It is encouraging to hear that the Institute has had a successful year and that you are working on new initiatives to promote even higher professional standards. This is most welcome, as education and professional development are fundamental to the sustainability of our financial sector and its continued success. Your strategic partnerships with the University of Malta and overseas professional bodies such as the European Banking & Financial Services Training Association (EBTN), the London Institute of Banking and Finance, and the Global Association of Risk Professionals  Page 1 of 8  (GARP) - whose representatives are with us tonight - reflects the Institute’s excellent reputation. That a Committee member of IFS-Malta has been elected to the highest decision making body of a European association for a third consecutive term confirms the Institute’s integrity and professionalism. The Central Bank has always worked closely with IFS and will continue to support its activities. This year, we also cooperated with the IFS during the European Money Week to promote financial literacy to underprivileged youths and participated in the successful IFS Malta Annual Seminar on pension reform. I look forward to even more cooperation in the future. Mr President, well done and thank you for taking a proactive stance towards raising the standards of financial services education. I wish you and your Committee every success in your future endeavours. Malta’s recent economic performance: Against a backdrop of weak growth in Europe as a whole, economic activity in Malta remains robust.

Asset quality continued to improve, as non-performing loans, especially to the non-financial corporate sector declined by almost 12%, mostly reflecting improved creditworthiness and an increased commitment by borrowers to honour their loan commitments. As a result the Non-performing Loan ratio declined to 6.5% by mid-year and is expected to decline further to below 6% later on this year. While banks have continued to adopt a prudent stance by increasing provisions, and while such loans are generally covered to a significant extent by collateral, nevertheless they need to build further coverage and exercise restraint in dividend distribution to shareholders to preserve further the soundness of the banking system. In this regard, the authorities, namely the Central Bank and the Malta Financial Services Authority through the Joint Financial Stability Board, have taken policy measures to ensure that by preserving its soundness, the overall banking system remains supportive of economic growth. During 2016, the authorities introduced the Other Systemically Important Institutions capital buffer, to preserve capital in those banks that are the most systemically important for the domestic economy. We have also launched the Countercyclical Capital Buffer, although this has been currently set at 0% as credit growth has not been excessive relative to economic growth or contributing to asset price inflation. Page 4 of 8  Other decisions to maintain the soundness of the banking system relate to addressing the stock of NPLs, which is incidentally also high on the agenda of the Single Supervisory Mechanism.