BOV’s equity maintains upward trend

Further demand for Bank of Valletta plc shares helped the Bank’s equity move closer to its 2012 high of €2.302 with its share price rising a further 0.9% higher to the €2.22 level across eight trades totalling 17,771 shares. BOV’s equity ended the week 5.7% higher as the Bank approaches the close of its current financial year ending 30 September.

Meanwhile, Lombard Bank Malta plc slumped a further 2.4% lower to yet another multi-year low of €2.00 following yesterday’s interim results publication. Almost 6,000 shares traded today. The 2012 half-year figures revealed a 36.5% plunge in the profitability of the Lombard Group on the back of a 6.5% drop in net interest income to €6.8 million reflecting the Bank’s prudent and cautious approach which yields low returns as well as the adverse effects of the changes in the tariffs imposed by the Universal Postal Union (UPU) on MaltaPost plc’s financials. Moreover, the half-year figures of the Lombard Group were also adversely impacted by the non-occurrence of a gain on the sale of investments of €1.2 million that took place last year as well as an increase in loan impairments to €0.46 million in line with the Bank’s provisioning policy in the prevailing challenging circumstances. The Bank’s equity ended the week 7% lower and currently ranks as the worst performer with a 25.9% drop since the start of 2012.

GO plc’s share price dropped 1% to close below the €1.00 level for the first time in 11-weeks. Just over 35,000 shares traded today. Yesterday, Forthnet announced that its shareholders approved all the resolutions on the agenda of the Extraordinary General Meeting held on the same day. The resolutions included a number of changes to Forthnet’s capital as well as a €30 million rights issue. Moreover, the announcement revealed that during the meeting Forgendo (the joint venture between GO and EITL) will participate in the rights issue whilst the second largest shareholder in Forthnet, Cyrte Investments BV will not participate in the rights issue and is uncertain whether to maintain its current shareholding.

The only two other active equities, HSBC Bank Malta plc and RS2 Software plc closed unchanged at €2.64 and €0.50 respectively. The IT Company is expected to publish its half-year results next week.

On the bond market, the Rizzo Farrugia MGS Index climbed another 0.1% to a new 2012 high of 998.254 points as Eurozone yields dropped to a new 3-week low of 1.326%. The extended downturn in yields reflects the increasing uncertainty over the way how the European Central Bank will contain Spain’s borrowing costs. Furthermore, markets are increasingly concerned over Greece after Germany’s finance ministry stated that a clause in the Greek bailout deal allowing for more time to reform is not legally binding.

Locally, as yields dropped, the Central Bank of Malta Stockbroker again raised its bid prices with new record prices established for the 4.3% MGS 2022 (II) at 102.89%; 5.10% MGS 2029 at 103.83% (compared to the July 2012 offer price of 101%); 5.25% MGS 2030 (I) at 104.69% and the 5.20% MGS 2031 at 103.17%.