Bank of Valletta plc - Full-Year Results

On 31 October, Bank of Valletta plc (BOV) published its preliminary full-year results for the financial year ended 30 September 2013.

Performance Overview

During the period under review, BOV registered a decrease of 11.4% in net interest income to €131 million mainly due to the 6.8% drop in gross interest income to €222.4 million reflecting the low interest rate scenario which led to tighter margins on the Bank’s treasury operations. Moreover, the Bank experienced subdued demand for business lending which was only partially offset by growth in home loans.

Meanwhile, non-interest income grew by 22.6% to €87.1 million. Net fee and commission income grew by 17.3% to €52.1 million reflecting growth across most of the Group’s business lines including its card business, fund management and administration as well as wealth management. The Bank also benefitted from positive fair value movements totalling €17.4 million on its international bond book classified as fair value through profit and loss compared to the €7.5 million mark up in the previous financial year.

As a result, the Group’s total operating income was relatively unchanged at €218.1 million.

On the expenditure side, BOV registered a 1.3% increase in operating costs to €82.6 million and an 8.1% rise in depreciation and amortisation to €6 million largely reflecting the continued investment in personnel and IT systems, a higher contribution towards the ‘Depositor Compensation Scheme’ as well as a one-off expense relating to the re-branding exercise undertaken during the financial year.

The income statement of the previous financial year also included a €4.6 million charge relating to the settlement of claims from a number of clients related to the Property Fund and the perpetual securities. The charge during the financial year under review amounted to only €0.5 million.

As a result, the Group’s operating profit before impairment allowances amounted to just under €129 million representing a 1.4% increase from the previous comparable figure.

Impairment allowances increased by 12.2% to €25.6 million mainly reflecting the cautious view taken on the property held as collateral against non-performing loans. Meanwhile, the BOV Group benefitted from a significant increase in the share of results from its insurance associates to €12.4 million compared to €6.3 million in the previous financial year.

Overall, the BOV Group registered a pre-tax profit of €115.8 million representing a 4.6% increase over last year’s figure. After accounting for a tax charge of €36.3 million and minority interest of €0.4 million, the Group’s net profit amounted to €79.1 million, up 5.4% from the previous year’s figure.

The Statement of Financial Position shows a 3% increase in total assets to €7.3 billion mainly reflecting the 6.7% increase in the Bank’s investments to €2.2 billion which offset the 0.9% drop in loans and advances to €3.67 billion. On the other hand, total liabilities grew by 2.3% to €6.68 billion mainly due to the €410 million increase in customer deposits. The growth in deposits is split equally between retail and institutional deposits. As a result, the Group’s advances to deposit ratio dropped to 59% from 64% in the previous financial year. BOV’s total equity grew by 10.7% to €0.58 billion reflecting the profitability registered during the period under review.

Dividend  

The Directors recommended a final gross dividend of €0.13 (net: €0.0845) per share to all shareholders as at the close of trading on Thursday 14 November. Coupled with the interim dividend paid earlier this year of €0.06 (net: €0.039) per share, the final gross dividend amounts to €0.19 (net: €0.1235) per share representing an 11.1% increase over the previous year’s dividend. The dividend will be paid on 20 December subject to approval by shareholders during the Annual General Meeting scheduled to be held on 19 December.

Bonus Issue 

The Directors also recommended a bonus share issue of 1 new share for every 10 shares held which will be funded through the capitalisation of €30 million of reserves. Shareholders as at the close of trading on 14 January 2014 will be eligible to receive the bonus shares.

Download

Bank of Valletta plc – Full-Year Results for the financial year ended 30 September 2013