Bank equities under pressure

All three equities of the largest banks listed on the Malta Stock Exchange trended lower as investors continue to shun bank shares in view of the downward pressure on their respective profitability levels given the prevailing economic challenges (namely the current low interest rate scenario) as well as the more stringent regulatory requirements.

The share price of Bank of Valletta plc trended lower for the second consecutive session on volumes of almost 80,000 shares. The equity slid to an intra-day low of €2.17 before partially recovering to end the session at the €2.181 level which still represents a 0.9% drop from the previous closing price. Last Friday, BOV presented its 2014 interim results revealing a profit before taxation of €50.7 million for the first half of their 2013/14 financial year, a decrease of 21 per cent when compared to the pre-tax profit of €64.6 million earned in the first six months of the previous financial year. The drop is largely attributable to lower net interest income, a reduction in fair value movements as well as a lower contribution from insurance operations. A gross interim dividend of €0.0425 (-22%) was declared to those shareholders as at close of trading on 5 May.

Similarly, the equity of HSBC Bank Malta plc eased 0.4% to €2.141 after some last minute sell orders forced the equity down from its intra-day high of €2.17. A total of 24,100 shares changed hands today.

Lombard Bank Malta plc shares also slipped 3% back to a fresh 17-month low of €1.63 albeit on significantly lower volumes of 939 shares.

The two other active equities also ended this morning’s session in negative territory. New sell orders forced the share price of Malta International Airport plc 0.4% lower back to €2.242 on low volumes of 3,500 shares. Similarly, the shares of RS2 Software plc retreated by 0.5% to €2.399 on volumes of 2,625 shares.

On the bond market, the Rizzo Farrugia MGS Index trended lower for the first time in five sessions with a 0.2% decline to 1,033.544 points as Eurozone yields regained the 1.51% level. This latter reflects easing pressure on the European Central Bank (ECB) to inject further stimulus after data showed an uptick in Germany’s inflation rate for the month of April which is also expected to be reflected in the inflation reading for the Eurozone from last month’s multi-year low of 0.5%.

On the local market, this morning, Island Hotels Group Holdings plc announced that it has submitted an application to the Listing Authority in connection with the issue of a new €35 million bond.