BOV reports surge in Q1 profits.

The MSE Equity Price Index posted a 4-day winning streak as it gained 0.601% to reach a fresh 7-month high of 3,672.462 points as the gains in BOV, HSBC and APS outweighed the decline in VBL. Meanwhile, four other equities closed unchanged as total trading activity amounted to €0.20 million.  Download today’s Equity Market Summary.

 Bank of Valletta plc was today’s most traded equity as it surged by 3.8% to the €1.08 level over 23 trades totalling 123,750 shares. Today, BOV issued an Interim Directors’ Statement providing information about its performance in Q1 2023. In comparison to the same period in 2022, revenues for the first quarter of this year increased by 62% (or €36.6 million) to €95.5 million, largely reflecting the growth in net interest income attributable to re-pricing of facilities to reflect Euribor increases, better returns on excess liquidity deployed in the securities markets and general growth in the loans portfolio. On the expenditure side, operating costs increased by 2.8% mainly due to higher employee compensation costs and the modernisation of the Bank’s technology. Meanwhile, BOV’s financial performance was impacted by a net charge in Expected Credit Losses of €5 million reflecting the growth in the loan portfolio and an improved coverage for riskier exposures. Overall, BOV recorded a profit before tax of €46.5 million compared to €24 million in the first three months of 2022. In terms of financial position, when compared to 31 December 2022, customer loans grew by a further 1.5% to over €5.5 billion whilst customer deposits dropped by 2.3% to just over €12 billion, resulting in an improved loan-to-deposit ratio. BOV also noted that liquidity ratios remained strong and regulatory capital ratios continued to well-exceed regulatory capital requirements.

Also, in the banking sector HSBC Bank Malta plc’s shares advanced by 2% to the €1.02 level across four deals totalling 17,475 shares, while APS Bank plc gained 0.8% to reach the €0.605 level over five trades totalling 17,700 shares.

Malta International Airport plc held the €5.65 level across four trades totalling 5,110 shares.

Meanwhile, one trade of 1,096 shares in GO plc left the share price unchanged at the €2.94 level. Similarly, Malta Properties Company plc and Santumas shareholding plc maintained the €0.42 and €1.28 levels respectively on muted activity.

VBL plc shed 12.5% to the €0.21 level on one trade of 10,000 shares.

The RF MGS Index eased by 0.11% to 882.96 points. Today, the ECB announced a 25-basis point rate hike on its key interest rates, indicating a slowdown in the pace of its policy tightening and in line with market expectations. The ECB stated that inflation outlook remains high amid underlying price pressures. The ECB’s governing council also confirmed that it will not continue reinvesting the maturing securities of its asset purchase programme as of July 2023 in an effort to continue tightening monetary conditions. Yesterday in the US, the Federal Reserve also raised interest rates by 25 basis points to a 16-year high range of 5.00-5.25%, also in line with market expectations, although it hinted that it may pause additional hikes while it continues to monitor the implications of its monetary policy and act accordingly. The Fed noted that achieving the target of 2% inflation rate remains its priority.

This report contains public information only and is not to be construed as investment advice or an offer to buy or sell any securities. Information contained herein is based on data obtained from sources considered to be reliable, but no representations or guarantees are made with regard to the accuracy of the data. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Rizzo, Farrugia & Co. (Stockbrokers) Limited is a company licensed to undertake investment services in Malta by the MFSA under the Investment Services Act, Cap. 370 of the Laws of Malta and a member of the Malta Stock Exchange.