Bank of Valletta plc - Interim Directors’ Statement

On 14 February, Bank of Valletta plc published its Interim Directors’ Statement to update the market on its performance since the start of its current financial year on 1 October 2012.

The Directors explained that the period under review was characterised by low-key economic activity with subdued demand for credit whilst deposits grew at a modest rate. Moreover, rising liquidity needs and the persistence of a low interest rate scenario maintained the pressure on interest margins. On the other hand, non-interest income was boosted by higher net commission fees reflecting the improved activity levels in the Group’s card business and investments section.

On the other hand, costs were similar to those incurred in the comparable period last year whilst impairment charges decreased.

The announcement also highlighted the continued positive performance of money markets around the world. This was also the case in Europe given the commitment of the European Central Bank to intervene as necessary. As a result, during the period under review, the bank recorded positive fair value movements on its investment portfolio.

Looking ahead, the Directors expect local demand for credit to remain subdued in the run-up and aftermath of the March general elections. In the meantime, economic activity in the Eurozone is expected to remain hampered by the austerity measures adopted by various governments although the expected recovery in late 2013 should bring about some stability in the region.

In conclusion, BOV stated that it will continue to maintain capital and liquidity buffers in accordance with international best practice. In this respect, the Directors reiterated the confirmation of the Bank’s ‘BBB+’ credit rating by Fitch which underlined BOV’s resilient operating profitability, prudent provisioning policy and strong capital ratios.