - | (120) |
Depreciation charge for the year | (226) | (250) | (113) | (113) |
Depreciation released on disposals | - | 120 | - | 120 |
At 31 December | 2,137 | 1,774 | 1,311 | 1,424 |
As at 31 December 2025, property, plant and equipment of the Group and the Bank includes right-of-use
assets of €6,455,000 (2024: €4,839,000) and €2,516,000 (2024: €2,813,000) respectively, as disclosed in
note 13.
166
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
12. Property, plant and equipment (continued)
167
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
12. Property, plant and equipment (continued)
Significant | Range of | ||||
| Description by class based | Valuation | unobservable | unobservable inputs | ||
on highest and best use | Fair value | technique | inputs | (weighted average) | |
Current use as Bank’s offices | €21 million | Rent capitalisation | Rental value (€/sqm) | ||
| and operational premises | method | Growth rate (%) | 60 – 367 (226) | ||
| Capitalisation rate | 2 per annum | ||||
(%) | 6 – 8 | (7) | |||
€17 million | Adjusted sales | Sales price per | 2,000 – | 15,000 | |
| comparison | square metre (€) | (3,179) | |||
approach | |||||
Current use as subsidiary’s | €19 million | Adjusted sales | Sales price per | 1,500 – | 6,900 |
| office premises, retail | comparison | square metre (€) | (4,116) | ||
| outlets and mail delivery | approach | ||||
hubs | |||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Cost | 38,510 | 38,331 | 24,380 | 24,526 |
Accumulated depreciation | (4,095) | (3,743) | (3,378) | (3,086) |
Net book amount at 31 December | 34,415 | 34,588 | 21,002 | 21,440 |
13. Leases
The Group leases various locations for offsite ATMs, offices, branches and motor vehicles as well as low
value items such as IT equipment. Rental contracts are typically made for fixed periods but may have
extension options. Extension and termination options are included in a number of property leases across
the Group. These are used to maximise operational flexibility in terms of managing the assets used in the
Group’s operations. The majority of extension and termination options held are exercisable only by the
Group and not by the respective lessor. Most extension options in property and motor vehicle leases have
been included in the lease liability as the lease term reflects the exercise of such options.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and
conditions. The lease agreements do not impose any covenants other than the security interests in the
leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
168
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Group | Bank | |||||
Buildings | Other | Total | Buildings | Other | Total | |
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |
At 1 January 2024 | ||||||
Cost | 6,095 | 435 | 6,530 | 3,909 | 120 | 4,029 |
Accumulated depreciation | (1,825) | (263) | (2,088) | (996) | (22) | (1,018) |
Net book amount | 4,270 | 172 | 4,442 | 2,913 | 98 | 3,011 |
Year ended 31 December 2024 | ||||||
At 1 January 2024 | 4,270 | 172 | 4,442 | 2,913 | 98 | 3,011 |
Additions | - | 122 | 122 | - | 122 | 122 |
Adjustments upon reassessment | ||||||
of lease term in respect of extensions (see Note 12) | 857 | - | 857 | - | - | - |
Depreciation charge for the year | (477) | (105) | (582) | (278) | (42) | (320) |
At 31 December 2024 | 4,650 | 189 | 4,839 | 2,635 | 178 | 2,813 |
At 31 December 2024 | ||||||
Cost | 6,952 | 557 | 7,509 | 3,909 | 242 | 4,151 |
Accumulated depreciation | (2,302) | (368) | (2,670) | (1,274) | (64) | (1,338) |
Net book amount | 4,650 | 189 | 4,839 | 2,635 | 178 | 2,813 |
Year ended 31 December 2025 | ||||||
At 1 January 2025 | 4,650 | 189 | 4,839 | 2,635 | 178 | 2,813 |
Additions | 1 ,702 | 752 | 2,454 | - | 75 | 75 |
Derecognition upon termination | (633) | (35) | (668) | - | (35) | (35) |
Adjustments upon reassessment | ||||||
of lease term in respect of extensions (see Note 12) | 7 | - | 7 | - | - | - |
Depreciation charge for the year | (643) | (153) | (796) | (278) | (63) | (341) |
Depreciation released on derecognition upon | ||||||
termination | 615 | 4 | 619 | - | 4 | 4 |
At 31 December 2025 | 5,698 | 757 | 6,455 | 2,357 | 159 | 2,516 |
At 31 December 2025 | ||||||
Cost | 8 ,028 | 1,274 | 9,302 | 3,909 | 282 | 4,191 |
Accumulated depreciation | (2,330) | (517) | (2,847) | (1,552) | (123) | (1,675) |
Net book amount | 5,698 | 757 | 6,455 | 2,357 | 159 | 2,516 |
169
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
13. Leases (continued)
The Group and the Bank’s lease liabilities are presented below:
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Lease liabilities (Note 23) | ||||
Current | 672 | 928 | 226 | 678 |
Non-current | 5,805 | 4,175 | 2,197 | 2,373 |
6,477 | 5,103 | 2,423 | 3,051 |
The following tables show the movements in lease liabilities during the year:
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Lease liabilities | ||||
At beginning of year | 5,103 | 4,545 | 3,051 | 3,070 |
Additions | 2,360 | 122 | 76 | 122 |
Acquisition of subsidiary | 94 | - | - | - |
Payments | (1,211) | (542) | (741) | (213) |
Interest charge | 174 | 121 | 69 | 72 |
Adjustments upon reassessment of lease | ||||
term in respect of extensions | 7 | 857 | - | - |
Derecognition upon termination | (50) | - | (32) | - |
At end of year | 6,477 | 5,103 | 2,423 | 3,051 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
The income statement reflects the following | ||||
amounts relating to leases: | ||||
Depreciation charge on right-of-use assets | 796 | 582 | 341 | 320 |
Interest expense | 174 | 121 | 69 | 72 |
Expense relating to short-term leases (included | ||||
in administrative expenses) | 517 | 509 | 80 | 95 |
Expense relating to leases of low-value assets | ||||
| that are not shown above as short-term leases | ||||
(included in administrative expenses) | 197 | 211 | 36 | 34 |
The total cash payments for leases, including short-term and low-value leases, in 2025 was €1,982,000
(2024: €1,387,000) for the Group and €858,000 (2024: €334,000) for the Bank.
There was no expense relating to variable lease payments which were not included in the measurement of
lease liabilities.
170
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Assets | Liabilities | Net | Assets | Liabilities | Net | |
2025 | 2025 | 2025 | 2024 | 2024 | 2024 | |
Group | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 |
Deferred tax asset, after offsetting | ||||||
Differences between depreciation | ||||||
and capital allowances | - | (236) | (236) | - | (252) | (252) |
Provisions for liabilities and charges | 893 | - | 893 | 720 | - | 720 |
Credit loss allowances | 3,062 | - | 3,062 | 3,361 | - | 3,361 |
Fair value movements on financial | ||||||
investments | 2,769 | - | 2,769 | 4,049 | - | 4,049 |
Others | - | (33) | (33) | 83 | - | 83 |
6,724 | (269) | 6,455 | 8,213 | (252) | 7,961 | |
Deferred tax liability | ||||||
Revaluation of property | - | (4,798) | (4,798) | - | (4,824) | (4,824) |
- | (4,798) | (4,798) | - | (4,824) | (4,824) |
Bank
Deferred tax asset, after offsetting
Differences between depreciation
and capital allowances
-
(154)
(154)
-
(174)
(174)
Provisions for liabilities and
charges
697
-
697
522
-
522
Credit loss allowances
2,968
-
2,968
3,291
-
3,291
Fair value movements on financial
investments
2,770
-
2,770
4,050
-
4,050
Others
-
(33)
(33)
83
-
83
6,435
(187)
6,248
7,946
(174)
7,772
Deferred tax liability
Revaluation of property
-
(3,252)
(3,252)
-
(3,279)
(3,279)
-
(3,252)
(3,252)
-
(3,279)
(3,279)
171
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
14. Deferred tax assets and liabilities (continued)
| Movement in deferred tax assets and liabilities relate to: | |||||||
Recognised | Recognised | ||||||
| At 1 | Recognised | in other | At 31 | Recognised | in other | At 31 | |
| January | in profit | comprehensive | December | in profit | comprehensive | December | |
2024 | or loss | income | 2024 | or loss | income | 2025 | |
Group | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 |
Differences between depreciation and capital allowances | (42) | (210) | - | (252) | 16 | - | (236) |
Provisions for liabilities and charges | 288 | 403 | 29 | 720 | 175 | (2) | 893 |
Credit loss allowances | 4,385 | (1,110) | 86 | 3,361 | (301) | 2 | 3,062 |
Revaluation of property | (4,099) | - | (725) | (4,824) | - | 26 | (4,798) |
Fair value movements on investments | 7,048 | - | (2,999) | 4,049 | 19 | (1,299) | 2,769 |
Others | 15 | 68 | - | 83 | (116) | - | (33) |
7,595 | (849) | (3,609) | 3,137 | (207) | (1,273) | 1,657 |
Bank
Differences between depreciation and capital allowances
(140)
(34)
-
(174)
20
-
(154)
Provisions for liabilities and charges
119
403
-
522
175
-
697
Credit loss allowances
4,353
(1,148)
86
3,291
(325)
2
2,968
Revaluation of property
(2,800)
-
(479)
(3,279)
-
27
(3,252)
Fair value movements on investments
7,049
-
(2,999)
4,050
19
(1,299)
2,770
Others
-
83
-
83
(116)
-
(33)
8,581
(696)
(3,392)
4,493
(227)
(1,270)
2,996
The recognised deferred tax assets and liabilities are expected to be recovered or settled principally after more than twelve months from the end of the reporting period. The
deferred tax liabilities reflected in other comprehensive income relate principally to the revaluation of property, plant and equipment and the fair valuation of investments
measured at FVOCI (note 34).
172
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Postal supplies and materials | 337 | 331 | - | - |
Merchandise | 521 | 522 | - | - |
Stocks for resale | 235 | 822 | 235 | 822 |
Other stock items | 56 | 56 | 56 | 56 |
1,149 | 1,731 | 291 | 878 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Trade receivables - net of expected | ||||
credit loss allowances | 6,311 | 6,341 | - | - |
Others | 10,116 | 6,638 | 7,238 | 3,443 |
16,427 | 12,979 | 7,238 | 3,443 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Loss allowance as at 1 January | 203 | 91 | - | - |
Acquisition of subsidiary | 3 | - | - | - |
Net charge recognised in profit | ||||
or loss during the year | 57 | 112 | - | - |
Loss allowance as at 31 December | 263 | 203 | - | - |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Accrued income | 2,512 | 2,553 | 2,485 | 2,524 |
Prepayments | 2,116 | 1,551 | 1,009 | 757 |
Other assets | 1,099 | 1,331 | 1,099 | 1,331 |
5,727 | 5,435 | 4,593 | 4,612 |
173
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
| 18. Share capital | ||||
Bank | ||||
2025 | 2024 | |||
No. of | No. of | |||
Shares | shares | |||
000s | € 000 | 000s | € 000 | |
Authorised | ||||
Ordinary shares of €0.125 each Issued | 300,000 | 37,500 | 300,000 | 37,500 |
Ordinary shares of €0.125 each | 154,572 | 19,322 | 154,572 | 19,322 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Property revaluation reserve | 16,893 | 17,016 | 12,728 | 12,851 |
Investment revaluation reserve | (5,682) | (7,877) | (5,726) | (7,936) |
Other reserve | 2,143 | 1,871 | 2,402 | 2,133 |
13,354 | 11,010 | 9,404 | 7,048 |
174
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
| 20. Amounts owed to banks | ||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Term deposits with agreed maturity dates or periods of notice | 23 | 23 | 23 | 23 |
Repayable on demand | 322 | 415 | 322 | 415 |
345 | 438 | 345 | 438 |
| 21. Amounts owed to customers | ||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Term deposits with agreed maturity dates | 550,973 | 484,266 | 551,373 | 484,666 |
Repayable on demand | 656,283 | 635,740 | 658,921 | 637,150 |
1,207,256 | 1,120,006 | 1,210,294 | 1,121,816 |
| 22. Provisions for liabilities and other charges | ||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Obligation to Government | 939 | 1,060 | - | - |
Contractual and regulatory claims | 1,991 | 1,490 | 1,991 | 1,490 |
Other expected credit losses on off-balance | ||||
sheet items | 32 | 83 | 32 | 83 |
2,962 | 2,633 | 2,023 | 1,573 |
Group | 2025 | 2024 | ||||||
Contractual | Contractual | |||||||
| and | Expected | and | Expected | |||||
| Obligation to | regulatory | Credit Loss | Obligation to | regulatory | Credit Loss | |||
Government | claims | allowance | Total | Government | claims | allowance | Total | |
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |
At 1 January | 1,060 | 1,490 | 83 | 2,633 | 1,034 | 340 | 29 | 1,403 |
Actuarial (gains)/losses | ||||||||
recognised in other comprehensive income | (9) | - | - | (9) | 84 | - | - | 84 |
Charges recognised | ||||||||
in profit or loss | 26 | 501 | - | 527 | 31 | 1,150 | - | 1,181 |
Crystallised obligations | (138) | - | - | (138) | (89) | - | - | (89) |
Change in ECL provision on off-balance sheet items | - | - | (51) | (51) | - | - | 54 | 54 |
At 31 December | 939 | 1,991 | 32 | 2,962 | 1,060 | 1,490 | 83 | 2,633 |
175
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
22. Provisions for liabilities and other charges (continued)
2025 | 2024 | |
€ 000 | € 000 | |
Present value of unfunded obligations | 1,948 | 1,931 |
Crystallised obligations | (1,009) | (871) |
939 | 1,060 |
2025 | 2024 | |
€ 000 | € 000 | |
Net actuarial (losses)/gains | ||
- attributable to financial assumptions | 9 | (84) |
9 | (84) |
Bank
2025
2024
Contractual
Contractual
and
Expected
and
Expected
regulatory
Credit Loss
regulatory
Credit Loss
claims
allowance
Total
claims
allowance
Total
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
At 1 January
1,490
83
1,573
340
29
369
Charge recognised in profit or loss
501
-
501
1,150
-
1,150
Change in ECL provision on off-
balance sheet items
-
(51)
(51)
-
54
54
At 31 December
1,991
32
2,023
1,490
83
1,573
In addition, the Bank is also a defendant in legal actions by other customers as a result of which the
Directors are of the opinion that no liability will arise.
176
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
| 23. Other liabilities | ||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Trade payables | 3,931 | 5,640 | - | - |
Bills payable | 4,527 | 5,373 | 4,527 | 5,373 |
Lease liabilities | 6,477 | 5,103 | 2,423 | 3,051 |
Other payables | 15,239 | 10,381 | 10,151 | 6,456 |
30,174 | 26,497 | 17,101 | 14,880 |
| 24. Accruals and deferred income | ||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Accrued interest | 9,680 | 7,323 | 9,681 | 7,324 |
Other | 6,145 | 6,524 | 1,787 | 2,319 |
15,825 | 13,847 | 11,468 | 9,643 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Contingent liabilities | ||||
Guarantee obligations incurred on behalf of third parties | 15,114 | 12,619 | 15,114 | 12,619 |
Documentary credits | 6,941 | 7,208 | 6,941 | 7,208 |
22,055 | 19,827 | 22,055 | 19,827 |
Commitments | ||||
Credit facilities and other commitments to lend | 355,682 | 291,647 | 356,793 | 292,754 |
Capital commitments | 776 | 389 | 59 | 79 |
356,458 | 292,036 | 356,852 | 292,833 |
177
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
25. Commitments and contingent liabilities (continued)
2025 | 2024 | |
€ 000 | € 000 | |
Current | ||
Within 1 year | 694 | 654 |
| 26. Net interest income | ||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Interest income | ||||
On loans and advances to banks | 1,115 | 1,405 | 1,050 | 1,333 |
On loans and advances to customers | 32,938 | 28,989 | 32,938 | 28,989 |
On balances with Central Bank of Malta | 3,162 | 4,992 | 3,162 | 4,992 |
On Malta Government treasury bills | 39 | 60 | 39 | 60 |
37,254 | 35,446 | 37,189 | 35,374 | |
On debt and other fixed income instruments | 3,549 | 3,568 | 3,489 | 3,496 |
Net amortisation of premiums and discounts | (769) | (871) | (767) | (869) |
2,780 | 2,697 | 2,722 | 2,627 | |
Total interest income | 40,034 | 38,143 | 39,911 | 38,001 |
Interest expense | ||||
On amounts owed to banks | (1) | (2) | (1) | (2) |
On amounts owed to customers | (13,731) | (10,760) | (13,735) | (10,763) |
On leases | (174) | (121) | (69) | (72) |
Total interest expense | (13,906) | (10,883) | (13,805) | (10,837) |
Net interest income | 26,128 | 27,260 | 26,106 | 27,164 |
178
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
| 27. Net fee and commission income | ||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Fee and commission income | ||||
Retail banking customer fees | 4,003 | 3,855 | 4,005 | 3,856 |
Brokerage | 143 | 72 | 143 | 72 |
Other | 2,520 | 2,715 | 1,538 | 1,682 |
Total fee and commission income | 6,666 | 6,642 | 5,686 | 5,610 |
Fee and commission expense | ||||
Inter-bank transaction fees | (260) | (246) | (260) | (246) |
Other | (33) | (23) | (33) | (23) |
Total fee and commission expense | (293) | (269) | (293) | (269) |
Net fee and commission income | 6,373 | 6,373 | 5,393 | 5,341 |
| 28. Postal sales and other revenues | ||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Stamps, parcel post and postal stationery | ||||
including income from foreign inbound mail | 35,909 | 34,038 | - | - |
Collectibles and philatelic sales | 1,800 | 733 | 1,520 | 500 |
Other | 4,940 | 4,412 | - | - |
42,649 | 39,183 | 1,520 | 500 |
| 29. Dividend income | ||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Subsidiaries | - | - | 2,104 | 1,445 |
Associates | - | - | 2,700 | - |
Equity investments measured at FVOCI | 425 | 465 | 425 | 465 |
425 | 465 | 5,229 | 1,910 |
179
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
| 30. Net trading income | ||||
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Gains on foreign exchange activities | 612 | 628 | 579 | 665 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Staff costs | ||||
- wages, salaries and allowances | 26,392 | 24,731 | 8,988 | 9,002 |
- social security costs | 1,832 | 1,798 | 509 | 511 |
- others | 75 | - | 75 | - |
28,299 | 26,529 | 9,572 | 9,513 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
Average number of employees | ||||
Executives and senior managerial | 47 | 47 | 35 | 35 |
Other managerial, supervisory and clerical | 389 | 373 | 171 | 173 |
Others | 532 | 523 | 6 | 6 |
968 | 943 | 212 | 214 |
180
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
32. Net movement in expected credit losses
Movement in expected credit losses during 2025 was as follows:
Group | Bank | |||||
Reversals | Reversals | |||||
| Write- | of write- | Write- | of write- | |||
downs | downs | Total | downs | downs | Total | |
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |
Trade receivables | ||||||
Stage 3 | (57) | - | (57) | - | - | - |
Total trade receivables | (57) | - | (57) | - | - | - |
Loans and advances to banks | ||||||
Stage 1 | - | 6 | 6 | - | 6 | 6 |
Total loans and advances | ||||||
to banks | - | 6 | 6 | - | 6 | 6 |
Loans and advances to customers | ||||||
Stage 1 | - | 301 | 301 | - | 301 | 301 |
Stage 2 | (308) | - | (308) | (308) | - | (308) |
Stage 3 | - | 1,150 | 1,150 | - | 1,150 | 1,150 |
Recoveries | - | 3 | 3 | - | 3 | 3 |
Total loans and advances | ||||||
to customers | (308) | 1,454 | 1,146 | (308) | 1,454 | 1,146 |
Debt securities measured | ||||||
at FVOCI | ||||||
Stage 1 | - | 5 | 5 | - | 5 | 5 |
Total financial investments | ||||||
measured at FVOCI | - | 5 | 5 | - | 5 | 5 |
Debt securities measured | ||||||
at amortised cost | ||||||
Stage 1 | - | 12 | 12 | - | 12 | 12 |
Total financial investments | ||||||
measured at amortised cost | - | 12 | 12 | - | 12 | 12 |
Other financial assets | ||||||
Stage 1 | (201) | - | (201) | (201) | - | (201) |
Total other financial assets | (201) | - | (201) | (201) | - | (201) |
Off-balance sheet items | ||||||
Stage 1 | - | 70 | 70 | - | 70 | 70 |
Stage 3 | (21) | - | (21) | (21) | - | (21) |
Total off-balance sheet items | (21) | 70 | 49 | (21) | 70 | 49 |
Net movement in expected | ||||||
credit losses | (587) | 1,547 | 960 | (530) | 1,547 | 1,017 |
181
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
32. Net movement in expected credit losses (continued)
Movement in expected credit losses during 2024 was as follows:
Group | Bank | |||||
Reversals | Reversals | |||||
| Write- | of write- | Write- | of write- | |||
downs | downs | Total | downs | downs | Total | |
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |
Trade receivables | ||||||
Stage 3 | (112) | - | (112) | - | - | - |
Total trade receivables | (112) | - | (112) | - | - | - |
Loans and advances to banks | ||||||
Stage 1 | (9) | - | (9) | (9) | - | (9) |
Total loans and advances | ||||||
to banks | (9) | - | (9) | (9) | - | (9) |
Loans and advances to customers | ||||||
Stage 1 | - | 601 | 601 | - | 601 | 601 |
Stage 2 | - | 1,441 | 1,441 | - | 1,441 | 1,441 |
Stage 3 | (1,184) | - | (1,184) | (1,184) | - | (1,184) |
Write offs | (129) | - | (129) | (129) | - | (129) |
Recoveries | - | 63 | 63 | - | 63 | 63 |
Total loans and advances | ||||||
to customers | (1,313) | 2,105 | 792 | (1,313) | 2,105 | 792 |
Debt securities measured | ||||||
at FVOCI | ||||||
Stage 1 | - | 247 | 247 | - | 247 | 247 |
Total financial investments | ||||||
measured at FVOCI | - | 247 | 247 | - | 247 | 247 |
Debt securities measured | ||||||
at amortised cost | ||||||
Stage 1 | - | 47 | 47 | - | 47 | 47 |
Total financial investments | ||||||
measured at amortised cost | - | 47 | 47 | - | 47 | 47 |
Other financial assets | ||||||
Stage 1 | - | 16 | 16 | - | 16 | 16 |
Total other financial assets | - | 16 | 16 | - | 16 | 16 |
Off-balance sheet items | ||||||
Stage 1 | (59) | - | (59) | (59) | - | (59) |
Stage 2 | - | 5 | 5 | - | 5 | 5 |
Total off-balance sheet items | (59) | 5 | (54) | (59) | 5 | (54) |
Net movement in expected | ||||||
credit losses | (1,493) | 2,420 | 927 | (1,381) | 2,420 | 1,039 |
182
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
After charging | ||||
Directors' emoluments | ||||
- fees | 161 | 148 | 135 | 102 |
- other emoluments | 381 | 368 | 381 | 368 |
After crediting | ||||
Net income from investment services | 555 | 429 | 555 | 429 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Foreign outbound mail | 9,852 | 10,710 | - | - |
Utilities, insurance and security | 1,098 | 1,089 | 707 | 717 |
Depositor and investor compensation schemes | 624 | 593 | 624 | 593 |
Information systems and telecommunications | 3,528 | 2,977 | 2,639 | 2,126 |
Repairs and maintenance | 1,302 | 1,275 | 421 | 440 |
Short-term and low value leases | 714 | 720 | 116 | 129 |
Expenses associated with card services | 1,057 | 1,542 | 1,057 | 1,542 |
Licence fees | 513 | 524 | 282 | 229 |
Legal and professional fees | 741 | 720 | 495 | 590 |
Other administrative expenses | 5,155 | 4,281 | 3,331 | 2,341 |
Total other operating costs | 24,584 | 24,431 | 9,672 | 8,707 |
Other assurance/ | ||
Audit | advisory services | |
€ 000 | € 000 | |
Bank | ||
2025 | 121 | 14 |
2024 | 108 | 158 |
Subsidiary companies | ||
2025 | 96 | 18 |
2024 | 86 | 18 |
183
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Current taxation | ||||
Current tax expense | 6,977 | 6,408 | 5,383 | 5,181 |
Deferred taxation | ||||
Deferred tax charge (note 14) | 207 | 849 | 227 | 696 |
7,184 | 7,257 | 5,610 | 5,877 |
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Profit before tax | 23,767 | 19,415 | 19,061 | 16,101 |
Tax on profit at 35% | 8,318 | 6,795 | 6,671 | 5,635 |
Tax effect of: | ||||
Expenses not deductible for tax purposes | 498 | 776 | 288 | 435 |
Deductions attributable to usage of electric | ||||
vehicles | - | (315) | - | - |
Income taxed at different tax rates | (45) | (118) | (11) | (232) |
Share of results of associate | (1,157) | 15 | - | - |
Income not subject to tax | - | - | (983) | (52) |
Other differences | (430) | 104 | (355) | 91 |
7,184 | 7,257 | 5,610 | 5,877 |
184
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
34. Income tax expense (continued)
2025 | 2024 | |||||
Tax | Tax | |||||
| Before | credit/ | Net of | Before | credit/ | ||
tax | (charge) | tax | tax | (charge) | Net of tax | |
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |
Group | ||||||
Fair valuation of land and buildings | - | - | - | 5,058 | (725) | 4,333 |
Fair valuation of financial | ||||||
assets measured at FVOCI: | ||||||
• Net changes in fair value | 3,492 | (1,299) | 2,193 | 8,872 | (3,074) | 5,798 |
• Net movement attributable to change in credit risk | (5) | 2 | (3) | (247) | 86 | (161) |
Remeasurements of defined | ||||||
benefit obligations | 9 | (2) | 7 | (84) | 29 | (55) |
3,496 | (1,299) | 2,197 | 13,599 | (3,684) | 9,915 |
2025
2024
Tax
Before
credit/
Net of
Tax credit/
tax
(charge)
tax
Before tax
(charge)
Net of tax
€ 000
€ 000
€ 000
€ 000
€ 000
€ 000
Bank
Fair valuation of land and
buildings
-
-
-
3,162
(479)
2,683
Fair valuation of financial
assets measured at FVOCI:
• Net changes in fair value
3,514
(1,299)
2,215
8,784
(3,074)
5,710
• Net movement attributable
to change in credit risk
(5)
2
(3)
(247)
86
(161)
3,509
(1,297)
2,212
11,699
(3,467)
8,232
Group | ||
2025 | 2024 | |
Net profit attributable to equity holders of the Bank (€ 000) | 15,382 | 11,293 |
Weighted average number of ordinary shares in issue | 154,272,263 | 154,572,263 |
Earnings per share | €0.10 | €0.07 |
The Bank has no instruments or arrangements which give rise to dilutive potential ordinary shares, and
accordingly diluted earnings per share is equivalent to basic earnings per share.
185
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
36. Dividends
2025 | 2024 | |
Dividends paid by the Bank (€ 000) | 3,416 | 1,638 |
€ per share - net | 0.01 |
The dividends per share in respect of the financial year ended 31 December 2024 reflected in the table
above has been calculated on the basis of the number of ordinary shares in issue of 154,572,263 as at 25
June 2025, being the date of approval of the dividends by the shareholders of the Annual General Meeting.
| Subsequent to the end of the reporting period, a gross dividend of 3.42 cent per nominal € |
(net dividend of 2.22 cent for a total amount of €3,436,000) for the twelve months ended 31 December
2025 is being proposed for approval by the shareholders to be distributed. A resolution to this effect will
be proposed to the Annual General Meeting.
Group | Bank | |||
2025 | 2024 | 2025 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
Balances with Central Bank of Malta (note 5) | 123,379 | 138,320 | 123,379 | 138,320 |
Malta Government treasury bills (note 5) | 25,864 | - | 25,864 | - |
Cash in hand (note 5) | 7,642 | 7,608 | 6,937 | 6,489 |
Loans and advances to banks (note 7) | 60,925 | 43,697 | 55,939 | 40,973 |
Amounts owed to banks (note 20) | (322) | (415) | (321) | (415) |
Cash and cash equivalents | 217,488 | 189,210 | 211,798 | 185,367 |
186
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
38. Related parties (continued)
2025 | 2024 | |
€ 000 | € 000 | |
Income statement | ||
Interest receivable and similar income | 49 | 31 |
Interest expense | 7 | 5 |
Other operating costs | 1,544 | 1,427 |
2025 | 2024 | |
€ 000 | € 000 | |
Statement of financial position | ||
Loans and advances to customers | 3,946 | 3,195 |
Amounts owed to customers | 1,607 | 1,722 |
Contingent liabilities and commitments | 137 | 213 |
187
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
38. Related parties (continued)
Loans and | Loans and | |||
advances | Commitments | advances | Commitments | |
2025 | 2025 | 2024 | 2024 | |
€ 000 | € 000 | € 000 | € 000 | |
At 1 January | 3,195 | (202) | 2,380 | (462) |
Additions | 1,052 | (5) | 1,070 | (109) |
Reductions/repayments | (301) | 85 | (255) | 368 |
Other movements | - | - | - | 1 |
At 31 December | 3,946 | (122) | 3,195 | (202) |
2025 | 2024 | |
€ 000 | € 000 | |
Income statement | ||
Fee and commission income | 2 | 1 |
Interest expense | 4 | 4 |
Other operating income | 76 | 73 |
Other operating costs | 487 | 453 |
Statement of financial position | ||
Loans and advances to customers | 9 | 8 |
Trade and other receivables | - | 18 |
Accrued income and other assets | 15 | 3 |
Amounts owed to customers | 3,038 | 1,810 |
Accruals and deferred income | 40 | 96 |
Contingent liabilities | 329 | 210 |
Commitments | 1,111 | 1,107 |
188
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
38. Related parties (continued)
2025 | 2024 | |
€ 000 | € 000 | |
Income statement | ||
Dividend income | 2,700 | - |
Fee and commission income | 121 | 33 |
Other operating costs | 136 | 60 |
Statement of financial position | ||
Trade and other receivables | 6,122 | 2,279 |
Accrued income and other assets | 15 | 13 |
Investments in associates | 503 | 1,645 |
Amounts owed to customers | 14 | 12 |
Accruals and deferred income | - | 5 |
Other liabilities | 22 | - |
39. Regulatory compensation schemes
Regulatory contributions amounting to €624,000 (2024: €409,000), included with administrative
expenses, reflect the Group’s annual obligations arising from the EU Directives on Deposit Guarantee
Scheme.
39.1 Investor compensation scheme
In accordance with the requirements of the Investor Compensation Scheme Regulations, 2003 issued
under the Investment Services Act, 1994 (Chapter 370 of the Laws of Malta) licence holders are required
to transfer a variable contribution to an Investor Compensation Scheme Reserve and place the equivalent
amount with a bank, pledged in favour of the Scheme. Alternatively licence holders can elect to pay the
amount of variable contribution directly to the Scheme. Lombard Bank Malta p.l.c. has elected to pay the
amount of the variable contribution directly to the Scheme.
189
Lombard Bank Malta p.l.c.
Notes to the Financial Statements for the year ended 31 December 2025
39. Regulatory compensation schemes (continued)
39. 2 Depositor compensation scheme
The Bank fulfils its obligations in respect of the Depositor Compensation Scheme (DCS) by effecting
payments of 70% of the required contributions directly to the Scheme, while the remaining 30% is
maintained in the form of irrevocable payment commitments (IPCs). The IPCs as at the end of the year
amounted to €2,402,000 (2024: €2,133,000). IPCs are irrevocable in nature, consistent with recent EU
jurisprudence confirming that such payment commitments remain binding and enforceable.
At 31 December 2025, the Bank had pledged deposits amounting to €1,582,000 (2024: €1,313,000) with
the Central Bank of Malta in favour of the Depositor Compensation Scheme and placed an amount of
€820,000 (2024: €820,000) directly with the Scheme to comply with local regulatory requirements.
The IPCs represent a present obligation arising from past events, comprising a legally binding obligation
that could require payment under specific circumstances as emphasised by recent case law. The obligation
emanating from the IPCs would result in an outflow of funds only if either (i) a DCS determination event
occurs in terms of the DCS Regulations in respect of a member bank which is unable to repay its deposit
liabilities, which would require DCS funding, or (ii) the Bank surrenders its credit institution licence. The
probability of an outflow of economic resources is dependent on the likelihood of occurrence of the
triggering events described above.
Management has assessed the probability of the Bank surrendering its licence, based on its strong capital
and liquidity position, profitability projections, regulatory compliance and importance within the domestic
banking system. The Bank’s business model and financial standing indicate the intentions to continue
operating indefinitely. The likelihood of a DCS determination event occurring within the Maltese banking
sector was also assessed considering macroeconomic conditions, financial stability indicators and the
historical incidence of such determination events. The outcome of the Bank’s assessment is that an
outflow linked to the Bank surrendering its credit institution licence and to a DCS determination event
would occur sufficiently far in the future such that the estimated provision necessary as at 31 December
2025 is considered insignificant. The Bank will continue to monitor regulatory developments, local banking
sector conditions, and economic indicators, and will reassess its position at each reporting date.
40. Statutory information
Lombard Bank Malta p.l.c. is a public limited liability company domiciled and incorporated in Malta
190
Five Year Summary
Statements of Financial Position
Group
2025
2024
2023
2022
2021
€ 000
€ 000
€ 000
€ 000
€ 000
Assets
Balances with Central Bank of Malta,
treasury bills and cash
182,564
154,480
147,043
139,234
126,279
Cheques in course of collection
150
266
1,880
1,053
530
Financial investments
213,136
208,110
216,770
220,815
227,135
Loans and advances to banks
62,423
46,189
38,139
27,615
78,279
Loans and advances to customers
929,111
872,682
758,304
711,612
642,893
Investments in associates
4,714
4,250
3,292
2,607
3,006
Intangible assets
2,136
2,186
2,192
2,121
2,145
Property, plant and equipment
72,635
71,450
66,511
66,375
65,346
Assets classified as held for sale
703
703
703
703
661
Current tax assets
291
-
643
575
2,691
Deferred tax assets
6,455
7,961
11,694
10,889
7,034
Inventories
1,149
1,731
1,391
1,271
1,324
Trade and other receivables
16,427
12,979
11,369
13,243
10,787
Accrued income and other assets
5,727
5,435
5,203
5,302
4,536
Total assets
1,497,621
1,388,422
1,265,134
1,203,415
1,172,646
Equity and liabilities
Equity
Share capital
19,322
19,322
19,322
11,341
11,192
18,530
Share premium
56,534
56,534
56,534
18,530
Property revaluation reserve
16,893
17,016
13,109
13,087
13,040
Investment revaluation reserve
(5,682)
(7,877)
(13,349)
(12,733)
5,180
Reserve for General Banking Risks
-
-
-
2,903
2,903
Other reserves
2,143
1,871
1,660
1,382
2,545
Retained earnings
134,506
122,582
113,107
101,700
83,910
Equity attributable to equity holders
of the Bank
223,716
209,448
190,383
136,210
137,300
Non-controlling interests
10,144
9,473
8,409
8,090
8,470
Total equity
233,860
218,921
198,792
144,300
145,770
Liabilities
Amounts owed to banks
345
438
145
535
1,224
Amounts owed to customers
1,207,256
1,120,006
1,019,075
1,008,431
977,143
Provisions for liabilities and other charges
2,962
2,633
1,403
1,688
2,113
Current tax liabilities
2,401
1,256
1,556
-
809
Deferred tax liabilities
4,798
4,824
4,099
4,099
4,099
Other liabilities
30,174
26,497
28,762
33,347
30,649
Accruals and deferred income
15,825
13,847
11,302
11,015
10,839
Total liabilities
1,263,761
1,169,501
1,066,342
1,059,115
1,026,876
Total equity and liabilities
1,497,621
1,388,422
1,265,134
1,203,415
1,172,646
Memorandum items
Contingent liabilities
22,055
19,827
14,315
13,611
13,195
Commitments
356,458
292,036
257,415
202,396
195,848
191
Five Year Summary
Income Statements
Group
2025
2024
2023
2022
2021
€ 000
€ 000
€ 000
€ 000
€ 000
Interest receivable and similar income
40,034
38,143
33,698
29,020
25,725
Interest expense
(13,906)
(10,883)
(7,837)
(6,744)
(6,169)
Net interest income
26,128
27,260
25,861
22,276
19,556
Other operating income
50,664
47,304
44,820
37,605
43,856
Other operating charges
(57,291)
(56,034)
(54,578)
(48,049)
(51,836)
Net movement in expected credit losses
960
927
(1,261)
16,243
1,464
Share of profit/(loss) of investment
accounted for using equity method
3,306
(42)
(315)
(399)
(402)
Profit before taxation
23,767 19,415 14,527
27,676
12,638
Income tax expense
(7,184)
(7,257)
(4,909)
(10,050)
(4,759)
Profit for the year
16,583
12,158
9,618
17,626
7,879
Attributable to:
15,382
11,293
9,064
17,530
Equity holders of the Bank
7,481
Non-controlling interests
1,201
865
554
96
398
Profit for the year
16,583
12,158
9,618
17,626
7,879
192
Five Year Summary
Statements of Cash Flows
Group
2025
2024
2023
2022
2021
€ 000
€ 000
€ 000
€ 000
€ 000
Net cash flows generated from/(used
in) operating activities
36,488
1,501
18,179
(36,281)
31,632
Cash flows from investing activities
Dividends received
425
465
203
141
81
Interest received from debt securities
3,637
3,791
4,675
3,485
3,012
Purchase of financial investments
(13,596)
(12,631)
(8,359)
(27,518)
(75,270)
Proceeds from maturity/disposal
of financial investments
9,942
30,156
9,903
5,220
6,760
Purchase of property, plant
and equipment and intangible assets
(2,260)
(2,289)
(2,657)
(3,709)
(7,601)
Proceeds from disposal of property,
plant and equipment
49
2
-
-
-
Purchase of investment in associate
-
-
-
-
(1,500)
Investments in associate
(1,000)
(1,000)
(1,000)
-
-
Net cash inflow arising from acquisition
of subsidiary
(256)
-
-
-
833
Net cash flows generated from/(used
in) investing activities
(3,059)
18,494
2,765
(22,381)
(73,685)
Cash flows from financing activities
Proceeds from rights issue of ordinary
shares
-
-
45,733
-
-
Dividends paid to equity holders
of the Bank
(3,416)
(1,638)
-
(873)
(862)
Dividends paid to non-controlling
interests
(523)
(300)
(299)
(429)
(429)
Principal element of lease payments
(1,212)
(552)
(491)
(478)
(523)
Net cash flows (used in)/generated
from financing activities
(5,151)
(2,490)
44,943
(1,780)
(1,814)
193
Independent auditor’s report
To the Shareholders of Lombard Bank Malta p.l.c.
Report on the audit of the financial statements
Our opinion
In our opinion:
· The Group financial statements and the Parent Company (“the Bank”) financial statements (the “financial statements”) of Lombard Bank Malta p.l.c. give a true and fair view of the Group and the Parent Company’s financial position as at 31 December 2025, and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU; and
· The financial statements have been prepared in accordance with the requirements of the Maltese Banking Act (Cap. 371) and the Maltese Companies Act (Cap. 386).
Our opinion is consistent with our additional report to the Audit Committee.
What we have audited
Lombard Bank Malta p.l.c.’s financial statements comprise:
· the Consolidated and Parent Company statements of financial position as at 31 December 2025;
· the Consolidated and Parent Company income statements and statements of comprehensive income for the year then ended;
· the Consolidated and Parent Company statements of changes in equity for the year then ended;
· the Consolidated and Parent Company statements of cash flows for the year then ended; and
· the notes to the financial statements, comprising material accounting policy information and other explanatory information.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and the Parent Company in accordance with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to audits of financial statements of an EU Public Interest Entity in Malta and the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) as applicable to audits of financial statements of public interest entities. We have also fulfilled our other ethical responsibilities in accordance with these Codes.
To the best of our knowledge and belief, we declare that non-audit services that we have provided to the Bank and its subsidiaries are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).
The non-audit services that we have provided to the Bank and its subsidiaries, in the period from 1 January 2025 to 31 December 2025, are disclosed in note 33 to the financial statements.
Our audit approach
Overview
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As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
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Overall group materiality |
€1,033,000 |
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How we determined it |
5% of profit before tax adjusted for non-recurring items |
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Rationale for the materiality benchmark applied |
We chose profit before tax adjusted for non-recurring items as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured by users, and is a generally accepted benchmark. We chose 5% which is within the range of quantitative materiality thresholds that we consider acceptable. |
We
agreed with the Audit Committee that we would report to them
misstatements identified during our audit above €103,000 as
well as misstatements below that amount that, in our view,
warranted reporting for qualitative reasons.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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Key audit matter |
How our audit addressed the key audit matter |
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Credit loss allowances in respect of loans and advances to customers of the Bank Credit loss allowances in respect of loans and advances to customers represent management’s best estimate of Expected Credit Losses (‘ECLs’) within the loan portfolios at the end of the reporting period. The development of the models designed to estimate ECLs on loans measured at amortised cost in accordance with the requirements of IFRS 9 requires a considerable level of judgement since the determination of ECLs is subject to a high degree of estimation uncertainty. In this respect, it is considered a key area of focus. The level of estimation uncertainty surrounding the measurement of ECLs in respect of the Bank’s lending portfolios remained elevated during the financial year ended 31 December 2025 in view of the ongoing geopolitical developments impacting key macroeconomic factors. This affected a number of components forming part of the ECL calculation, including the determination of staging, the modelling of expected default levels and loss severities, and the determination of forward-looking scenarios giving rise to heightened subjectivity requiring a higher level of expert judgement. Credit loss allowances relating to loans and advances in the Bank’s Personal and Corporate and commercial portfolios are determined at an instrument level. In general, the Bank calculates ECLs by multiplying three main components: probability of default (PD), loss given default (LGD) and exposure at default (EAD): i. Probability of default (“PD”): the likelihood of a borrower defaulting on its financial obligation either over the next 12 months or over the remaining lifetime of the obligation. ii. Loss given default (“LGD”): the expected losses taking into account, among other attributes, the mitigating effect of collateral value (if any) at the time it is expected to be realised and the time value of money. The LGD modelling methodology utilises historical experience, which might result in limitations in its reliability to appropriately estimate ECLs especially during periods characterised by economic conditions such as those currently experienced. iii. Exposure at default (“EAD”): the expected exposure in the event of a default (including any expected drawdowns of committed facilities). When applicable, the Bank also applies overlays based on expert judgement where management’s view is that the calculated ECLs based on these key inputs do not fully capture the risks within the Bank’s loan portfolios. For non-defaulted (Stage 1 and 2) loans and a number of defaulted (Stage 3) loans which are not individually significant, the Bank uses internally developed statistical models. For non-defaulted (Stages 1 and 2) exposures, PDs are estimated using historical model development data based on the Bank’s own experience as available at the reporting date. For exposures secured by immovable properties, LGDs are driven by the adjusted loan-to-value ratio of the individual facilities and takes into account other assumptions, including market value haircut (which includes costs to sell), time to sell and the impact of discounting the collateral from the date of realisation back to the date of default. The maximum period considered when measuring ECLs is the maximum contractual period over which the Bank is exposed to credit risk. For individually significant defaulted (Stage 3) exposures, discounted cash flow models are utilised in order to estimate ECLs. Internal credit risk management practices are used to determine when a default has occurred, considering quantitative and qualitative factors where appropriate. Judgement is required to determine when a default has occurred and then to estimate the expected future cash flows related to the loan, which are dependent on parameters or assumptions such as the valuation of collateral (including forced sale discounts and assumed realisation period) or forecasted operating cash flows. The Bank is required to assess multiple scenarios in this respect, which scenarios will have probabilities attached. Macroeconomic conditions impact the level of uncertainty around judgements made in determining the timing of defaults and in respect of staging. In this respect, economic conditions might be reasonably expected to impact the affordability of repayments attributable to exposures within the personal portfolio. Moreover macroeconomic factors could create additional pressures on the business of the Bank’s borrowers in the corporate and commercial portfolio. Under IFRS 9, the Bank is required to formulate and incorporate multiple forward-looking economic conditions, reflecting management’s view of potential future economic variables and environments, into the ECL estimates. A number of macroeconomic scenarios based on the selected macroeconomic variables are considered to capture non-linearity across credit portfolios. The complexity attributable to this factor requires management to develop multiple macroeconomic scenarios involving the use of significant judgements. The prevailing macroeconomic uncertainty has significantly impacted macroeconomic factors increasing the uncertainty around judgements made in determining the severity and likelihood of macroeconomic forecasts across the different economic scenarios used in ECL models. Overly sensitive ECL modelled outcomes can be observed when current conditions fall outside the range of historical experience. Data used in the impairment calculation is sourced from a number of systems, including systems that are not necessarily used for the preparation of accounting records. The ECL models are based on a general-purpose application which requires extensive manual handling of data. This increases risk around the accuracy and completeness of data used to determine assumptions and to operate the ECL models. In some cases, data is unavailable and reasonable alternatives have been applied to allow calculations to be performed. Since the estimation of ECLs is subjective in nature and inherently judgmental, the Bank’s application of the IFRS 9 impairment requirements is deemed to be an area of focus, especially in the context of the macroeconomic conditions currently experienced, which have increased the level of estimation uncertainty in respect of the calculation of credit loss allowances. We focused on credit loss allowances due to the subjective nature of specific data inputs into the calculation of ECLs and the subjective judgements involved in both timing of recognition of impairment and the estimation of the size of any such impairment. Accordingly, summarising the key areas relevant to the Bank’s measurement of ECLs would include: • Allocation of assets to stage 1, 2, or 3 using criteria in accordance with IFRS 9; • Accounting interpretations and modelling assumptions used to build the models that calculate the ECL; • Completeness and accuracy of data used to calculate the ECL; • Inputs and assumptions used to estimate the impact of multiple macroeconomic scenarios; and • Measurement of individually assessed provisions including the assessment of multiple scenarios. Relevant references in the Annual Report and Financial Statements: • Summary of material accounting policies: note 1.4 • Credit risk management: note 2.3; • Accounting estimates and judgements: note 3.2; • Note on Loans and advances to customers: note 8; and • Note on Net movement in expected credit losses: note 32. |
During our audit of the financial statements for the year ended 31 December 2025, we continued to focus on the key drivers of the estimation of ECL. Apart from assessing the continuing appropriateness of management assumptions, updates to key parameters and model enhancements were evaluated and tested. Discussions with the Audit & Risk Committee and management were held on:
· individually significant loan impairments. With respect to the ECL models utilised by the Bank, the continued appropriateness of the modelling policies and methodologies used was independently assessed by reference to the requirements of IFRS 9. ECL calculation for non-defaulted loan exposures and a number of defaulted loans which are not individually significant We understood and critically assessed the models used for ECL estimation for the Bank’s loan portfolio. Since modelling assumptions and parameters are based on historic data, we assessed whether historic experience was representative of current circumstances and of the recent losses incurred within the portfolios. The appropriateness of management’s judgements was also independently considered in respect of calculation methodologies, calibration of PDs and LGDs, segmentation and selection of macroeconomic variables. Model calculations were also tested independently. Substantive procedures were performed as follows: · Performed an overall assessment of the ECL provision levels by stage to determine if they were reasonable considering the Bank’s portfolio, risk profile, credit risk management practices and the macroeconomic environment. · Tested a sample of loans to independently review the borrower’s financial performance and ability to meet loan repayments and assess the appropriateness of the credit rating assigned by management, taking into consideration the impact of the current macroeconomic conditions on the repayment capabilities of the sampled borrowers. · Challenged the criteria used to allocate an asset to stage 1, 2 or 3 in accordance with IFRS 9 and tested a sample of assets in stage 1, 2 and 3 to verify that they were allocated to the appropriate stage. · Tested the completeness and accuracy of the critical data extracted from the underlying systems, that is utilised within the models for the purposes of the year end ECL calculation.
· Risk based testing of models, including a review of the continuing appropriateness of model assumptions. We tested the assumptions, inputs and formulas used in ECL models on a sample basis. This included assessing the appropriateness of model design and formulas used, and recalculating PDs, LGDs and EADs on a sample basis, through the involvement of subject matter experts. · We assessed the reasonableness of modelled PDs through a comparison of historically predicted and observed default rates and the reasonableness of modelled LGDs taking cognisance of the potential impacts of the current macroeconomic environment. · We also assessed the reasonableness of market value haircuts and time to sell assumptions used as inputs in the light of the current economic climate. · Tested the multiple macroeconomic scenarios and variables to assess their reasonableness. We assessed the appropriateness of changes effected during the year to factor the impact of the current macroeconomic environment. We assessed whether the severity of the forecasted macroeconomic variables was appropriate in view of the elevated level of uncertainty related to the current economic conditions. We challenged the correlation between economic factors and ECL allowances and the impact of these macroeconomic factors on the ECL. Our testing of models and model assumptions did not highlight material differences.
Based on the evidence obtained, we found the model assumptions and data used within the models to be reasonable.
ECL calculation for defaulted individually significant loan exposures For defaulted exposures within the loan portfolio, the appropriateness of the methodology and policy used to calculate ECLs was independently assessed. We understood and evaluated the processes for identifying default events within loan portfolios, as well as the impairment assessment process. Substantive procedures were performed in respect of identification of defaults as follows: · Assessed critically the criteria used by management for identifying borrowers whose financial performance is expected to be particularly susceptible to the potential impact of the economic pressures being experienced and for determining whether a UTP/default event had occurred by testing a sample of loans with characteristics that might imply a default event had occurred (for example a customer experiencing financial difficulty or material sector disruption) to challenge whether default events had actually occurred and to assess whether default events had been identified by management in a timely manner. · Selected a sample of performing loans which had not been identified by management as potentially defaulted, to form our own judgement as to whether that was appropriate and to further challenge whether all relevant events had been identified by management. Substantive procedures were performed on defaulted exposures in respect of the estimation of the amounts of the respective ECL provisions, as follows: · Reviewed the credit files of a selected sample of loans to understand the latest developments at the level of the borrower and the basis of measuring the ECL provisions and considered whether key judgements were appropriate taking cognisance of the current macroeconomic environment. · Challenged the severity of scenarios being applied for these exposures, together with their respective probability weights by forming an independent view of the recoverability of the selected loan exposures under different scenarios, assigning probabilities independently and comparing the outcomes to that of the Bank. · Tested key inputs to and reperformed the impairment calculation used to derive expected cash flows under different scenarios. · Assessed the appropriateness of a sample of property valuations securing impaired loans through the use of experts. In the case of some impairment provisions, we formed a different view from that of management, but in our view the differences were within a reasonable range of outcomes. |
How we tailored our group audit scope
The Group is composed of seven components. These include Lombard Bank Malta p.l.c. (the Parent Company), and its subsidiary, Redbox Limited. The Group also includes MaltaPost p.l.c. which is a subsidiary of Redbox Limited (which is fully owned by Lombard Bank Malta p.l.c.) and Tanseana Limited, Ciabro Limited, PostaInsure Agency Limited and Dormax Press Company Limited, by virtue of MaltaPost p.l.c.’s controlling shareholding in these four entities.
The group auditor performed a full scope audit on the financial statements of the Bank and it’s subsidiary, Redbox Limited, and performed oversight procedures on the work performed by the component auditor on the significant component, namely MaltaPost p.l.c.
We tailored the scope of our audit in order to perform sufficient work on all components to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates, and local statutory requirements.
The Group auditor performed all of this work by applying the Group overall materiality, together with additional procedures performed on the consolidation. This gave us sufficient appropriate audit evidence for our opinion on the Group financial statements as a whole.
Other information
The directors are responsible for the other information. The other information comprises all of the information in the Annual Report and Financial Statements 2025 (but does not include the financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon except as explicitly stated within the Report on other legal and regulatory requirements.
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, 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.
Responsibilities of the directors and those charged with governance for the financial statements
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 Maltese Banking Act (Cap. 371) and the Maltese Companies Act (Cap. 386), and for such internal control as the directors 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 Group’s and the Bank’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 Group or the Bank or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
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 opinion. 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.
As part of an audit in accordance with ISAs, we exercise professional judgement 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 Group’s and the Bank’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 Group’s or the Bank’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 Group or the Bank to cease 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.
· Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance 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 those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, 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 with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (the “ESEF Directive 6”) on the Annual Financial Report of Lombard Bank Malta p.l.c. for the year ended 31 December 2025, entirely prepared in a single electronic reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the Annual Financial Report, including the consolidated financial statements and the relevant mark-up requirements therein, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.
Our responsibilities
Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including the consolidated financial statements and the relevant electronic tagging therein, complies 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.
Our procedures included:
· Obtaining an understanding of the entity's financial reporting process, including the preparation of the Annual Financial Report, in accordance with the requirements of the ESEF RTS.
· 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 taggings therein have been applied and whether, in all material respects, they are 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 opinion.
Opinion
In our opinion, the Annual Financial Report for the year ended 31 December 2025 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS.
Other reporting requirements
The Annual Report and Financial Statements 2025 contains other areas required by legislation or regulation on which we are required to report. The directors are responsible for these other areas.
The table below sets out these areas presented within the Annual Financial Report, our related responsibilities and reporting, in addition to our responsibilities and reporting reflected in the Other information section of our report. Except as outlined in the table, we have not provided an audit opinion or any form of assurance.
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Area of the Annual Report and Financial Statements 2025 and the related Directors’ responsibilities |
Our responsibilities |
Our reporting |
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Directors’ report
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We are required to consider whether the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements. We are also required to express an opinion as to whether the Directors’ report has been prepared in accordance with the applicable legal requirements. In addition, we are required to state whether, in the light of the knowledge and understanding of the Company and its environment obtained in the course of our audit, we have identified any material misstatements in the Directors’ report, and if so to give an indication of the nature of any such misstatements. With respect to the information required by paragraphs 8 and 11 of the Sixth Schedule to the Act, our responsibility is limited to ensuring that such information has been provided. |
In our opinion: · the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and · the Directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386). We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.
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Statement of Compliance with the Principles of Good Corporate Governance The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare and include in the Annual Financial Report a Statement of Compliance with the Code of Principles of Good Corporate Governance within Appendix 5.1 to Chapter 5 of the Capital Markets Rules. The Statement’s required minimum contents are determined by reference to Capital Markets Rule 5.97. The Statement provides explanations as to how the Company has complied with the provisions of the Code, presenting the extent to which the Company has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles.
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We are required to report on the Statement of Compliance by expressing an opinion as to whether, in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have identified any material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatements. We are also required to assess whether the Statement of Compliance includes all the other information required to be presented as per Capital Markets Rule 5.97. We are not required to, and we do not, consider whether the Board’s statements on internal control included in the Statement of Compliance 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 Statement of Compliance has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority. We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section. |
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Remuneration report The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare a Remuneration report, including the contents listed in Appendix 12.1 to Chapter 12 of the Capital Markets Rules. |
We are required to consider whether the information that should be provided within the Remuneration report, as required in terms of Appendix 12.1 to Chapter 12 of the Capital Markets Rules, has been included. |
In our opinion, the Remuneration report has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority. |
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Other matters prescribed by the Maltese Banking Act (Cap. 371) In terms of the requirements of the Maltese Banking Act (Cap. 371), we are also required to report whether: · we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; · proper books of account have been kept by the bank, so far as appears from our examination of those books; · the bank’s financial statements are in agreement with the books of account; · in our opinion, and to the best of our knowledge and according to the explanations given to us, the financial statements give the information required by any law which may from time to time be in force in the manner so required. |
In our opinion: · we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; · proper books of account have been kept by the bank, so far as appears from our examination of those books; · the bank’s financial statements are in agreement with the books of account; and · to the best of our knowledge and according to the explanations given to us, the financial statements give the information required by any law in force in the manner so required.
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Other matters on which we are required to report by exception We also have responsibilities under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us. We also have responsibilities under the Capital Markets Rules to review the statement made by the directors that the business is a going concern together with supporting assumptions or qualifications as necessary. |
We have nothing to report to you in respect of these responsibilities. |
Other matter - use of this report
Our report, including the opinions, has been prepared for and only for the Parent Company’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.
Appointment
We were first appointed as auditors of the Company on 10 April 2010. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 16 years.
Fabio Axisa
Principal
For and on behalf of
PricewaterhouseCoopers
78, Mill Street
Zone 5, Central Business District
Qormi
Malta
24 April 2026