Bank of Valletta posts interim €74 million pre-tax profit

The Bank of Valletta Group announced a profit before tax of €74 million for the six months ended on 31 March 2017, an increase of 8% over the €68.5 million reported for the same period last year, a return on equity before tax of 20%.

The Board of Directors declared a gross interim dividend of 4.5 cents per share, an increase of 24% over the 3.64 cents declared last year, as adjusted for the bonus share issue made in January 2017.

BOV Chairman Deo Scerri said the Group’s performance was informed by a high-performing local economy, but also a difficult international scenario marked by persisting low interest rates.

The current interest rate environment is posing a challenge to all European banks, and BOV’s interest margin for the period, which amounted to €72.7 million, showed a decrease of 3% over March 2016.

The decline in margin income was, however, mostly offset by an increase in net fee income, which rose by 6% to reach €33.8 million.

The group also recorded a reversal of impairment charges of €5.3 million, the result of the bank’s persistent debt recovery efforts that resulted in a number of settlements of non-performing loans. There was also a general improvement in the credit quality of the loan book.

Scerri said the group’s financial position reflected current local conditions, where buoyant economic activity and high investor and consumer confidence are resulting in high levels of liquidity in the economy. During the period under review, BOV customer deposits rose by €487 million to reach €9.7 billion, accounting for 86% of the Group's balance sheet.

Concurrently, group net lending rose by €102 million, and stands at €4.1 billion. The excess of new deposits over new lending was deployed into liquid and investment assets. Group liquid and investment assets now stand at €6.9 billion, or 61% of the balance sheet.

Total assets stand at €11.3 billion, an increase of €583 million over September 2016, while equity amounts to €753 million, an increase of €24 million. Group Core Equity Tier 1 ratio is 13.1%, up from 12.8% in September 2016.