BOV announces €50.7 million profit for first six months of FY 2014
Board declares interim dividend of €0.0425 per share
The Bank of Valletta Group registered a pre-tax profit of €50.7 million for the first six months of Financial Year 2014, a decrease of 21% compared to the same period last year. The core operating profit, which is stated before fair value movements and share of profit from associates, stood at €40.6 million (FY13: €42.8 million).
The Board declared a gross interim dividend of €0.0425 per share (FY13: 0.0545 per share as restated for the January 2014 bonus issue). The dividend will be paid on 23 May 2014 to shareholders on the Bank’s register of members at the close of business on 8 May 2014.
The main highlights of the results are:
- Interest margin amounts to €61.6 million, a decrease of 7% over that of last year. The lower revenue generated on advances results from the lowering of the Bank’s base rate during the period coupled with falling yields on the treasury assets.
- Net commission and trading income improved by 7% during the first six months of this financial year to reach €35.4 million. The cards business, payments and investment-related activities all made significant contributions to this result.
- The Group’s share of profits from its associated companies, MSV Life plc and Middlesea Insurance plc, amount to €5.4 million (FY13: €8.6 million).
- Operating expense for the six months total €46.5 million, an increase of 4% over the same period last year. The major contributors to this increase relates to human resources, IT investment, depreciation and regulatory fees.
- Total assets as at 31 March 2014 stand at €7.73 billion (FY13: €7.25 billion), while equity attributed to the shareholders of the Bank amounted to €584.5 million.
- The Bank’s net advances increased by €12 million from September 2013 to €3.74 billion. Demand for home loans was the main driver of this growth.
- Customer deposits stand at €6.58 billion, an increase of €362 million over the same period last year.
BOV Group Chairman John Cassar White said that the results were adequate considering the competitive environment in which the Bank was operating. He noted that the economic situation in Malta remains relatively buoyant when compared to its European peers. Indeed the Maltese economy outperformed the euro area driven by its external competitiveness and the availability of funding for the private and public sectors.
BOV Group CEO Charles Borg said that the Bank has continued to manage its balance sheet in a deliberate and prudent manner with the aim of strengthening its core tier 1 capital and liquidity ratios in line with the CRD IV regulatory regime and with the expectations of the ECB. Tier 1 capital as at end of this interim period stood at 11.3%.
John Cassar White noted that over the coming years, the Bank will be facing a number of important challenges amongst them the current Asset Quality Review which is being undertaken by the European Central Bank as an introduction to the Single Supervisory Mechanism. This exercise will be followed by a stress test which will determine the resilience of the Bank’s balance sheet in a scenario of extreme stress.
“As Malta’s largest financial services provider, Bank of Valletta carries a high degree of responsibility for supporting the local economy while ensuring financial stability”, John Cassar White said. “The Bank’s Board of Directors shall maintain a prudent business model which is focused on ensuring that the quality and quantity of the Bank’s capital and liquidity resources are never put at risk. A responsible dividend policy, prudent lending and investment practices, and a cautious risk appetite shall remain the pillars which will enable the Bank to achieve this objective”, concluded the BOV Chairman.