Subdued demand for Bank of Valletta credit in 2012

Bank of Valletta has reported a very subdued demand for new home and corporate loans, announcing a "limited" credit growth in a company statement.

Customer deposits growth, however, during the third quarter has been sustained, the bank said.

In the statement, BOV reported satisfactory net interest income but subdued commission and trading income, with lower demand experienced in investment related services, "largely as a result of the uncertain conditions that continue to prevail across the eurozone and global markets."

The bank said the first three months of 2012 saw a deepening of the eurozone crisis, and a spillover into the credit and inter-bank markets, with a number of substantial European banks being shut out from access to funding.

However, uncertainty returned to the markets in the third quarter of 2012 as a result of the general and presidential elections that were held in Greece and France respectively, and the worsening of the crisis affecting the domestic banking sector in Spain.

"Overall, the cumulative operating profits for the year to date are satisfactory and in line with expectations. At the start of quarter four, the expectation is that both in Malta and across Europe, economic growth will be sluggish at best. No early and lasting resolution to the eurozone debt crisis appears to be in sight, and therefore continuing uncertainty and volatility, which may in turn impact bond spreads and prices, are to be expected. It is also expected that the current ultra low interest rate environment will prevail for some time to come," the bank said.

BOV said it will continue with its consistent approach of supporting the Maltese economy responsibly, to meet the reasonable expectations of borrowers and savers alike, and maintain prudent funding, asset quality, liquidity and capital adequacy policies.