Bank of Valletta plc issued its Interim Directors’ Statement on 25 January 2008 in which it stated that since the start of their financial year on 1 October 2007, income from the retail and corporate business of the Bank has been much in line with expectations. However, Malta’s adoption of the euro has resulted in material one-off costs and has also brought about increased competition bringing margins under pressure. Foreign exchange income earnings have also been adversely affected by euro adoption.
The Directors noted that the Group continued to maintain strong capital adequacy and liquidity positions, and the credit quality of the loan book registered further improvement. However, international credit market conditions remained extremely volatile, and this has led to further markdowns in the Group’s investment portfolio which, nevertheless, remains of very high quality.
Due to the ongoing volatility in the international capital and credit markets, and assuming no material reversal of markdowns in the period to 31 March 2008, the Board of Directors expects that the profits that will be reported for the first half of the current financial year will be below that achieved during the first six months of financial year 2007.