APS Bank plc - Quarterly Update

On 28 October 2021, APS Bank plc published a Quarterly Financial Update providing information about its performance during the nine-month period ended 30 September 2021 when compared to the same period in 2020. In this respect, APS Bank explained that during the first nine months of 2021, net interest income increased by 12.3% to €40.6 million (Q1-Q3 2020: €36.1 million) as gross interest income grew by 10.3% to €50.9 million reflecting the continued strong growth in lending activity whilst interest expense remained unchanged at €10.3 million.

Meanwhile, APS Bank recorded a marginal decline in non-interest income to €0.5 million (Q1-Q3 2020: €0.6 million) reflecting the impact of unfavourable market movements in the value of financial instruments in Q3 2021 following the positive performance recorded during the previous two quarters.

On the expenditure side, total operating costs increased by 20.6% to €30.4 million (Q1-Q3 2020: €25.2 million) as APS continued with its investments in IT and HR. Given the higher percentage increase in costs than the growth in income, the bank’s cost efficiency ratio deteriorated to 66.1% compared to 61.5% in December 2020. On the other hand, APS Bank recorded a net impairment release of €1.0 million compared to a charge of €1.5m incurred in the same period last year.

Overall, the bank reported a pre-tax profit of €16.7 million which is 22.8% higher than the €13.6 million figure recorded in last year’s comparable period. After accounting for a tax charge of €5.8 million, APS Bank posted a net profit of €10.9 million (Q1-Q3 2020: €8.5 million) which, in turn, translates into an annualised return on average equity of 6.9% (Q1-Q3 2020: 5.9%).

The Statement of Financial Position as at 30 September 2021 shows that total assets increased by 11.6% (or +€281.6 million) to €2.7 billion when compared to the position as at the end of 2020. Customer loans surged by 10.2% to just under €2 billion on the back of the sustained demand for household and mortgage financing, whilst treasury assets increased by 17.4% (or +€83 million) to €558 million. Meanwhile, customer deposits increased by 10% (or +€211 million) to €2.3 billion. Given the stronger percentage increase in customer loans than the growth in customer deposits, the loans-to-deposits ratio improved to 85.1% compared to 84.9% as at 31 December 2020. Meanwhile, although total equity improved by an additional 5.1% to €216.7 million, the bank’s CET 1 ratio eased to 13.0% (31 December 2020: 15.1%) whilst the Total Adequacy Ratio retracted to 17.1% (31 December 2020: 19.5%).

Commenting on the bank’s performance, APS Bank CEO Mr Marcel Cassar explained that: “As the economy adapts to new contours of the post-COVID crisis, we are pleased to see strong 3Q2021 results which confirm that our business model is prevailing even in such unprecedented circumstances. At the same time, we are vigilant towards any economic risks that may arise from the extent of rebound in key economic sectors as well as any possible consequences of the FATF decision on Malta. Our plans remain on track to approach the market in 2022 to raise new equity as we prepare for our next stage of development. We look at the coming months with renewed confidence and optimism.”