Bank of Val­letta an­nounces in­terim re­sults for Fi­nan­cial Year 2017

The Malta Business Weekly - - FRONT PAGE -

BOV chair­man Deo Scerri, flanked by CEO Mario Mal­lia and CFO Elvia Ge­orge ad­dressed a press con­fer­ence last week dur­ing which he an­nounced the sec­ond in­terim fi­nan­cial year re­sults for the bank for 2017.

As had been an­nounced ear­lier, 2017 is an ex­cep­tional year for Bank of Val­letta, as the cur­rent fi­nan­cial year con­sists of 15 months, fol­low­ing a de­ci­sion to change the fi­nan­cial year end from 30 Septem­ber to 31 De­cem­ber. For the sake of clar­ity and for com­par­a­tive pur­poses, the bank is to­day re­port­ing its in­terim re­sults for the 12-month pe­riod Oc­to­ber 2016 to Septem­ber.

The Bank of Val­letta Group an­nounced pre-tax prof­its of €143.9m for the pe­riod un­der re­view. This rep­re­sents an in­crease of 21.5% over the ad­justed profit be­fore tax of €118.4m re­ported for the same pe­riod last year. Last year the bank had a one-time wind­fall profit of €27.5m aris­ing from the takeover of Visa Group, in which BOV is a prin­ci­pal mem­ber, by Visa Inc.

The chair­man said that the bank’s re­sults need to be in­ter­preted in a con­text of a lo­cal econ­omy that has been per­form­ing very well, even by com­par­i­son to EU stan­dards, but within an in­ter­na­tional sce­nario of per­sis­tently low in­ter­est rates, that con­tinue to pose a sig­nif­i­cant chal­lenge.

“The bank’s strate­gic de­ci­sion to di­ver­sify its in­come sources is yield­ing re­sults,” said Scerri. “In fact, we have wit­nessed sat­is­fac­tory per­for­mance in both our card busi­ness and in­vest­ments. This was neu­tralised in part by the nar­row in­ter­est mar­gins and the high liq­uid­ity lev­els. Mean­while, the bank bore the costs of its in­creased in­vest­ment in Hu­man Re­sources and IT, pri­mar­ily in re­la­tion to the im­ple­men­ta­tion of the pro­gramme that will see the bank chang­ing its core bank­ing sys­tems and oner­ous reg­u­la­tory re­quire­ments.”

Scerri also ex­plained that the bank’s more proac­tive ap­proach to­wards legacy bad debts re­sulted in a net re­ver­sal of im­pair­ment charges equiv­a­lent to €7.5m.

Mean­while, the bank’s share of profit from Mapfre MSV Life in­creased sig­nif­i­cantly, go­ing up to €14.5m (FY 2016: €3.7m).

A closer look at the bank’s bal­ance sheet shows that cus­tomer de­posits con­tin­ued to in­crease, reach­ing a new high of €10.1bn, in an en­vi­ron­ment where the pref­er­ence for short-term de­posits per­sists as the bank im­ple­mented stricter on board­ing pro­ce­dures. Con­cur­rently, the Group net lend­ing rose slightly and now stands at €4.4bn, with home loans rep­re­sent­ing 42% of the bank’s to­tal loan book.

The Group Core Eq­uity Tier 1 ra­tio is 13.4%, up from 12.8% in Septem­ber 2016. Here the chair­man made ref­er­ence to the bank’s im­mi­nent Rights Is­sue, which will see the BOV Group strengthen its cap­i­tal base. “This is nec­es­sary not only be­cause of the bank’s po­si­tion as a sys­tem­i­cally im­por­tant bank in Malta but also to en­able us to be in a bet­ter po­si­tion to sus­tain new lend­ing, un­der­take new in­vest­ment and dis­trib­ute div­i­dends to our share­hold­ers,” stated Scerri.

In his con­clud­ing re­marks, the BOV chair­man ex­pressed his sat­is­fac­tion with the Bank’s per­for­mance say­ing that: “Over the past years, the bank took some tough de­ci­sions and is in­vest­ing heav­ily in its peo­ple and IT sys­tems in or­der to en­sure it re­mains valid, com­pet­i­tive and sus­tain­able over the long-term. Mean­while, we have re­viewed our busi­ness model and risk ap­petite frame­work with a view to en­sur­ing that they are ten­able, rel­e­vant and in line with our strate­gic ori­en­ta­tion for the medium- to long- term”.

Scerri con­firmed that the bank was al­ready re­ceiv­ing very pos­i­tive feed­back from the mar­ket, 24 hours from the com­pany’s an­nounce­ment out­lin­ing the de­tails of the Rights Is­sue, claim­ing that this is an im­por­tant step in the bank’s jour­ney to re­main a rel­e­vant and per­ti­nent fi­nan­cial part­ner to its cus­tomers for years to come.

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