Subdued demand for credit in 2013 but BOV pledges ‘uninterrupted flow’ to business

2013's first six months were characterised by continuing low-key economic activity, with demand for credit remaining subdued, and deposits growing at a modest rate, Bank of Valletta said in a company announcement ahead of its interim results.

Higher levels of liquidity, coupled with the continuing low interest rate scenario, resulted in narrowing margins on the bank's proprietary operations, while local competition maintained pressure on interest margins in the retail business.

But net commission income registered a satisfactory year-on-year increase, primarily driven by investment related activities, trade finance and card-related business.

The bank said cost-cutting has kept expenses in line with last year's levels.

"The latest Central Bank of Malta projections for the Maltese economy indicate that, after last year's slowdown, economic growth is expected to gain momentum driven by domestic demand, in particular by private consumption, but also by government spending, which is set to support the expansion of the local economy.

"While uncertainties remain in respect of the overall economic outlook at EU level, the ECB assures price stability. The renewed confidence in the financial markets, coupled with the possibility of some European economic recovery in late 2013, is expected to result in a more stable Eurozone scenario," BOV said in its statement.

"In this environment, Bank of Valletta will continue to extend strong support to the Maltese economy, ensuring an uninterrupted flow of credit to both business and personal borrowers, while ensuring that both capital and liquidity buffers are maintained in accordance with best international practice."