Bank of Valletta interim pre-tax profits at €148.2 million

Bank of Valletta registered pre-tax profits of €148.2 million in the first half of 2024, up 40.9% (€105.1m) from the same period in 2023.

BOV attributed the increase to strong growth in interest income, and to a lesser extent, from net fee and commission streams.

The bank shifted short-term liquidity into long-term assets so as to ensure longer term profitability, in anticipation of monetary policy easing by the ECB, with a first rate cut actually materialising in June 2024. Its treasury portfolio registered an increase of 13.5% compared to December 2023 whilst the credit portfolio growth rate continued on an upward path with an overall increase of 6.1%.

Positive results were achieved on both the commercial and retail lending portfolios, with a slight increase in customer deposits of 0.1% that led to a gross loan-to-deposit ratio of 54.7%, reflecting a 5.5% growth over the same period last year and 3% above the end of year 2023 position.

Net Interest Income (NII) reached €193.6 million, an increase of 21.1%, driven by the expansion in both customer lending and proprietary investment portfolios, as well as improved deposit rates on cash balances. Interest expense increased marginally to €26.9m (€23.3m) which is mainly composed of the Minimum Requirement for own Funds and Eligible Liabilities (MREL) bond cost.

Net Fee and Commission revenue accounted for 16% of the Bank’s total operating income, reaching €36.7m, a growth of 6.5%.

Excluding strategic costs, operating costs registered a decrease of €2.3 million down to €90.7m (€93m).

Human capital, followed by technology-related expenses, together accounted for 68% of total operating costs of bank.  Total strategic investments on digitalisation so far amounted to €4.2 million.

Net Expected Credit Losses (ECL) amounted to a net release of €5.2 million (€4.6m net charge) which was influenced by an improvement in both the non-performing and under-performing ratios as well as strengthened collateral position on a number of key non-performing assets.

The ratio of non-performing loans to the total credit portfolio also remained in line with that registered in December at 3.0% (December 2023: 3.1%). The net value of non- performing debt written off, after recoveries, was negligible for the period, also being reflective of the positive impact from the NPL sale of 2023.

The Group’s total assets stood at €14.4 billion at the mid-point of 2024, resulting in a marginal decrease of €59.6 million compared to the end of 2023 (€14.5 billion). The overall decrease in assets is reflective of the corresponding reduction in total liabilities, namely that related to amounts owed to banks resulting from a decrease in repos trading.

The loans and advances to customers amounted to €6.6 billion at the end of the first half (December 2023: €6.2 billion), resulting in the above noted net increase of €374.0 million or 6.1% with high growth levels being registered on both business and retail advances.

On the liabilities side, there was a reversal in the trend that ensued over the previous quarters, where customer deposits experienced a marginal increase of €14.9 million, equivalent to 0.1% and reaching €12.2 billion. The increase was entirely attributable to personal customers whereas the corporate deposits remained practically flat and in line with the amount registered at the start of the year.

The Group’s liquidity ratio as measured by the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR) remained well above the minimum regulatory requirements, with the LCR ratio reading at 357% at the end June 2024, close to the 362% as at December 2023.

Total Group Equity stood at €1.3 billion, an increase of €68.7 million derived from the shift to retained earnings.