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3 NEWS 2.9.2021 FROM PAGE 1 Supported by a strong financial position, the bank saw further growth in relation- ships and market share both in its com- mercial and home loan lending portfoli- os, as well as deposits. Pressures on costs were inevitable though these were pru- dently managed. e financial statements show that group's Employee Compensation and Benefits rose by 2% in line with the group's ethos to employ suitably qualified staff to support its growth initiatives. While op- erating costs remain under control, costs associated with obligations to satisfy reg- ulatory requirements and enhance com- pliance capabilities continued to increase. Increases in expected credit losses (ECL) as defined and determined by In- ternational Financial Reporting Standard 9 (IFRS9) during the period were driven by loan portfolio growth as well as appli- cation of expert judgement in respect of industry-specific exposures adversely hit by the ongoing uncertain economic sit- uation. It is encouraging to note that the majority of those personal customers who benefitted from capital and interest mor- atoria have returned to pre-concession performance. e resultant charge for 'credit impair- ment losses' as determined by IFRS 9 for the six months under review, at €0.9m was slightly lower compared to €1.1m in the corresponding period last year. e bank will continue to closely monitor its exposures in light of developments so as to accordingly align the 'expected credit loss' as determined by IFRS 9. Both common equity Tier 1 ratio (CET1) as well as total capital ratio stood at 15.1%, the regulatory minimum in terms of Reg- ulation (EU) No 575/2013 being 4.5% and 8.0%, respectively. Bank advances to de- posits ratio was 65.3% (FYE 2020: 65.5%), indicative of a healthy liquidity buffer. Business continued to be undertaken in line with the Bank's straightforward non-complex and traditional banking model, while support continued to be provided to customers in these challeng- ing times. e Bank's balance sheet fun- damentals remain strong. MaltaPost, the Bank's main subsidiary remained well positioned to weather the challenges resulting from the Pandemic and the accelerated reduction in tradi- tional letter mail, by maximising all reve- nue potential through changes in its busi- ness mix and by implementing strict cost containment measures. Lombard Group said the H1 2021 re- sults demonstrate the strength of its strat- egy and business model. It is also a testa- ment to the ability of our staff members to quickly adapt to the changed circum- stances so as to continue delivering effi- cient service to customers and the com- munity, underpinned by our commitment to provide a personalised service. e Bank continues to rely on a diver- sified funding base for its liquidity, which over the years has proven to be relatively stable. Fee and commission income for the Group was up by 4% resulting from gen- eral increases across the board. In the Group's statement, the board of directors said they will be mindful of the continued downside risks associated with COVID-19 and the effects and con- sequences of the Financial Actions Task Force's (FATF) decision to add Malta to the list of jurisdictions under increased monitoring - both factors bound to con- dition the performance outlook for the second half of the year. e Board said that, despite these con- siderations, it remains optimistic that supported by strong fundamentals and a time-tested, sound business model, the Group continues its journey of prudent growth, while remaining agile so as to meet with the everchanging needs of its customers and thereby continue to pro- vide value-added to all its stakeholders. FROM PAGE 1 Melite, whose subsidiary is the own- er of the Accessorize retail licence for a string of stores in northern Italy, will convene a bondholders meeting with- in the first week of October, requesting the green light for the reduction of the 4.85% coupon on its €9.25 million bond issue. e group was hard-hit by the COV- ID-19 lockdown in Italy, forcing it to shut down its stores and find new ten- ants for several of its stores. e retail franchise chain suffered €4.2 million in losses last year due to the COVID closures of its Italian fash- ion shops for the Accessorize, Monsoon and CKU brands, and more worryingly saw its projected €6.2 million equity go- ing down to €1.3 million. e company operated some 26 properties in Italy, but the ravages of COVID-19 across Italy forced a severe lockdown that killed business in the country, and Melite to rescind its leases on the stores. In August, shareholders Alf. Mizzi, Marina Milling, and the Ganado fami- ly, were requested by the Melite board to consider whether they were in a po- sition to provide additional support to the company, over and above the €1.1 million loan to the company they pro- vided. "e shareholders were not in a position to uphold the request tabled at the meeting," the board said. Shareholders have so far not proposed increasing their share capital. e com- pany secured €449,000 from the Malta Development Bank's Covid Guarantee Scheme to meet its interest payments for its €9.25 million bonds. e €1.1 million loan will be as part-capital con- tribution to the company (€630,000) that will be repayable at the option of the company after the 2028 bonds are redeemed; and €470,000 in a non-inter- est loan, repayable within five years. In 2019, Melite issued a €9.25 million bond to finance a restructuring of the group, whose principal activity is the acquisition and sub-leasing of property rights for Italian retail outlets. But now the group wants bondholders to reduce the bond interest rate from 4.85% to 3.5% as from November 2021. e company intends convening a meeting for bondholders on a propos- al to reduce the coupon on the bond, which Melite says must "reflect the eco- nomic realities which the company and subsidiary Melite Properties face and will continue to face." e bondholders meeting will now take place by no later than 8 October, with all ancillary documentation to be communicated by 10 September, in- cluding interim management accounts for the company and subsidiary Melite Properties. A further EGM will be con- vened following the conclusion of the bondholders' meeting. Melite Finance's stores in the cities of Bolzano, Como, Florence, Padua, Pavia, Milan, Turin and Treviso – previous- ly sub-leased by its subsidiary Melite Properties – will be taken over a third party already operating its own brand across more than 80 stores all over Italy. It will also assume responsibility for the Accessorize franchise in Italy. Melite also concluded agreements for the subletting of seven other stores to third-party operators unrelated to the Accessorize brand, while one store re- mains vacant. Melite owners to go to bondholders Owners will not extend further support to COVID-hit retail chain, bondholders meeting slated for October Lombard Bank reports 4% increase in customer deposits and loans and advances to customers

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