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Bank of Valletta plc – Quarterly Update

Jonathan Falzon

April 29, 2025

29 April, 2025
6 min read
29 April, 2025
6 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 29 April 2025, Bank of Valletta plc issued a quarterly financial overview providing information about its performance in Q1 2025 when compared to the same period in 2024.

Net interest income dropped by 5.9% to €92.5 million (Q1 2024: €98.3 million) as the 5.7% reduction in gross interest income to €105.8 million outweighed the 3.9% reduction in interest expenses to €13.3 million. BOV explained that the reduction in income is due to lower floating rates and lower ECB benchmark rates, which was partly offset by the higher interest income generated by the growing investments portfolio.

Meanwhile, BOV’s non-interest income surged by 33.5% to €25.6 million (Q1 2024: €19.1 million) driven by the improvement in net fee and commission income and trading profits.

In aggregate, BOV’s operating income remained virtually unchanged at the €118 million level.

Furthermore, BOV’s financial performance was impacted by net impairment charges of €0.17 million, which are lower than the €6.6 million recognised in the first quarter of 2024. BOV explained that the minimal charge in the first quarter of 2025 underscores the Bank’s commitment to enhance credit quality, which also led to a reduction in the non-performing loans ratio to 2.5% compared to 2.7% as at the end of 2024.

On the expenditure side, total operating costs increased by 7.5% to €52.8 million driven by higher employee costs, additional regulatory costs, and the continued investment in technology. As a result, the cost-to-income ratio increased to 44.7% compared to 41.8% in Q1 2024.

BOV’s share of results from the Bank’s insurance associates increased by 5.5% to €2.0 million.

Overall, BOV recorded a profit before tax of €67.1 million, which is 5.3% higher than the €63.7 million in the first three months of 2024. The net profit for the period amounted to €44.3 million which translates into an annualised return on average equity of 12.4% (Q1 2024: 13.1%).

In terms of financial position, when compared to 31 December 2024, total assets increased by 3.6% to €15.6 billion amid further growth in treasury investments (+ €602 million to €6.9 billion) and customer loans (+€278 million to €7.1 billion), while the cash and balances held with the central bank declined by €260 million to €825 million.

Total liabilities increased by 3.7% to €14.2 billion as BOV attracted €472 million in amounts owed to banks. Meanwhile, customer deposits remained virtually unchanged at €12.8 billion. As a result, the loan-to-deposit ratio improved to 55.6% compared to 53.5% as at the end of 2024.

Total equity increased by 3.1% (or €44 million) to €1.45 billion, which translates into a net asset value per share of €2.487. BOV also noted that liquidity ratios remained strong and regulatory capital ratios continued to well-exceed regulatory capital requirements, with the CET1 ratio at 21.6% (Dec 2024: 22.3%) and total capital ratio at 26.3% (Dec 2024: 27.1%), albeit the capital ratios are exclusive of the first quarter profits, which will be added to capital ratios in the interim and annual results.

Issue of Series 2 Bonds under the Unsecured Euro Medium Term Bond Programme

BOV announced that the Board resolved to issue a second series of bonds under its existing Unsecured Euro Medium Term Bond Programme, which will consist of an offer of €100 million, with an over-allotment option of another €50 million. The publication of the final terms will be made available in due course.

Financial Outlook

In its statement, BOV remarked that the expected decline in interest rates will continue to an extent impact interest income in 2025. The Bank will continue to mitigate this impact through proactive financial strategies and higher focus on increasing net fee and commission income. The Bank also expects significant progress in technological investments, with associated costs of execution and implementation. The Board stated that the Group remains on track to achieve a profit before tax of €200 million to €250 million in the 2025 financial year, in line with the previous guidance.

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 29 April 2025, Bank of Valletta plc issued a quarterly financial overview providing information about its performance in Q1 2025 when compared to the same period in 2024.

Net interest income dropped by 5.9% to €92.5 million (Q1 2024: €98.3 million) as the 5.7% reduction in gross interest income to €105.8 million outweighed the 3.9% reduction in interest expenses to €13.3 million. BOV explained that the reduction in income is due to lower floating rates and lower ECB benchmark rates, which was partly offset by the higher interest income generated by the growing investments portfolio.

Meanwhile, BOV’s non-interest income surged by 33.5% to €25.6 million (Q1 2024: €19.1 million) driven by the improvement in net fee and commission income and trading profits.

In aggregate, BOV’s operating income remained virtually unchanged at the €118 million level.

Furthermore, BOV’s financial performance was impacted by net impairment charges of €0.17 million, which are lower than the €6.6 million recognised in the first quarter of 2024. BOV explained that the minimal charge in the first quarter of 2025 underscores the Bank’s commitment to enhance credit quality, which also led to a reduction in the non-performing loans ratio to 2.5% compared to 2.7% as at the end of 2024.

On the expenditure side, total operating costs increased by 7.5% to €52.8 million driven by higher employee costs, additional regulatory costs, and the continued investment in technology. As a result, the cost-to-income ratio increased to 44.7% compared to 41.8% in Q1 2024.

BOV’s share of results from the Bank’s insurance associates increased by 5.5% to €2.0 million.

Overall, BOV recorded a profit before tax of €67.1 million, which is 5.3% higher than the €63.7 million in the first three months of 2024. The net profit for the period amounted to €44.3 million which translates into an annualised return on average equity of 12.4% (Q1 2024: 13.1%).

In terms of financial position, when compared to 31 December 2024, total assets increased by 3.6% to €15.6 billion amid further growth in treasury investments (+ €602 million to €6.9 billion) and customer loans (+€278 million to €7.1 billion), while the cash and balances held with the central bank declined by €260 million to €825 million.

Total liabilities increased by 3.7% to €14.2 billion as BOV attracted €472 million in amounts owed to banks. Meanwhile, customer deposits remained virtually unchanged at €12.8 billion. As a result, the loan-to-deposit ratio improved to 55.6% compared to 53.5% as at the end of 2024.

Total equity increased by 3.1% (or €44 million) to €1.45 billion, which translates into a net asset value per share of €2.487. BOV also noted that liquidity ratios remained strong and regulatory capital ratios continued to well-exceed regulatory capital requirements, with the CET1 ratio at 21.6% (Dec 2024: 22.3%) and total capital ratio at 26.3% (Dec 2024: 27.1%), albeit the capital ratios are exclusive of the first quarter profits, which will be added to capital ratios in the interim and annual results.

Issue of Series 2 Bonds under the Unsecured Euro Medium Term Bond Programme

BOV announced that the Board resolved to issue a second series of bonds under its existing Unsecured Euro Medium Term Bond Programme, which will consist of an offer of €100 million, with an over-allotment option of another €50 million. The publication of the final terms will be made available in due course.

Financial Outlook

In its statement, BOV remarked that the expected decline in interest rates will continue to an extent impact interest income in 2025. The Bank will continue to mitigate this impact through proactive financial strategies and higher focus on increasing net fee and commission income. The Bank also expects significant progress in technological investments, with associated costs of execution and implementation. The Board stated that the Group remains on track to achieve a profit before tax of €200 million to €250 million in the 2025 financial year, in line with the previous guidance.