Bank of Valletta plc - Interim Directors’ Statement

Thursday, January 30th, 2014

On 30 January, Bank of Valletta plc published its Interim Directors’ Statement to update the market on its performance since the start of the current financial year on 1 October 2013.

The Directors noted that the period under review was once again characterised by subdued credit growth although this was mitigated by a satisfactory increase in the demand for house loans. On the other hand, both retail and institutional deposits grew at a faster rate than expected. As a result, the higher levels of liquidity, the continuing low interest rate scenario and competition in the local retail business will continue to exert pressure on the already narrowing margins of the Bank.

The announcement also explained that net commission income continued to register satisfactory growth mainly driven by investment related activities, trade finance and card related business. Furthermore, during the period under review, costs are in line with expectations whilst movement’s on the Bank’s investment book remained positive. The Directors also noted that the Bank retained its cautious approach towards provisioning especially in view of the requirements of a new banking rule on provisioning.

During the period under review, Fitch Ratings also confirmed BOV’s long-term credit rating at ‘BBB+’ with stable outlook. Further details in this respect may be found at http://rizzofarrugia.com/news-events/2014/fitch-confirms-rating-bov10/.

Looking ahead, BOV expects that the second half of its financial year (from 1 April 2014 to 30 September 2014) to be marked by a pick-up in local economic activity in line with the latest projections of the Central Bank of Malta. 

The Directors also reiterated that the European Central Bank (ECB) will shortly be conducting an asset quality review on the Bank in anticipation of the ECB’s new supervisory role over several European Banks with effect from 1 November 2014.

In conclusion, the Directors noted that the Bank will continued to focus on improving customer service, reviewing operational eficiency and supporting the local economy, while maintaining strong capital and liquidity buffers in line with international best practice.

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