COVID-19 pandemic drags

The MSE Equity Total Return Index closed March 17.82 per cent lower at 7,761.132 points, as only two equities registered gains, whilst 22 closed in the red. The drop in the local equity index was broadly in line with similar indices in Europe. Turnover totalled to €12.1 million – of which €3.3 million were negotiated in Malta International Air

shares.

port plc (MIA)

MIA shares oscillated between a

monthly high of €6.85 and a low of €3.50, over 514 deals of 658,464 shares, to ultimately close at €4.96, registering a decline of 27.6% for the month. In its customary monthly company announcement, MIA reported that passenger movements for February 2020 amounted to 421,567, equivalent to a 17.3 per cent growth from the same month last year. This leap year allowed an additional day of operations, boosting the month’s total traffic with 16,986 passenger movements.

The main drivers for the month’s traffic were the United Kingdom, Italy, Germany, France and Spain amongst others, apart from Germany which declined by five per cent. Despite February’s overall traffic result being a positive one, however, Seat Load Factors (SLF), particularly on Italian routes, saw a significant decline during the last week of the month due to the Covid-19 outbreak in Europe, and declining travel demand. The SLF, which measures the occupancy of seats available on flights operated to and from MIA, stood at 75.8 per cent.

Meanwhile, seat capacity dropped by 14 per cent in March, due to a number of cancellations. Similarly, seat loads declined by 22.4 per cent, as travel demand continued to weaken in line with the restrictions imposed by the authorities. This resulted into a 38 per cent fall in traffic during the first 17 days of the month when compared to March 2019.

When taking into consideration the week starting from March 11, 2020 to March 17, 2020, passenger movements dropped by a significant 62 per cent when compared to March 2019. The company expects the situation to deteriorate further over the coming weeks given the authorities’ decision to suspend all inbound commercial flights. Original financial guidance for the year are therefore not expected to be delivered.

The company has issued an announcement to reassure its shareholders that all necessary measures are being taken to mitigate the inevitable negative impacts of the current unprecedented situation.

The board agreed to postpone the Annual General Meeting (AGM) to July 29, 2020. While constantly monitoring the current situation, an extraordinary board meeting has been called for April 22, 2020 to consider the impact this virus outbreak will have. During the meeting, the board shall re-consider the then current state of affairs and any measures which the company may need to implement and to discuss whether the current situation merits a re-consideration of the proposed dividend.

International Hotel Invest

ments plc

shares registered the most significant loss, having stumbled by 30.5 per cent, across 49 transactions of 286,293 shares, closing €0.235 lower at €0.535. The company announced its precautionary measures with respect to the evolving Covid-19 to reassure its shareholders. The company addressed a series of first-wave cost cutting and cost containment measures, such as the shutting down of hotels’ entire wings or floors. The company instructed no new CAPEX, no new employments, no payroll shifts and banned travelling. Costs are being monitored while amenities, energy and consumables are being conserved.

Bank of Valletta plc (BOV)

shares fell by €0.19 or 18.1 per cent, as 1.4 million shares were negotiated across 302 trades, closing at €0.86. The bank announced its commitment to support its customers who were adversely hit by the current pandemic. New measures are being constantly introduced to help their customers during such unprecedented times. Subject to eligibility criteria, the bank is offering an increase in overdraft and credit card limits to satisfy the short-term financial needs of its customers. Moreover, extensions have also been applied to the use of credit facilities and on drawdowns, at no extra cost. A minimum on cash withdrawals of €500 has also been set this week to reduce people contact.

BOV reported a 25.3 per cent increase in profit before tax when compared the previous year’s figure. The bank’s interest on loans and advances increased to nearly €170 million, yet the bank’s operating income declined by 3 per cent to €250 million, as fee and commission income declined. The bank’s operating profit before the litigation provision, declined from €138 million to €98.3 million. However, after taking in consideration the litigation provision for the financial year ended 2019 of €25 million, the bank’s profit before tax amounted to €89.2 million, up from €71.2 million in 2018, during which the bank made the litigation provision of €75 million.

The bank’s return on equity, after tax, increased to 6.2 per cent from 5.3 per cent the previous year. Similarly, earnings per share were up to €0.109, resulting into a €63.5 million profit attributable to shareholders.

The bank’s IT security infrastructure was strengthened following the February 2019’s cyber-attack. Most misappropriated funds were recovered since action was taken promptly. Operating expenses were up by 6.5 per cent to €139.1 million, as the bank continued to invest in IT and HR. In addition to this, €23.9 million were incurred for the transformation programme, which is expected to run over two years.

The ratio of non-performing exposures to total lending registered a positive result, as it was down by 0.7 per cent from last year to 4.6 per cent. The bank also registered a strong Common Equity Tier 1 ratio, as it increased by 1.2 per cent to 19.5 per cent from the previous year.

The board is recommending the payment of a final gross dividend of €0.026 per share, translating into a final net dividend of €0.017 per share, to be approved during the upcoming AGM. This would amount to a total gross dividend of €15,384,615 for the year. The audited financial statements for the financial year ended December 31, 2019, are to be submitted for the approval of the shareholders at the AGM. Due to the current scenario, the bank has decided to postpone the AGM to a future date within regulatory requirements.

In the beginning of April, confirmed the decision to keep the initial proposal for distribution of the dividend (a final net dividend of €0.017 per share) but make the actual payment conditional to the reassessment of the situation once the uncertainties caused by COVID-19 disappear, the earliest of which, in line with the European Central Bank’s recommendation, would be 1 October 2020.

HSBC Bank Malta plc

BOV

shares fell by 14.3 per cent across 151 transactions of two million shares, to close €0.15 lower at €0.90. In the beginning of April, the bank announced the delay of the dividend distribution to ensure that the banking system, deploys capital in support of the macro-economy. Therefore, the bank’s 2019 final dividend will be paid when it is appropriate to do so, but not before the fourth quarter of this year. The board will re-examine the situation and will update the market accordingly. The bank has sufficient capital to support the previously announced a final net dividend of €0.014.

The bank has also introduced measures to support its customers affected by this current situation. One measure is related to home or personal loans as a three-month capital repayment moratorium was set, subject to eligibility.

FIMBank plc shares decreased by $0.13 or 22.4 per cent across 24 trades of 331,588 shares, to close at $0.45. The trade finance bank approved the consolidated audited financial statements for the financial year ended December 31, 2019. These shall be submitted for approval by the shareholders at the forthcoming AGM, which shall be held on May 7, 2020. During the AGM, the board will not be recommending a dividend.

The group’s net operating results declined by 32.5 per cent to $14.3 million, upon the implementation of a de-risking process in order to strengthen the quality of the portfolio. Net operating income also dropped by 13 per cent, as it stood at $51.3 million. Revenues decreased due to economic conditions and certain measures which were carried out. This led the group to de-risk its main portfolio due to a number of non-performing loans identified in prior years, resulting into a drop in income generated from these portfolios. The group improved its funding structure to offset the drop in revenues through various asset and liability measures. As a result, net interest income increased by almost 3.5 per cent to $32.3 million.

As at December 31, 2019, the group’s CET1 ratio was down by seven percentage points to 16.9 per cent. Similarly, total capital ratio decreased to 16.9 per cent, versus 18 per cent recorded in 2018.

Lombard Bank

Malta

plc

shares fell by 5.4 per cent, as 35,252 shares changed ownership across 13 transactions, closing at €2.10. The bank announced the approval of the audited financial statements for the year ended December 31, 2019 which shall be submitted for approval at the next AGM. This AGM has been postponed to a date which has not been confirmed yet due to the current coronavirus issues. The board resolved to recommend that the AGM approves the payment of a final net dividend of €0.0455 per share. The dividend distribution date is yet to be communicated.

The bank registered an 11.1 per cent increase in profit before tax to €15.3 million for the year ended December 31, 2019 when compared to the previous year. Such positive performance was the result of prudent business practices and persistent low interest rates.

An increase in credit activity pushed net interest income 12.4 per cent upwards to €19.7 million versus the previous year’s figure. This figure was also impacted by judicious treasury management intended to decrease the impact of negative interest rates together with repricing of liabilities at finer interest rates.

The group’s total assets were up by 9.7 per cent to €1,042.3 million when compared to the same period last year. Likewise, equity attributable to shareholders was up by 10 per cent, as it amounted to €119.1 million. The group’s earnings per share increased by €0.02 to €0.211, while group post tax return on equity stood at 8.2 per cent.

The bank’s total capital ratio and leverage ratio recorded were 16 per cent and 10.5 per cent – both of