Bank of Valletta announces €143.9 million in pre-tax profits

The Bank of Valletta Group this morning announced pre-tax profits of €143.9 million for the 12-month period between October 2016 and September 2017.

Addressing a press conference bank chairman Deo Scerri, flanked by CEO Mario Mallia and CFO Elvia George said the profits registered represented an increase of 21.5% over the adjusted profit before tax of €118.4 million reported for the same period last year. 

Last year the Bank had a one-time windfall profit of €27.5 million arising from the takeover of VISA Group, in which BOV is a principal member, by VISA Inc., said Scerri.  

Scerri said that 2017 was an exceptional year for Bank of Valletta, since the current financial year consisted of 15 months, following a decision to change the financial year-end from 30th September to 31st December. However it was clarified that the results presented today were for a 12-month period. 

The chairman said that the Bank’s results needed to be interpreted within a context of a local economy that has been performing very well, even by comparison to EU standards. He added that within an international scenario of persistently low interest rates however, that continues to pose a significant challenge.  

“The Bank’s strategic decision to diversify its income sources is yielding results,” said Scerri, “In fact, we have witnessed satisfactory performance in both our card business and investments. This was neutralised in part by the narrow interest margins and the high liquidity levels. Meanwhile, the Bank bore the costs of its increased investment in Human Resources and IT, primarily in relation to the implementation of the programme that will see the Bank changing its core banking systems and onerous regulatory requirements.”  

Scerri also explained that the Bank’s more proactive approach towards legacy bad debts resulted in a net reversal of impairment charges equivalent to €7.5 million.

Meanwhile, the bank said its share of profit from Mapfre MSV Life had increased significantly, going up to €14.5 million. Moreover, the bank said that its balance sheet showed customer deposits continuing to increase, reaching a new of €10.1 billion “in an environment where the preference for short-term deposits persists as the Bank implemented stricter on boarding procedures”.

Concurrently the group’s net lending rose slightly and now stands at €4.4 billion, with home loans representing 42% of the Bank’s total loan book.

The Bank of Valletta Group’s Core Equity Tier 1 ratio was 13.4%, up from 12.8% in September 2016. Scerri made reference to the Bank’s imminent Rights Issue which will see the BOV Group strengthen its capital base.

“This is necessary not only because of the Bank’s position as a systemically important bank in Malta but also to enable us to be in a better position to sustain new lending, undertake new investment and distribute dividends to our shareholders,” he said.

Ultimately, the chairman said he was satisfied with the bank’s performance.

“Over the past years, the Bank took some tough decisions and is investing heavily in its people and IT systems in order to ensure it remains valid, competitive and sustainable over the long term. Meanwhile, we have reviewed our business model and risk appetite framework with a view to ensuring that they are tenable, relevant and in line with our strategic orientation for the medium to long-term,” said Scerri.   

He added that the Bank was already receiving very positive feedback from the market, 24 hours from the company announcement outlining the details of the Rights Issue, claiming that this was an important step in the bank’s journey to remain a relevant and pertinent financial partner to its customers for years to come.