During a meeting held on 28 April 2005, the Board of Directors of Bank of Valletta plc approved the financial results for the six months ended 31 March 2005.
During the six-month period under review, which ended on 31 March 2005, the BOV Group generated a net interest income of Lm20.1 million. This represents a rise of 8.9% over the interest income in the comparative period last year. The net interest margin has improved from 46.8% to 50.2%. Furthermore, non-interest income grew by 23.5% to Lm10.7 million. This resulted both from a rise in net fee and commission income as well as trading profits. Net fee and commission income increased by 21.8% to Lm5.6 million whereas trading profits increased by 28.7% to Lm5.1 million. Total operating income for the six-month period under review amounted to Lm30.8 million, a rise of 13.5% over March 2004. The faster rate of growth in non-interest income reflects the Group’s drive towards diversification of its sources of revenue. Non-interest income accounted for 34.8% of total income (2004: 32%).
Administrative expenses increased by 6.3% to Lm13.8 million and the charge for depreciation went up from Lm1.15 million to Lm1.34 million. Share of profits of associated companies (Middlesea Insurance plc and Middlesea Valletta Life Assurance Co. Ltd.) increased marginally from Lm1.1 million to Lm1.14 million. The Group’s cost to income ratio (including the share of profits from associates) continued to improve and is now at 47.5% compared to 50.1% in March 2004.
The charge for net impairment losses increased by 9.8% to Lm6.6 million and includes a one-off charge of Lm3.5 million resulting from a change in policy on the treatment of suspended interest on impaired accounts.
Group profit before tax of Lm10.1 million represents a rise of 26.2% over the interim profits as at March 2004. After accounting for taxation and minority interests, Group profit attributable to shareholders amounted to Lm6.8 million, 25.2% up from the Lm5.4 million of March 2004. Earnings per share increased from 9c8 in March 2004 to 12c3.
The Directors have declared a gross interim dividend of 7c5 per share which represents a 25% rise over the 6c interim dividend paid last year. This dividend will be paid on 30 May 2005 to all those shareholders who appear on the share register as at close of trading on Thursday 5 May.
The Group's total assets as at 31 March 2005 amounted to Lm2,053 million. Loans and advances to customers, net of impairment allowances, increased marginally over the last six months to a value of Lm826.7 million. The Bank notes that whilst there was a decrease in business lending, this was more than offset by higher lending to the personal sector, especially for home loans. Customers deposits dropped by 0.4% (Lm6.48 million) since September 2004 and amount to Lm1,452 million in March 2005. Shareholders funds increased from Lm129.8 million to Lm133.2 million resulting in a net asset value per share of 240c4.
In the statement accompanying the interim results, the Directors noted that "overall, the underlying profit trend for the Bank has been positive, but there are clear signs of increased competition on all fronts". Moreover the Directors state that although no forecasts for the full year are issued, "the improvements in results seen in the first six months can be sustained in the second half".