Bank of Valletta plc - Moody’s Report

Wednesday, December 28th, 2005

In its latest credit rating report on Bank of Valletta, Moody's issued a positive report on BOV and described the bank as having a dominant business franchise underpinned by a strong brand name.

“Bank of Valletta boasts a dominant position as the largest bank in Malta with a market share accounting for around 40 per cent of the banking system's total assets. Its strong business franchise ensures the bank with a sustainable earnings capacity driving its ratings (Baa1/Prime-2/D+) with a stable outlook.

“BOV enjoys an excellent brand name and it would not be exaggerating to state that it is present in nearly every important financing deal within Malta. It attracts customer loyalty by carrying the image of being the Maltese bank, compared to its main rivals, which are predominantly subsidiaries of large foreign banking groups,” said Moody's.

The ratings agency went on to say: “We believe that the bank has a defendable franchise and that going forward its financial muscle and efforts to make inroads into other financial services are likely to reinforce its leading role in the system.”

It added: “Looking ahead over a medium-to-longer term horizon, more cross selling opportunities are likely to arise, while the bank's non-interest income streams are bound to benefit, exerting upward pressure on its financial strength rating (FSR).”

The extensive report notes that the BOV has a coherent strategy in place to sustain its growth potential and profitability. It also comments on the bank's retail strategy underpinned by its alternative-delivery channel approach which is resulting in more than 70 per cent of the bank's total transactions taking place outside its branches.

Moody's welcomed the strengthened corporate governance framework that supports the bank's positive credit rating drivers. It also highlighted the separation between the chairmanship and the position of CEO and the fact that the structure is now more in line with international practice.

“We take a positive view of the new management structure and the newly-appointed chairman, who took over in November 2004. BOV's management team members, and the bank as a whole, are set to benefit from his extensive international experience within the financial markets.”

BOV's chief executive officer Tonio Depasquale expressed his satisfaction at this report which, he said, confirms the validity of the bank's strategy and underlines the positive all-round performance that BOV continues to sustain in the best interest of all its stakeholders.

“Moody's have acknowledged the bank's continued efforts to widen its revenue base by achieving further growth in non-traditional banking services. These initiatives complement the bank's core product offering and ensure that BOV continues to be well-placed to take advantage of Malta's fast-developing financial services industry” Mr Depasquale said.

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