In 2018, the core domestic banks saw an increase in assets, customer deposits as well as loans and advances to customers and it is evident these banks continued to be very much participant in the financing of the Maltese economy especially in terms of lending to residents.
This emerges from a recent assessment made by the Malta Bankers’ Association (MBA) on the contribution of its members to the Maltese economy.
While all three categories of banks comprising the local sector continued to be profitable in 2018, the overall levels of profitability were down across all the categories. In general during the year the banking sector in Malta continued to be well capitalised and highly liquid, despite experiencing some degree of downsizing through de-risking processes. The three categories as defined by the Central Bank of Malta are referred to as, core domestic banks, non-core domestic banks and international banks.
The analysis takes into account various aspects of the Maltese banking sector and examines the changes in 2018 compared to 2017. The main areas highlighted include the total assets gathered by the 23 member banks of the Association, and trends in the services provided, such as Customer Deposits, Loans and Advances to Customers. Employment in the Banking Sector together with Wages, Dividends and Taxation are also contained in the analysis. The following infographic contains these details:
MBA Infographic on Maltese Banks Contribution to Local Economy
A focus on the contribution by the six core domestic banks is included in the analysis, with respect to every area examined. Mr Karol Gabarretta, MBA’s Secretary General, commented that the core domestic banks as the main players within the local banking sector, are still very much involved in the financing of the real economy. This despite several challenges experienced by this cohort of banks throughout 2018, the long-term impact of the persistent low interest-rate environment and the inevitable continual increase in compliance and risk management related costs to further mitigate risks to their financial stability.
In comparison to the core domestic banks, non-core and international banks have only limited, to very limited, links to local economy. However, as has been observed by the CBM Financial Stability Report for 2018, the “systemic risks arising from non-core domestic and international banks remained contained, also on the back of strong capital and liquidity levels”.