APS posts €10.1m pre-tax profit for first half of 2024

APS Bank delivered a pre-tax profit of €10.1 million, down €6.7 million in the first half of 2023 at group level, and €9.9m at bank level (2023: €16.1m), in a year it said that had provided “a complex and dynamic landscape” with economies moving at different speeds as they emerge from the shocks of recent years.

The board declared an interim net divided of €2m (gross, €3.07m), or €0.00527 cents per ordinary share (gross €0.00811c).

“Inflation remains a concern as major central banks try to balance between controlling price pressures and supporting growth with a more benign monetary policy outlook. Concurrently, geopolitical tensions affected energy prices, global trade and general investor confidence as volatility continues in the financial markets,” CEO Marcel Cassar said.

“Looking ahead, the second half of 2024 should see steadier global economic growth with an easing of monetary policy and further interest rate cuts as inflationary pressures continue to moderate.

“At the same time, regional differences, geopolitical risks and trade tensions will need to be managed carefully in order to calm down market volatility and potential asset price corrections.”

Cassar said Maltese banks were operating with ample liquidity and capital headroom that enabled them to post record profits, helped mainly by the high interest rate conditions.

APS said it had already anticipated that returns would be lower in the first half of the year mainly due to margin compression resulting from the higher interest rate expense, including from the MREL build-up late in 2023.

The group generated interest income of €56 million, up by €6.4 million compared to the same period in 2023, across retail, commercial and syndicated loans, as well as the liquidity holdings of cash and treasury instruments.

Interest expense amounted to €22.9m (2023: €12.5m) mainly due to the higher interest paid on euro deposits reflecting the pass-through of interest rates, and significantly more competitive pricing on various savings products in an increasingly tight market.

Net fee and commission income went up by 12.7% to €4.5m from key commission streams on advances, card related transactions and investment services.

APS also announced its lowest ever ratio of non-performing loans at 1.9%, reflecting the strength of its credit underwriting standards.

Operating expenditure climbed by 2.5% to €27m from sustained investment in technology, regulatory and compliance requirements, professional fees and employee compensation.

Group assets stood at €3.77 billion, growing by 3.0% or €110m, from a growth in its net loans and advances, while total liabilities closed at €3.48 billion, growing €108m over the period, mainly from customer deposits.