Bank of Valletta profits cut because of litigation provision

Bank of Valletta’s decision to put aside €75 million to cater for ongoing litigation has cut the group’s profits, leaving shareholders without a cash dividend for 2018.

The financial results approved by directors on Friday show that the group registered €51.4 million in profits after the litigation provision and after tax deductions. The pre-tax profit stood at €71.2 million.

The results for 2018 are not strictly comparable to the previous year because in 2017 the bank changed its accounting period and results were for a 15-month period rather than 12.

BOV’s operating profit in 2018 stood at €138 million with CEO Mario Mallia, saying that the bank registered higher interest income from more personal and business loans.

The litigation provision had been announced last year after an Italian court issued a freezing order on €363 million worth of assets over the Deiulemar case.

Mallia insisted today that the bank believed it had a strong legal position to rebuff the claims being made by Italian investors from Torre d’Annunziata, a small Italian town, who lost their life savings when the Deiulemar shipping company went belly up.

The liquidators of Deiulemar insist that €363 million are held in trust at BOV by owners of the collapsed shipping giant, which went bankrupt in 2012 with losses of over €800 million.

BOV is expecting the court of first instance at Torre d’Annunziata to decide the case sometime this year and the bank is expected to appeal if it loses.

Mallia said the decision not to give out a dividend was a measure to strengthen its capital buffers in view of the ongoing litigation. This had been announced in June last year.

The financial results show that BOV registered earnings per share of 9c7.

The balance sheet shows that the bank has more than €12 billion in assets.

BOV has shareholders’ equity of €994 million, an increase of 3.3% over last year, net advances to customers of €4.5 billion, 4.5% higher than December 2017 and customer deposits of €10.4 billion, up by 3.1%.

The board of directors will, at the forthcoming annual general meeting, be recommending a bonus share issue of one new share for every 10 ordinary shares held.