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Bank of Valletta plc – Full-Year Results

Matthew Fabri

March 26, 2025

26 March, 2025
11 min read
26 March, 2025
11 min read

Following last week's article detailing the performance of the S&P 500 index in 2025, it is worth devoting time to review the developments across the European equity markers in my last article of the year.

Financial Performance

On 26 March 2025, Bank of Valletta plc published its Annual Report and Financial Statements for the financial year ended 31 December 2024.

Net interest income increased by 9.6% (or €34 million) to €386 million as gross interest income increased by 8.9% (or €36 million) to €437 million whilst interest expenses increased by 3.8% to €51 million. In this respect, BOV explained that the performance reflects the continued growth in its lending and investments portfolios as part of the Group’s strategy in optimising the balance sheet by productively deploying funds in long-term interest-bearing assets.

BOV also recorded an increase of 12.2% (or €10.8 million) in non-interest income to just under €100 million principally reflecting the improvement in net fee and commission income derived through credit-related and trade finance activities.

In aggregate, BOV’s total operating income increased by 10.1% (or 45 million) to €486 million compared to €441 million in 2023.

BOV’s financial performance was also boosted by the net impairment reversal of €23.8 million, which is higher than the net release of €10.5 million recorded in 2023. BOV explained that the net release of expected credit losses was principally the result of improvements in both the non-performing and under-performing ratios as well as strengthened collateral position on a number of key non-performing assets. BOV explained that non-performing exposures as at the end of 2024 stood at 2.68% compared to 3.06% in the previous year.

On the expenditure side, total operating costs increased by 2.7% to €217 million reflecting the higher levels of administrative expenses. BOV explained that the increases were driven by higher employee compensation and additional technology-related expenses. BOV also allocated €13.8 million (2023: €11 million) in strategic initiatives. In view of the notable growth in operating income, the cost-to-income ratio improved to 44.6% compared to 47.8% in 2023.

BOV’s share of results from associate investments (namely Mapfre MSV Life plc and Mapfre Middlesea plc) amounted to €9.5 million compared to €11 million in 2023.

Overall, BOV reported a profit before tax of €302.4 million (2023: €251.6 million). After accounting for a tax charge of €102.8 million, the net profit amounted to a record of €199.6 million which translates into a return on average equity of 14.9% (2023: 14.1%).

The Statement of Financial Position as at 31 December 2024 shows that total assets increased by 4.1% (or €592 million) to €15.1 billion with major increases in investments (+ €983 million to €6.3 billion) and customer loans (+€732 million to €6.8 billion) which offset the lower balances with the Central Bank of Malta, treasury bills and cash (-€1.3 billion to €1.1 billion).

Total liabilities increased by 3.4% (or €452 million) to €13.7 billion reflecting the increase in customer deposits (+€652 million to €12.8 billion) and the issuance of €100 million unsecured subordinated debt (Tranche 1) in November. Overall, the loan-to-deposit ratio climbed to 54.5% compared to 50.3% in 2023.

Total equity expanded by 11% to €1.41 billion which translates into a net asset value of €2.411 per share (31 December 2023: €2.171 per share). The Bank’s capital ratios remained above regulatory requirements with the CET 1 ratio at 22.31% (2023: 22.66%) and the Total Capital Ratio at 27.13% (2023: 25.94%).

Dividend

The Board of Directors is recommending a final net dividend of €0.0854 per share to be paid on 12 June 2025 to all shareholders as at close of trading on 25 April 2025 subject to regulatory approval and approval by the Annual General Meeting scheduled for 29 May 2025.

Coupled with the net interim dividend of €0.06 per share paid in December 2024, the total net dividend attributable for the 2024 financial year amounts to €0.1455 per share, which is 92.6% higher than the previous year and represents a payout ratio of 42.6%.

Bonus Issue

The Board of Directors further resolved to recommend a bonus share issue of one share for every ten shares held at the forthcoming Annual General Meeting.

Share Buy-Back (non-cancellable) Programme

The bank commissioned an external independent study to assess initiatives intended to optimise shareholder value. The Bank determined that it will support the liquidity of the Bank’s equity on the Malta Stock Exchange through a share buy-back program. This initiative is subject to shareholder and regulatory approval and will not involve the cancellation of any shares.

Issuance of Unsecured Subordinated Debt

Several initiatives are being taken forward to support key strategic goals in the bank’s strategic plan for FY2024-FY2026 with the four strategic objectives of; customers, operations, governance and people. The bank has already undertaken a number of initiatives including the modernisation of the bank’s personal banking network, enhancing customers’ ease of access to the bank, a reorganisation of the bank’s business channels along with several digital initiatives.

Moreover, the strategy focuses on strengthening governance, risk management controls and security protocols aiming to protect both the bank and its customers.

Strategy Update & Financial Outlook

Several initiatives are being taken forward to support key strategic goals in the bank’s strategic plan for FY2024-FY2026 with the four strategic objectives of; customers, operations, governance and people. The bank has already undertaken a number of initiatives including the modernisation of the bank’s personal banking network, enhancing customers’ ease of access to the bank, a reorganisation of the bank’s business channels along with several digital initiatives.

Moreover, the strategy focuses on strengthening governance, risk management controls and security protocols aiming to protect both the bank and its customers.

The Bank anticipates that its return on average equity will remain double-digit over the upcoming three years. The Group aims to continue growing its balance sheet with the focus centred around good quality commercial and retail lending as well as strengthening non-interest income through new products as well as new areas of business. The bank noted that some of its interest income is sensitive to a decline in interest rates as it is pegged to international benchmark rates. Furthermore, the Bank noted that during the current financial year ending 31 December 2025 it will be subject to a number of technological investments which will bring about a rise in costs which will be required for longer-term benefits.

In this respect, BOV expects that in 2025 its profit before tax will range between €200 million and €250 million with improvements being expected in the following two years. The Bank stated that the dividend payout ratio in respect of the 2025 financial year will be set to a maximum of about 50%.

The Bank explained that it intends to continue to operate with high capital and liquidity buffers for the period under consideration. Additionally, it will continue to adopt a very proactive balance sheet management strategy with the aim of optimising income and profitability levels. This would be reinforced by adding long term debt issuances to support the requirement for additional risk weighted assets brought about by its growth strategy.

The article contains public information only and is published solely for informational purposes. It should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in this article. Rizzo, Farrugia & Co. (Stockbrokers) Ltd (“Rizzo Farrugia”) is under no obligation to update or keep current the information contained herein. Since the buying and selling of securities by any person is dependent on that person’s financial situation and an assessment of the suitability and appropriateness of the proposed transaction, no person should act upon any recommendation in this article without first obtaining investment advice. Rizzo Farrugia, its directors, the author of this article, other employees or clients may have or have had interests in the securities referred to herein and may at any time make purchases and/or sales in them as principal or agent. Furthermore, Rizzo Farrugia may have or have had a relationship with or may provide or has provided other services of a corporate nature to companies herein mentioned. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security mentioned in this article. Neither Rizzo Farrugia, nor any of its directors or employees accepts any liability for any loss or damage arising out of the use of all or any part of this article. Additional information can be made available upon request from Rizzo, Farrugia & Co. (Stockbrokers) Ltd., Airways House, Fourth Floor, High Street, Sliema SLM 1551. Telephone: +356 2258 3000; Email: info@rizzofarrugia.com; Website: www.rizzofarrugia.com © 2021 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved. This article may not be reproduced or redistributed, in whole or in part, without the written permission of Rizzo Farrugia. Moreover, Rizzo Farrugia accepts no liability whatsoever for the actions of third parties in this respect.

This article was produced by Edward Rizzo, Director at Rizzo Farrugia, which is a company licensed to undertake investment services in Malta by the MFSA under the Investment Services Act, Cap. 370 of the Laws of Malta and a member of the Malta Stock Exchange. The company’s registered address is at Airways House, Fourth Floor, High Street, Sliema SLM 1551, Malta.

The article contains public information only and is published solely for informational purposes. It should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in this article. Rizzo, Farrugia & Co. (Stockbrokers) Ltd (“Rizzo Farrugia”) is under no obligation to update or keep current the information contained herein. Since the buying and selling of securities by any person is dependent on that person’s financial situation and an assessment of the suitability and appropriateness of the proposed transaction, no person should act upon any recommendation in this article without first obtaining investment advice. Rizzo Farrugia, its directors, the author of this article, other employees or clients may have or have had interests in the securities referred to herein and may at any time make purchases and/or sales in them as principal or agent. Furthermore, Rizzo Farrugia may have or have had a relationship with or may provide or has provided other services of a corporate nature to companies herein mentioned. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security mentioned in this article. Neither Rizzo Farrugia, nor any of its directors or employees accepts any liability for any loss or damage arising out of the use of all or any part of this article. Additional information can be made available upon request from Rizzo, Farrugia & Co. (Stockbrokers) Ltd., Airways House, Fourth Floor, High Street, Sliema SLM 1551. Telephone: +356 2258 3000; Email: info@rizzofarrugia.com; Website: www.rizzofarrugia.com © 2021 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved. This article may not be reproduced or redistributed, in whole or in part, without the written permission of Rizzo Farrugia. Moreover, Rizzo Farrugia accepts no liability whatsoever for the actions of third parties in this respect.

This article was produced by Edward Rizzo, Director at Rizzo Farrugia, which is a company licensed to undertake investment services in Malta by the MFSA under the Investment Services Act, Cap. 370 of the Laws of Malta and a member of the Malta Stock Exchange. The company’s registered address is at Airways House, Fourth Floor, High Street, Sliema SLM 1551, Malta.

On 26 March 2025, Bank of Valletta plc published its Annual Report and Financial Statements for the financial year ended 31 December 2024.

Net interest income increased by 9.6% (or €34 million) to €386 million as gross interest income increased by 8.9% (or €36 million) to €437 million whilst interest expenses increased by 3.8% to €51 million. In this respect, BOV explained that the performance reflects the continued growth in its lending and investments portfolios as part of the Group’s strategy in optimising the balance sheet by productively deploying funds in long-term interest-bearing assets.

BOV also recorded an increase of 12.2% (or €10.8 million) in non-interest income to just under €100 million principally reflecting the improvement in net fee and commission income derived through credit-related and trade finance activities.

In aggregate, BOV’s total operating income increased by 10.1% (or 45 million) to €486 million compared to €441 million in 2023.

BOV’s financial performance was also boosted by the net impairment reversal of €23.8 million, which is higher than the net release of €10.5 million recorded in 2023. BOV explained that the net release of expected credit losses was principally the result of improvements in both the non-performing and under-performing ratios as well as strengthened collateral position on a number of key non-performing assets. BOV explained that non-performing exposures as at the end of 2024 stood at 2.68% compared to 3.06% in the previous year.

On the expenditure side, total operating costs increased by 2.7% to €217 million reflecting the higher levels of administrative expenses. BOV explained that the increases were driven by higher employee compensation and additional technology-related expenses. BOV also allocated €13.8 million (2023: €11 million) in strategic initiatives. In view of the notable growth in operating income, the cost-to-income ratio improved to 44.6% compared to 47.8% in 2023.

BOV’s share of results from associate investments (namely Mapfre MSV Life plc and Mapfre Middlesea plc) amounted to €9.5 million compared to €11 million in 2023.

Overall, BOV reported a profit before tax of €302.4 million (2023: €251.6 million). After accounting for a tax charge of €102.8 million, the net profit amounted to a record of €199.6 million which translates into a return on average equity of 14.9% (2023: 14.1%).

The Statement of Financial Position as at 31 December 2024 shows that total assets increased by 4.1% (or €592 million) to €15.1 billion with major increases in investments (+ €983 million to €6.3 billion) and customer loans (+€732 million to €6.8 billion) which offset the lower balances with the Central Bank of Malta, treasury bills and cash (-€1.3 billion to €1.1 billion).

Total liabilities increased by 3.4% (or €452 million) to €13.7 billion reflecting the increase in customer deposits (+€652 million to €12.8 billion) and the issuance of €100 million unsecured subordinated debt (Tranche 1) in November. Overall, the loan-to-deposit ratio climbed to 54.5% compared to 50.3% in 2023.

Total equity expanded by 11% to €1.41 billion which translates into a net asset value of €2.411 per share (31 December 2023: €2.171 per share). The Bank’s capital ratios remained above regulatory requirements with the CET 1 ratio at 22.31% (2023: 22.66%) and the Total Capital Ratio at 27.13% (2023: 25.94%).

Dividend

The Board of Directors is recommending a final net dividend of €0.0854 per share to be paid on 12 June 2025 to all shareholders as at close of trading on 25 April 2025 subject to regulatory approval and approval by the Annual General Meeting scheduled for 29 May 2025.

Coupled with the net interim dividend of €0.06 per share paid in December 2024, the total net dividend attributable for the 2024 financial year amounts to €0.1455 per share, which is 92.6% higher than the previous year and represents a payout ratio of 42.6%.

Bonus Issue

The Board of Directors further resolved to recommend a bonus share issue of one share for every ten shares held at the forthcoming Annual General Meeting.

Share Buy-Back (non-cancellable) Programme

The bank commissioned an external independent study to assess initiatives intended to optimise shareholder value. The Bank determined that it will support the liquidity of the Bank’s equity on the Malta Stock Exchange through a share buy-back program. This initiative is subject to shareholder and regulatory approval and will not involve the cancellation of any shares.

Issuance of Unsecured Subordinated Debt

The Board of Directors is considering approving an issuance of Bonds out of the Euro Medium Term Bond program of up to €250 million whose base prospectus was approved by the regulator in October 2024. The bonds will be issued to the general public in Malta by the second quarter of this year. The objective is to continue enhancing the Bank’s capital base in satisfaction of its MREL requirements in support of the Bank’s forecasted balance sheet growth in the coming years. The bank is finalising the Final Terms which shall be made available closer to the issue date following regulatory approval.

Strategy Update

Several initiatives are being taken forward to support key strategic goals in the bank’s strategic plan for FY2024-FY2026 with the four strategic objectives of; customers, operations, governance and people. The bank has already undertaken a number of initiatives including the modernisation of the bank’s personal banking network, enhancing customers’ ease of access to the bank, a reorganisation of the bank’s business channels along with several digital initiatives.

Moreover, the strategy focuses on strengthening governance, risk management controls and security protocols aiming to protect both the bank and its customers.

Financial Outlook

The Bank anticipates that its return on average equity will remain double-digit over the upcoming three years. The Group aims to continue growing its balance sheet with the focus centred around good quality commercial and retail lending as well as strengthening non-interest income through new products as well as new areas of business. The bank noted that some of its interest income is sensitive to a decline in interest rates as it is pegged to international benchmark rates. Furthermore, the Bank noted that during the current financial year ending 31 December 2025 it will be subject to a number of technological investments which will bring about a rise in costs which will be required for longer-term benefits.

In this respect, BOV expects that in 2025 its profit before tax will range between €200 million and €250 million with improvements being expected in the following two years. The Bank stated that the dividend payout ratio in respect of the 2025 financial year will be set to a maximum of about 50%.

The Bank explained that it intends to continue to operate with high capital and liquidity buffers for the period under consideration. Additionally, it will continue to adopt a very proactive balance sheet management strategy with the aim of optimising income and profitability levels. This would be reinforced by adding long term debt issuances to support the requirement for additional risk weighted assets brought about by its growth strategy.