Bank of Valletta plc - Voluntary Disclosure of Financial Information

Monday, August 7th, 2017

On 7 August, Bank of Valletta plc issued an announcement reiterating its intention to change its accounting year end from 30 September to 31 December. Furthermore, the announcement also confirmed that following the publication on 27 April of the interim results covering the six months ended 31 March 2017, BOV will be publishing a second set of interim results by the end of October 2017 covering the 12-month period from 1 October 2016 to 30 September 2017. Subsequently, BOV will be publishing its preliminary statement of audited results for the full 15-month period from 1 October 2016 to 31 December 2017 by the end of March 2018. Concurrently, the Directors will also consider recommending the payment of a final dividend.

Meanwhile, BOV published extracts from its unaudited management accounts for the six month period ended 30 June 2017 coupled with the respective comparable figures.

During the six months ended 30 June 2017, BOV reported a 5.5% decline in interest receivable to €103 million which was only partially offset by a 6.1% decline in interest payable to €31 million and thus leading to a 5.3% drop in net interest income to €72 million. The Directors noted that this contraction in net interest income largely reflects the persistent low yields and negative interest rates. On the other hand, the BOV Group reported a 9.6% increase in net fee and commission income to €34 million and a 12.5% increase in trading profits to €9 million reflecting the Group’s efforts in growing its non-interest income business.

On the expenditure side, the Group’s costs remained unchanged at around €62 million as the continued upward pressure in costs related to compliance and the Core Banking Transformation Programme were mitigated by measures to control the discretionary cost items.

BOV also revealed that it recognised €6 million in net impairment reversals compared to €3 million net impairment provisions in the previous corresponding period following the settlement of various non-performing exposures in line with the Group’s efforts to improve the quality of its loan book.

As a result, BOV’s core profit improved by 17.6% to €60 million.

During the period under review, BOV incurred a fair value loss of €1 million compared to a fair value uplift of €33 million in the first six months of 2016. However, the latter includes a one-off gain of €22 million related to the sale of the Group’s shareholding in VISA Europe.

BOV reported a significant improvement in the share of results of its insurance associates to €9 million compared to €1 million in the previous corresponding period.

Overall, BOV registered a pre-tax profit of €68 million which is 20% lower than the comparable figure for the first six months of 2016. However, when the aforementioned one-off gain is excluded, BOV’s pre-tax profit during the period under review actually improved by 7.9%.

The Statement of financial position as at 30 June 2017 reveals a 4.3% increase in total assets to €11,609 million compared to the corresponding figures as at 31 December 2016. This largely reflects a 13.3% increase in cash and short-term funds to €3,100 million as well as a 2.4% increase (equivalent to €100 million) in loans and advances to customers to €4,241 million on the back of satisfactory demand for credit with growth in both the Bank’s mortgage and corporate loan books. Total liabilities also increased by 4.3% to €10,848 million mainly due to a further 5.9% increase in amounts owed to customers to €10,026 million with increases in both retail and corporate deposits. Overall, the Group’s equity base as at 30 June 2017 amounted to €761 million representing a 4.4% increase over the corresponding figure as at 31 December 2016.

The announcement also noted that the Group‘s Core Tier 1 ratio was 13.3% as at 30 June 2017 and that the Bank is planning to strengthen this ratio further with its plans for a €150 million rights issue.

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Bank of Valletta plc – Voluntary Disclosure of financial information for the six-month period ended 30 June 2017.

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