Bank of Valletta plc - Interim Results

On 29 July 2024, Bank of Valletta plc published its interim financial statements covering the six-month period ended 30 June 2024.

Net interest income surged by 21.1% to €194 million from the €160 million recorded in the comparable period last year driven by higher gross interest income which was only accompanied by a minimal increase in interest expenses. The growth in gross interest income reflected an expansion in both customer lending and proprietary investment portfolios as well as improved deposit rates on cash balances.

Meanwhile, BOV recorded a 7.1% decrease in non-interest income to €39.7 million (H1 2023: €42.7 million), as declines in foreign exchange income outweighed an increase in net fee and commission income. As a result, total operating income amounted to €233.2 million compared to €202.5 million in the same period last year.

On the expenditure side, operating expenses decreased by 2.3% to €94.9 million (H1 2023: €97.1 million) due to a cost management framework. As a result, the Bank’s cost-to-income ratio improved to 40.7% from 47.9%.

BOV’s financial performance was boosted by a net impairment release of €5.2 million (compared to the charge of €4.6 million recorded in the same period last year), due to the improvement of both non-performing and under-performing loan ratios as well as strengthened collateral positions on a number of key non-performing assets.

As a result, BOV registered an operating profit of €144 million, 40.9% higher than the €101 million in the first six months of 2023.

Moreover, BOV recorded a gain of €4.62 million from its share of results of associates, compared to €4.27 million in H1 2023.

BOV reported a record interim profit before tax of €148 million, corresponding to an increase of 41% compared to the previous record of €105 million reported last year. After accounting for a tax charge of €50.5 million, BOV’s net profit for the period amounted to €97.6 million resulting in an average return on equity of 15.5%.

The Statement of Financial Position as at 30 June 2024, compared to 31 December 2023 shows that total assets remained relatively unchanged at €14.4 billion. BOV registered growth in customer loans (+€382 million) and investments (+€723 million) but held lower levels of balances with the Central Bank, treasury bills and cash (-€1,126 million). Total liabilities fell by 1.0% to €13.1 billion solely driven by a reduction in loans to banks. Meanwhile, customer deposits remained relatively unchanged at €12.2 billion. As a result, the loan-to-deposit ratio improved to 53.4% from 47.6%. BOV’s equity base expanded by 5.1% (or €68.7 million) to €1.34 billion which translates into a net asset value per share of €2.289 (31 December 2023: €2.171). BOV’s CET 1 and Total Capital ratios increased to 22.3% (31 December 2023: 22.7%) and 25.4% (31 December 2023: 25.9%) respectively.

Euro Medium Term Note Programme

The Board of Directors announced its intention to establish a Euro Medium Term Note Programme of up to €250 million. The notes will be issued to the general public and an application will be made for admission to the official list of the Malta Stock Exchange. The proceeds will be used to enhance the Bank’s capital base in satisfaction of its Minimum Requirement for own funds and Eligible Liabilities (MREL) to support the Bank’s growth. Further information will be made available in a Prospectus and the relevant Final Terms, which will be made available once regulatory approval is obtained.

Strategy Implementation and Outlook

In the first six months of 2024, BOV continued with its initiatives across four key quadrants covering the Bank’s customers, operational efficiency, governance & risk management, and its employees. BOV entered into a strategic partnership with Databricks, the data and AI company and pioneer of the Data Intelligence Platform. This initiative will transform the Bank’s governance and use of data, enabling more agile, informed and effective business operations. Furthermore, the Bank also launched the BOV mobilePos application as a secure payment terminal for merchants and professionals, eliminating the need for dedicated hardware.

The Group also reported significant progress in its change management program with notable strengthening of regulatory compliance, streamlining internal processes, introducing new products and enhancing customer experience.

Within the Interim Directors’ Report, the Board noted that the Bank is carefully assessing the implications and impact of the new Capital Requirements Regulations (CRR3) which will come into force in January 2025.