MSE Equity Index trends lower

The MSE Equity Total Return Index extended January’s 4.5% loss, having declined by 2.2%, on a turnover of just below €3.1 million. A total of 28 equities were active, seven of which advanced and 19 fell. LifeStar Insurance plc, Main Street Complex plc and RS2 Software plc Preference shares were the only three equities which were not active during the month.

Bank of Valletta plc (BOV) shares closed February 8.1% lower, at €0.79. A total of 180 transactions of 1.2m shares were recorded. The equity’s price fluctuated between a monthly low of €0.78 and a high of €0.85. BOV was the most liquid equity in February, generating a total of nearly €1m in turnover.

The bank was informed that the Tribunal of Torre Annunziata delivered its decision against the Bank in aggregate an amount of €370 million including legal interests and costs. In line with advice received from legal counsel, the bank shall be immediately appealing this decision. Under these proceedings, the bank was being requested to pay an amount equivalent to the value of the shares of a company which had been settled on trust with the bank as Trustee, and which value the plaintiffs were alleging amounts to €363 million. BOV disputed this claim, as shares held were deemed worthless following the bankruptcy of Deiulemar Group.

The bank held no other assets on behalf of the Deiulemar Group. Pending such appeal, the bank assured the market that it is well capitalised and its operations will not be adversely impacted by this decision. In 2018, the bank had placed in excess of €363 million in the hands of an independent entity, following an order from the Tribunal of Torre Annunziata as precautionary security. No new payment will be made as result of this decision.

HSBC Bank Malta plc shares fell by 0.6% across 39 transactions of 258,927 shares worth €236,166. HSBC closed €0.005 lower at €0.895.

The company’s board approved the annual report and accounts for the year ended December 31, 2021.

The bank reported a profit before tax of €26.9m, an increase of €16.4m or 157% compared to 2020. Adjusted profit before tax of €29.7m increased by €19.2m, or 184% versus 2020. The adjusted profit before tax for 2021 excludes the impact of a restructuring provision of €2.8m.

Reported profit attributable to shareholders was €17.8m, resulting in earnings per share of €0.049 cents compared to €0.021 cents in the same period in 2020.

Net interest income decreased by 8% to €97.8m compared to prior year. The decrease was mainly driven by lower average yields on debt securities, tighter margins and placement of surplus liquidity at negative rates. This was partially offset by lower interest paid on customer deposits and changes in deposit composition towards short-term placements.

During the year, the bank reported a release of expected credit losses (ECL) of €1.0m, compared to a charge reported in 2020 of €25.6m. In 2020, higher ECL were booked to reflect the prevailing negative outlook and uncertainty arising from the Covid-19 pandemic. The net release in 2021 mainly reflected the performance of specific customers, rather than an improvement in the economic outlook.

Operating costs for the year amounted to €105.4m, compared to €97.4m reported in 2020. Operating expenses for 2021 include a restructuring provision of €2.8m. Excluding the restructuring provision, expenses increased by €5.2m or 5% compared to the previous year. While the bank continued to achieve sustainable savings from the transformation programs announced in 2019 and 2021, non-staff costs increased by €9.5m. The increase in non-staff costs was driven by compliance costs due to increased monitoring, transformation expenses, regulatory fees, fraud losses, as well as higher investment in digitalisation.

The bank’s net loans and advances to customers decreased marginally by €67.9m to €3,197m. The decrease mainly related to the corporate portfolio, due to unforeseen repayments. Despite the fact that the bank continues to monitor the asset quality of non-performing loans (NPL), the bank saw an annual net increase in NPL of €36.9m. The increase in wholesale NPL is mainly driven by the downgrade of a small number of corporate customers engaged in industries impacted by the Covid-19 pandemic, while the increase in retail NPL is primarily a result of individuals requesting a moratoria extension. Customer deposits grew by 7% to €5,621m, driven by both retail and commercial deposits. The bank maintained a healthy advance to deposits ratio of 57%, and its liquidity ratios remained well in excess of regulatory requirements.

The board recommended a dividend pay-out of 45% on reported profits after tax. The final dividend will be paid on April 21, 2022 to shareholders who are on the bank’s register of shareholders at March 14, 2022 subject to approval by the AGM scheduled for April 13, 2022.

Malta International Airport plc (MIA) shares partially recouped the previous month’s loss of 5%, having gained 1.8% in February. The banking equity was active on 44 transactions of 34,607 shares, closing at €5.80.

MIA announced January’s Traffic Results. Passenger numbers remained 62% below pre-pandemic levels back in 2020, as the effect of restrictions introduced across Europe towards the end of last year rippled into 2022.

The average seat load factor (SLF) for January stood at 55.7%, indicating that just over half the seats available on flights operated to and from Malta International Airport were occupied throughout the month.

These flights carried a total of 159,357 passengers, with January’s top drivers of traffic being Italy, the United Kingdom, Poland, Germany and

France.

The rest of the first quarter of 2022 is expected to be challenging. However, the recent easing of restrictions in important source markets for Malta International Airport and the coming into force of the new intra-EU/EEA regime are expected to gradually restore normality in relation to air travel over the coming months.

Furthermore, during the month, the board of MIA approved the Group’s financials for the year ended December 31, 2021. The local airport ended 2021 by recovering just 34.8% of its pre-pandemic passenger numbers. Compared to 2020, on the other hand, the airport’s traffic results for 2021 marked an increase of 45.3%, and contributed to a significantly improved financial performance registered by the group, during the year under review. At €47.4m, however, the total revenue generated was 52.7% below pre-pandemic levels.

While revenue generated from the group’s main streams remained well below the record levels reached in 2019, both streams registered stronger results during the year under review, compared to 2020. The aviation segment grew by 55.7%, and the nonaviation segment, which includes non-aviation concessions, the company’s VIP products and car parking, grew at a slower rate of 36.9%.

Despite the fact that 2021 brought better prospects than the preceding year, the company continued to exercise a cautious approach in relation to the management of its finances, as uncertainty and instability limited its visibility of the way ahead. The company was able to further lower its costs over 2020 in relation to marketing (-33.3%), staff (21.7%) and maintenance and repairs (-9.5%) by focusing strictly on essential works, legally required employee training and necessary recruitment, whilst benefitting from the COVID-19 Wage Supplement. Savings from these three areas alone amounted to €3.4m for the year under review.

The company’s cost-cutting programme, together with an increase in passenger traffic over 2020, led to an increase of €18.5m in earnings before interest, taxation, depreciation and amortisation (EBITDA), in parallel with an improvement of 33.3 percentage points in EBITDA margin. While the group had registered a net loss of €4.3m in 2020, a net profit of €7m was recorded in 2021.

During the same meeting, the board officially gave the green light to an investment just shy of €40m in the construction of a new apron covering an area of approximately 100,000 square metres. The construction of this apron – Apron X – will entail the largest investment in the aerodrome infrastructure, equipping Malta International Airport with the capacity to accommodate more parked aircraft at any given time, and eventually aim to achieve further growth in passenger traffic

Having carefully analysed the group’s accounts and external forces that are likely to continue affecting consumer confidence and air travel in the foreseeable future, the board believes that, with an aim to safeguard the best interests of the Company as a whole and its stakeholders for the longterm, it is not prudent to recommend the payment of dividend for the year ended December 31, 2021.

The retail conglomerate PG plc lost ground, as 22 trades of 153,662 shares pushed the share price to the €2.22 level, 3.5% lower. PG traded at a high of €2.30 and a low of €2.16.

RS2 Software plc Ordinary shares shed €0.09 off its share price, closing February 5.3% lower at €1.62. The IT services provider’s shares were negotiated across 19 trades of 55,609 shares.

Harvest Technology plc shares registered a 4% decline to close February at €1.46. The equity was active on five transactions worth €31,643.

FIMBank plc shares decreased by 1.5% across three trades of 3,624 shares, to close the month at $0.266.

Meanwhile, Lifestar Holding