Bank of Valletta plc - Full-Year Results

Friday, October 31st, 2014

On 31 October, Bank of Valletta plc (BOV) published its preliminary full-year results for the financial year ended 30 September 2014.

 Performance Overview

During the period under review, BOV registered a 3.8% decrease in net interest income to €126 million largely reflecting the persisting low interest rate scenario and the high levels of liquidity, as the 5.3% increase in the Bank’s lending operations was offset by a 14.5% increase in its deposit taking. Meanwhile, income from fees and commissions increased by 7.4% to €56 million. Lower income was generated from the Group’s trading activities, affected by the geopolitical instability in North Africa as well as lower gains on its investment and hedging instruments.

As a result, operating income decline by 3.8% to €209.8 million.

Operating costs amounted to €93.5 million, which is an increase of 4.9% over the expenses incurred in financial year ending 30 September 2013. The Bank reports that new regulatory reporting regimes and the participation of the Group in the Asset Quality Review of the ECB accounted for most of this increase, pushing regulatory costs up. Additionally, as the Bank’s deposits grew, the contributions that the Bank had to make towards the Deposit Guarantee Scheme increased.

The impairment charge for the year stood at €19.4. This is 24.1% lower than the charge taken for the previous reporting period. While the bank increased the provisions on individually assessed exposures in line with recommendations of the regulators, the specific allowances were lower, and this curtailed the impairment charge taken for the year.

After accounting for a €7.2 million profit from its associate undertakings, the Group’s pre-tax profits stood at €104.1 million, which is 10.1% lower than the profits for the previous period. This resulted in a lower tax charge of €34.7 million (FY2013: €36.3 million). The Group’s profit after tax was of €68.9 million (-12.8%), after accounting for minority interest of €0.4 million.

The Bank’s balance sheet shows an asset base of €8.3 billion. The 14.3% increase in total assets was mainly attributable to the increase in the Bank’s investments to €2.4 billion (€1.7 billion in 2013), while lending activities increased, albeit at a slower rate of 5.3%. The main source of funding for BOV’s activities remained customer deposits, which increased by 14.5% to €7.1 billion (FY2013: €6.2 billion), while equity grew by 6.5% to €614.5 million reflecting the profits generated during the period under review.

Dividend  

The Directors recommended a final gross dividend of €0.0925 (net: €0.0601) per share to all shareholders as at the close of trading on Thursday 13 November. Coupled with the interim dividend paid earlier this year of €0.0425 per share, the final gross dividend amounts to €0.135 (net: €0.0878) per share representing a 21.8% decrease over the previous year’s dividend. The dividend will be paid on 18 December subject to approval by shareholders during the Annual General Meeting scheduled to be held on 17 December.

Bonus Issue 

The Directors also recommended a bonus share issue of 1 new share for every 11 shares held which will be funded through the capitalisation of €30 million of reserves. Shareholders as at the close of trading on 14 January 2015 will be eligible to receive the bonus shares.

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Bank of Valletta plc – Full-Year Results for the financial year ended 30 September 2014

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