Izola Bank profits down by 6.7% during first half of 2010

A company announcement on the Malta Stock Exchange (MSE) on 30 July 2010 by company secretary Stefan Farrugia, which was published this morning, explained how this lower profit figure was the result of “a higher general impairment allowance taken due to the increase in the factoring portfolio and a higher depreciation charge”.

In view of these results, the Board of Directors has also decided not to declare an interim dividend.

The drop in net interest income was due to “margin compression” as debt securities were re-priced during the course of 2009. In addition, interest spread on certain balance sheet items such as shareholders’ equity was “compressed due to prevailing very low interest rates”.

The bank registered an operating income of €1,345,186 for the six months ended 30 June 2010, up by €42,851 or 3.3%, compared with €1,302,335 for the same period in 2009.

Isola Bank’s cost-to-income ratio increased to 41.9% for the six months ended 30 June 2010, up by 6.2%, when compared with 35.7% for the same period in 2009.

During the same period, the Bank’s loans and advances to customers of €35.86 million increased by €3.65 million, or 11.3%, when compared with 30 June last year.

At 30 June 2010, customer deposits stood at €66.00 million, an increase of €3.78 million, or 6.1%, when compared the same period last year.

Izola Bank’s total assets stood at €92.44 million at 30 June 2010, up €16.51 million, or 21.7%, compared with the same period last year..

The bank registered a return on equity of 4.0% for the six months ended 30 June 2010, a reduction of 1.9% when compared to 5.9% in the first half of 2009.

Izola Bank registered an increase of €191,178, or 41.1%, compared with 30 June 2009, in net fees and commission income of €656,050 for the six months ended 30 June 2010. The bank explained that this increase was a result of “the growth in factoring activity”.

The bank’s operating income for the first six months of 2010 increased slightly by €42,851, or 3.3%, when compared with the same period in 2009.  The bank attributed this increase to a “strong growth in net fees and commission income”.

During the first six months of 2010, Izola Bank’s cost-to-income ratio increased by 6.2% during the first six months of 2009 to 41.9% during the first six months of this year.

The bank attributed this increase “mainly due to a higher general impairment allowance and depreciation charge”.

During the first six months of 2010, the bank grew its loans and advances to customers by €3.65 million, or 11.3%, compared with the same period in 2009.

The company reported that the quality of the lending portfolio during the first six months of 2010 showed “no sign of deterioration” whilst liquidity and capital ratios remained “substantially above regulatory requirements”.