Bank of Valletta plc - Interim Directors’ Statement

Monday, July 13th, 2015

On 13 July, Bank of Valletta plc issued its Interim Directors’ Statement updating the market on its performance since 1 April 2015.

The Directors noted that the financial performance of the BOV Group during the period under review was in line with expectations. Home loans growth was strong, particularly aided by Government measures that enhanced the ability of first time buyers to acquire property. Meanwhile, customer deposits continued to grow despite the lower interest rate applicable, resulting in higher levels of liquidity particularly in the short-term categories. This resulted in a positive impact on the net interest margin of the Bank, albeit posing additional challenges in view of the negative rates earned on overnight deposits held with other banks. Concurrently, commissions earned on the sale of financial products continued to grow at a satisfactory rate across all key business lines, while other income generated from foreign exchange transactions and investment portfolio gains improved.

On the expenditure side, the costs incurred during the period were in line with expectations while exceeding those of comparative years, specifically due to the higher regulatory costs applicable as from this year. Impairment charges on specific accounts take on in past years increased, which reflects the deteriorating quality of such accounts.

In conclusion, the Directors also noted that the Bank has commenced work on the replacement of the core IT system which will subsequently transform the business processes and practices of the Bank. Although this project will come at a considerable expense, it is expected to enable the Bank to position itself in a more customer-centric organisation.

 

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