Positive reaction to Bank of Valletta’s financial results

Analysis: Rizzo Farrugia & Co Stockbrokers

The MSE Share Index advanced by 0.3% to 2,969.161 points following a positive reaction to the interim financial statements published by Bank of Valletta plc last Friday afternoon.

The share price of BOV edged 1.9% higher to close the day at €2.15 on total volumes of over 44,000 shares.

The initial trades took place at the €2.20 level, representing a 4.3% premium to last Friday's close of €2.11. Lack of further support at this level forced the share price to ease lower during the second half of the session.

Last Friday BOV reported a 9% increase in pre-tax profits to €49.1 million and the bank declared a gross interim dividend of €0.06 per share (8% above last year's interim). This was mainly due to a 14% increase in net interest income to a record €77.3 million following interest receivable of €5.2 million in respect of certain customer accounts which were previously provided for. Moreover, the higher interest income was also due to the growth in the loan book from one year to the next.

Two other banking equities were active today. HSBC Bank Malta plc closed minimally above its 2012 low of €2.50 but activity remained low with only 4,000 shares changing hands.

Elsewhere, FIMBank plc was active for the first time since the shares started trading without the entitlement to the bonus share issue and the full-year dividend. The share price of FIMBank dropped 4.3% from its bonus issue adjusted price of $0.846 as the bulk of today's volumes of 259,644 shares traded at $0.81.

GO plc closed the day unchanged at the €0.75 level on activity of 20,433 shares. The company will be holding its Annual General Meeting next week.

The reporting season comes to an end today as MIDI plc is expected to publish its 2011 financial statements.

On the bond market, the Rizzo Farrugia MGS Index closed minimally higher as most of the indicative Malta Government Stock bid prices went up to reflect the renewed drop in the benchmark Eurozone yields. The main highlight on the local bond market was the initial trades registered in the 4.25% Bank of Valletta plc 2019 bonds. This bond closed the day 51 basis points above the par value.

Internationally, Spain continued to dominate the headlines today. This morning it became official that the Spanish economy went back into recession (two quarters of negative gdp) with a GDP contraction of 0.3% in the first quarter of the year after a fourth quarter drop also of 0.3%.

Earlier on, following Spain's sovereign downgrade last Thursday, Standard & Poor's also downgraded 11 Spanish banks, including two to "junk" status.