Bank of Valletta plc - Quarterly Update

On 29 April 2025, Bank of Valletta plc issued a quarterly financial overview providing information about its performance in Q1 2025 when compared to the same period in 2024.

Net interest income dropped by 5.9% to €92.5 million (Q1 2024: €98.3 million) as the 5.7% reduction in gross interest income to €105.8 million outweighed the 3.9% reduction in interest expenses to €13.3 million. BOV explained that the reduction in income is due to lower floating rates and lower ECB benchmark rates, which was partly offset by the higher interest income generated by the growing investments portfolio.

Meanwhile, BOV’s non-interest income surged by 33.5% to €25.6 million (Q1 2024: €19.1 million) driven by the improvement in net fee and commission income and trading profits.

In aggregate, BOV’s operating income remained virtually unchanged at the €118 million level.

Furthermore, BOV’s financial performance was impacted by net impairment charges of €0.17 million, which are lower than the €6.6 million recognised in the first quarter of 2024. BOV explained that the minimal charge in the first quarter of 2025 underscores the Bank’s commitment to enhance credit quality, which also led to a reduction in the non-performing loans ratio to 2.5% compared to 2.7% as at the end of 2024.

On the expenditure side, total operating costs increased by 7.5% to €52.8 million driven by higher employee costs, additional regulatory costs, and the continued investment in technology. As a result, the cost-to-income ratio increased to 44.7% compared to 41.8% in Q1 2024.

BOV’s share of results from the Bank’s insurance associates increased by 5.5% to €2.0 million.

Overall, BOV recorded a profit before tax of €67.1 million, which is 5.3% higher than the €63.7 million in the first three months of 2024. The net profit for the period amounted to €44.3 million which translates into an annualised return on average equity of 12.4% (Q1 2024: 13.1%).

In terms of financial position, when compared to 31 December 2024, total assets increased by 3.6% to €15.6 billion amid further growth in treasury investments (+ €602 million to €6.9 billion) and customer loans (+€278 million to €7.1 billion), while the cash and balances held with the central bank declined by €260 million to €825 million.

Total liabilities increased by 3.7% to €14.2 billion as BOV attracted €472 million in amounts owed to banks. Meanwhile, customer deposits remained virtually unchanged at €12.8 billion. As a result, the loan-to-deposit ratio improved to 55.6% compared to 53.5% as at the end of 2024.

Total equity increased by 3.1% (or €44 million) to €1.45 billion, which translates into a net asset value per share of €2.487. BOV also noted that liquidity ratios remained strong and regulatory capital ratios continued to well-exceed regulatory capital requirements, with the CET1 ratio at 21.6% (Dec 2024: 22.3%) and total capital ratio at 26.3% (Dec 2024: 27.1%), albeit the capital ratios are exclusive of the first quarter profits, which will be added to capital ratios in the interim and annual results.

Issue of Series 2 Bonds under the Unsecured Euro Medium Term Bond Programme

BOV announced that the Board resolved to issue a second series of bonds under its existing Unsecured Euro Medium Term Bond Programme, which will consist of an offer of €100 million, with an over-allotment option of another €50 million. The publication of the final terms will be made available in due course.

Financial Outlook

In its statement, BOV remarked that the expected decline in interest rates will continue to an extent impact interest income in 2025. The Bank will continue to mitigate this impact through proactive financial strategies and higher focus on increasing net fee and commission income. The Bank also expects significant progress in technological investments, with associated costs of execution and implementation. The Board stated that the Group remains on track to achieve a profit before tax of €200 million to €250 million in the 2025 financial year, in line with the previous guidance.