Bank of Valletta plc - Interim Directors’ Statement

On 2 November 2020, Bank of Valletta plc issued an Interim Directors’ Statement providing indications about the bank’s performance in Q3 2020. In this respect, BOV explained that the COVID-19 situation continued to strongly influence its activities as although elements of improvement over Q2 were experienced, the prolongation of the situation is leading to overall lower business volumes and revenues compared to the corresponding period last year. This was mostly evident in lower fees and commissions as travel, foreign exchange and transaction business activity remain subdued.

BOV added that at this stage, the bank did not see signs of significant businesses distress while retail customer resilience remains relatively strong. As conditions can be expected to deteriorate through a prolongation of the COVID-19 situation, the bank is regularly reviewing credit loss provisions and developing strategies to support customers who start to experience material difficulties. As such, BOV is anticipating further management overlays into economic forecasts which will increase overall credit loss provisions for the duration of the COVID-19 event. On the other hand, however, a reinforced focus on recoveries of long-standing lending assets previously written off is leading to positive outcomes.

Apart from COVID-19, BOV noted that it is expecting some tailwinds during the second half of 2020 related to a recovery to the Income Statement from the settlement of the Swedish Pension Agency ‘Falcon Fund’. With respect to the other major contingent liability involving the Deiulemar Trust, although BOV expressed its commitment to resolving this case, it also noted that it is not in a position to report any further tangible progress at this point.

Meanwhile, BOV explained that it extended over €200 million to its clients under the ‘COVID-19 Assist’ scheme supported by the Malta Development Bank. Demand for home loans also picked up lately after the slowdown earlier in the year. Corporate deposits decreased marginally in the recent months in line with the bank’s de-risking initiatives, but this was offset by growth in the retail sector as personal spending was generally subdued. BOV’s capital and liquidity positions remained very strong as the bank continued to prioritise the optimisation of regulatory capital whilst significant progress was registered in the risk management and compliance activities.

In conclusion, BOV reiterated its readiness to continue supporting the local economy and its customers in these unprecedented times whilst continuing to pursue efforts aimed at maximising long-term value for its shareholders.