Bank of Valletta plc - Full-Year Results

Friday, October 30th, 2015

On 30 October, Bank of Valletta plc (BOV) published its preliminary full-year results for the financial year ended 30 September 2015.

Performance Overview

During the period under review, BOV registered a 14.9% increase in net interest income to €144.8 million largely reflecting the 19.8% reduction in interest expense as customers’ preference for short term deposits continued. Meanwhile, net commission and trading income increased by 16.7% to €87.3 million as products and services offered across all the main business lines (including investments related services) performed satisfactorily. In particular, the Bank experienced growth in its card business whilst higher volumes were registered in foreign exchange transactions. Moreover, fair value movements pertaining to the Bank’s investments increased by 64.4% to €14.8 million. As a result, operating income improved by 17.7% to €246.9 million.

Operating costs amounted to €108.0 million, an increase of 15.5% over the expenses incurred during the previous financial year to 30 September 2014. The Bank reported that the introduction of a new regulatory reporting regime as part of the Single Supervisory Mechanism, as well as the contributions towards the Deposit Guarantee Scheme and the Single Resolution Fund, resulted in a substantial increase in regulatory costs. Additionally, increases in costs arising from the continued investment in human resources and IT were partly offset by the curtailment of the discretionary spend. The replacement of the core banking system project was launched during the year, and substantial investment in the Bank’s IT infrastructure is expected to be made in the coming years.

The impairment charge for the year stood at €32.7 million. This is 68.3% higher than the charge taken for the previous reporting period. In line with the recommendations made by supervisory authorities, during the year under review, the Bank revised its provision methodology and this resulted in a more prudent view of provisions required.

After accounting for a €11.8 million profit from its associate undertakings (namely MSV Life plc and Mapfre Middlesea plc), the Group’s pre-tax profits stood at €117.9 million, which is 13.3% higher than the profits for the previous period. This resulted in a higher tax charge of €38.0 million (FY2014: €34.7 million). The Group’s profit after tax amounted to €79.4 million (+15.1%), after accounting for minority interest of €0.6 million.

The Bank’s balance sheet shows total assets of €9.9 billion. The 19.3% increase in total assets was mainly attributable to the increase in the Bank’s investments to €3.4 billion (€2.4 billion in 2014). Loans and advances to customers increased by 3.6% to €4 billion. Meanwhile, customer deposits climbed by 20% to €8.6 billion with the loan to deposit ratio sliding to 47%. Equity attributable to shareholders increased by a further 9% to reach €670.2 million, mainly reflecting the profits generated during the period under review.

Dividend  

The Directors recommended a final gross dividend of €0.085 (net: €0.05525) per share to all shareholders as at the close of trading on Friday 13 November. Coupled with the interim dividend paid earlier this year of €0.039 per share, the final gross dividend amounts to €0.124 (net: €0.0806) per share, unchanged 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 12 shares held which will be funded through the capitalisation of €30 million of reserves. Shareholders as at the close of trading on 13 January 2016 will be eligible to receive the bonus shares.

Download

Bank of Valletta plc – Preliminary Statement of results for the year ended 30 September 2015.

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