Bank of Valletta plc - Interim Results

Thursday, April 30th, 2015

On 30 April, Bank of Valletta plc published its interim results covering the six months ended 31 March 2015.

Performance Overview

During the period under review, the Bank registered a 15.4% increase in net interest income to €71.1 million largely reflecting the 17.1% decline in interest expense to €36.2 million as the Bank experienced a shift towards short-term, low yielding deposit products. Nonetheless, BOV’s performance was also positively impacted by the 1.9% increase in gross interest income  to €107.3 million in spite of the prevailing low interest rate scenario.

BOV also reported double-digit gains in non-interest income with a 20.7% uplift to €48.4 million. This reflects the 6.8% increase in net fee and commission income to €28.2 million and the 29.6% increase in profits on foreign exchange activities to €11.35 million following a satisfactory performance across all product lines particularly in bancassurance, credit card business and investment related services. BOV’s half-year performance was further boosted by an €8.1 million positive fair value movement compared to €4.7 million in the previous comparative six month period as international markets remained positive and the Bank also made some gains on investments in locally listed equities.

On the costs side, BOV also registered a 17.4% increase to €54.6 million largely reflecting substantially higher regulatory costs including a higher contribution towards the Depositor Guarantee Scheme, contributions to the newly enacted Single Resolution Fund as well as continued increase in Human resource costs and technology.

Impairment allowances increased by 40.9% to €13.9 million reflecting the even more conservative approach adopted by the Bank towards provisioning and collateral valuation in line with the recommendations made to the Bank following the Asset Quality Review and stress tests carried out by the European Central Bank (ECB).

The positive trend in financial markets also lifted the share of profits of the Group’s insurance associate companies by 44.9% to €7.8 million.

Overall, BOV reported a pre-tax profit of €58.8 million representing a 15.9% increase over the previous comparable figure. After accounting for a tax charge of €18.34 million and minority interest of €0.28 million, the BOV Group’s net profit for the period under review amounted to €40.2 million compared to €34.45 million during the six months ended 31 March 2014.

The Statement of Financial Position, compared to the figures at the end of the last financial year on 30 September 2014, shows a 9% increase in total assets to just €9 billion following a 22.6% increase in investments to almost €3 billion and a 3.1% increase in loans and advances to customers to almost €4 billion. Similarly, total liabilities increased by 9.4% to €8.4 billion mainly reflecting the further 9.2% growth in customer deposits to €7.78 billion. Overall, the Group’s equity grew by 4.3% to €0.64 billion which translates into a net asset value per share of €1.778 compared to €1.70 as at September 2014.

Dividend

The Directors declared an unchanged gross interim dividend of €0.039 per share (net: €0.025) which the Directors believe balances dividend expectations with the need to continue building up the Bank’s capital base through profit retention. The Directors also took into account the increase in the Bank’s Reserve for General Banking Risk to €5.4 million. The interim dividend is payable to those shareholders as at close of trading on Friday 8 May.

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Bank of Valletta plc – Interim Financial Statements for the six months ended 31 March 2015.

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