Bank of Valletta plc - Interim Results & Dividend

Bank of Valletta plc issued their half-yearly results as at 31 March 2006 following a Board of Directors meeting held on 27 April. The Directors declared a gross interim dividend of 5c5 per share, which will be paid on 30 May 2006 to all shareholders as at close of trading on Wednesday 3 May. The equity therefore trades ex-dividend as from 4 May 2006.

During the first six months of its financial year which ended on 31 March 2006, the BOV Group generated total net interest income of Lm23.7 million, which represents a rise of 18.5% over the March 2005 restated figures. Gross interest income and interest expenses both surged by over 17% to Lm47.1 million and Lm23.3 million respectively. The Group’s net interest margin edged up to a record 50.5% and the Bank attributed this increase in interest income to a shift in the asset mix from quasi-liquid assets to advances as well as the one-time charge taken in March 2005 from a change in the policy on the treatment of suspended income on impaired accounts, which was not repeated in the period under review.

Non-interest income during the first six months of the year amounted to Lm11.96 million compared to Lm10.4 million in March 2005 – a rise of 15.4%. This increase is mainly attributable to a 22.7% rise in net commission income, which amounted to Lm6.9 million in the six months to March 2006 following increased sales of investment products, life assurance, advances and foreign trade finance. Trading profits also performed strongly with a rise of 7.2% to Lm5.1 million.

Total operating income of the BOV Group for the first six months of the year increased by 17.5% to Lm35.7 million. Meanwhile, non-interest expenses, comprising administrative expenses and depreciation, edged 4.5% higher to Lm15.8 million. The Bank attributed this rise to higher personnel remuneration, contributions to the community and depreciation on IT.

The Group’s operating profit before impairment allowances and the share of profits from associate and jointly controlled companies amounted to Lm19.9 million, representing a 30.3% rise over the comparative figures. The charge for net impairment allowances amounted to Lm3.9 million, compared to Lm6.6 million reported in March 2005. These include a specific impairment charge amounting to Lm2.9 million (March 2005: Lm5.2 million), arising from a more prudent view of collateral held against certain impaired accounts, leading to a downward revaluation of the realisable value, as well as an exercise whereby relatively small impaired accounts which had been long outstanding were written off as bad debts. The charge for collective impairment amounted to Lm1.0 million (March 2005: Lm1.4 million), resulting from an increase in the loan book.

Share of profits from associates and jointly-controlled companies, which include Middlesea Insurance plc and Middlesea Valletta Life Assurance Co. Ltd., soared 145% to Lm2.8 million. The Group cost to income ratio including these share of profits further improved to a record of 41.1% (March 2005: 48.0%).

Group profit before tax during the first six months of the year amounted to Lm18.8 million, representing a 92.2% rise over the comparative restated earnings of March 2005. After accounting for taxation and minority interests, Group profit attributable to shareholders of Lm12.9 million are almost double those earned in the same six months of last year. Earnings per share increased to 11c7 (March 2005: 5c9).

As at 31 March 2006, Group total assets amounted to Lm2.2 billion with shareholders funds of Lm150.8 million translating into a net asset value per share of Lm1.36. Loans and advances to customers increased by Lm98 million (11.7%) since the start of the financial year to Lm935.6 million. The Bank reported that most of the new lending was made to the business sector, although personal lending for housing finance also continued to increase. Customer deposits continued to rise and amounted to Lm1.56 billion as at the end of March 2006, representing a 3.4% rise since September 2005. The Group achieved an annualised return on equity (post-tax profit divided by average shareholders’ funds) of 18.2% with annualised return on assets also rising strongly to 1.8%.