Bank of Valletta plc - Interim Directors’ Statement

On 15 May, Bank of Valletta plc issued an Interim Directors’ Statement to update the market on its performance during the first quarter of 2019.

The Directors noted that during the first three months of the year, the financial performance of BOV was broadly in line with expectations but lower than that achieved during the first quarter of 2018 as a result of the following factors:

  • Net interest income remains under pressure due to a low/negative interest environment and high levels of liquidity;
  • Higher costs reflecting continued investment in HR, IT security, governance and risk management;
  • Lower impairment provisions reversals.

The announcement also revealed that total assets registered moderate growth, reflecting the local buoyant economic activity as well as customer and investor confidence. Furthermore, satisfactory growth was achieved in both corporate and retail lending with higher-than-expected increases being recorded in mortgage lending. Asset quality also improved with a further reduction in corporate non-performing loans.

Customer deposits also increased since the year-end as incoming funds from local retail and corporate customers exceeded reductions in the deposits of international corporate clients. The advances/deposits ratio stands at the December 2018 level and the Group remains highly liquid with short term funds exceeding the €4 billion mark.

Regulatory capital ratios showed an improvement over those as at December 2018, as the Bank continues to implement its capital optimisation plan. As previously outlined, the Bank will be seeking to raise new capital to further strengthen its regulatory capital.

In February, the Bank suffered a sophisticated cyber incident. A substantial part of the irregular payments have already been recovered and the Bank is continuing with its endeavours to recoup the remaining funds. Nevertheless, it has prudently set aside a provision for these outstanding amounts during the period under review.

The BOV Group continued implementing its 2020 Vision. During the period under review, bank conducted training for the Core Banking Transformation programme. Moreover, in early May BOV signed a new Collective Agreement. At the same time, the business restructuring programme is also progressing as the Group aims to strengthen the Bank’s capital position while ensuring long term viability – the Group’s primary strategic priority.