Bank of Valletta plc - Interim Results

On 27 April, Bank of Valletta plc announced its results for the six months ended 31 March 2012. The board declared an interim gross dividend of €0.06 per share (net: €0.039 per share), representing an 8% increase over last year’s interim dividend. The dividend will be paid on 24 May to all shareholders as at close of business on Monday 7 May.

During the first half of the 2011/12 financial year, the Bank of Valletta Group generated a profit before tax of €49.1 million, an increase of 8.7% when compared to the first six months of the previous year. This was mainly due to a 14% increase in net interest income to a record €77.3 million following interest receivable of €5.2 million in respect of certain customer accounts which were previously provided for. Moreover, the higher interest income was also due to the growth in the loan book from one year to the next.

Net commission and trading income of just under €30 million was marginally unchanged over the comparative period as demand for credit and investment related activities continued to be muted due to the negative sentiment arising from the eurozone sovereign debt crisis. Activity across the local capital market also remained limited. Profit from foreign exchange activities dropped by 9.8% to €7.7 million as margins on foreign exchange business narrowed due to an increased competitive environment.

In contrast to the €5.6 million fair value loss registered in the first half to 31 March 2011, BOV registered a gain of €0.5 million during the period under review following a recovery in the international bond markets during the first three months of the calendar year. This came about following the 3-year liquidity facility made available to European banks by the ECB.

Operating expenses increased by 10% to €45 million due to a number of factors including a new collective agreement, higher professional expenses and increased IT costs. The operating profit before impairment allowances of €62.5 million represents a 21% rise over the comparative period.

Net impairment charges climbed to €15 million as the difficult economic conditions continued to have a knock-on effect on overall credit quality. Specific impairments only amounted to €2 million with the balance of €13 million set aside as a collective provision in view of the cautious outlook. However, BOV reported that the overall credit quality remains satisfactory with non-performing loans improving to 4.1% as at 31 March 2012.

The insurance associates generated a profit of €1.63 million compared to €3.8 million during the comparative period.

BOV’s profit for the period increased by 5.4% during the first six months of their financial year to €31.9 million.

The balance sheet as at 31 March 2012 shows total assets of €6.7 billion with net loans increasing by €87 million during the first half of the year to €3.7 billion. Customer deposits advanced by €94 million to €5.62 billion with BOV reporting modest growth in both the retail and institutional sectors. The advances to deposit ratio as at 31 March 2012 stood at 68.7%. BOV reported a Tier I Capital of 10.8% which is above the regulatory requirement.

Download a copy of the March 2012 Interim Results.