Bank of Valletta plc - Interim Directors’ Statement

On 6 May 2021, Bank of Valletta plc issued an Interim Directors’ Statement providing information about its performance in Q1 2021 when compared to the same period in 2020. In this respect, BOV explained that revenues decreased by 4% reflecting the reversal of certain fees which are currently being reviewed by the regulator, as well as lower foreign exchange income due to the impact of COVID-19.

On the expenditure side, operating costs increased by 4% mainly due to increases in employee compensation, investment in technology, and higher amortisation charges. The financial performance of BOV was also negatively impacted by the impairment charges on long-outstanding non-performing loans. On the other hand, the bank’s share of results from associates exceeded expectations as BOV intensifies its strategic partnership with Mapfre MSV Life plc.

Overall, BOV generated a pre-tax profit of €9.3 million which, in turn, is in line with the performance recorded during the same period in 2020. In terms of financial position, the bank also noted that during Q1 2021, customer deposits increased by a further 1.3% to €11.4 billion whilst customer loans grew by 1.7% to €4.82 billion mostly due to the continued growth in mortgage business. In view of the stronger increase in customer loans, the loans-to-deposits ratio improved marginally to 42.2% compared to 42.1% as at the end of 2020. During the first quarter of 2021, the Bank participated in the TLTRO III Eurosystem funding. This will contribute to mitigate the costs of funding liabilities through which the bank will continue to sustain its position as a key player in the provision of finance to local businesses and households.

Looking ahead, BOV explained that business remains subject to a significant degree of uncertainty, with a number of items impacting Q1 2021 performance which may not be representative of the full year results. The bank added that its next priorities will be on improving operational efficiencies and enhance customer experience. In the meantime, BOV is also phasing out its de-risking projects whilst also investing heavily in its human resources and branch network with a view of becoming more effective in meeting customer’s banking needs.