The Bank of Valletta Group has today announced its financial results for the first half of this year. The Group has recorded a profit before tax of €54.3 million in six months, representing a pre-tax annualised return on equity of 10.7%. For the comparative period of the previous year, the Group registered a pre-tax profit of €13.5 million, which included a litigation loss provision of €75 million.
Group operating income, which has remained at last year’s level, amounted to €127 million. Recurrent costs amounted to €81 million, an increase of 27% over the comparative period. The increase in costs arose mainly on fees and expenses related to the Bank’s ongoing transformation programme and on the substantial recruitment of resources in the Group’s control functions. The impairment charge for the period is just under €1 million, compared to reversals of €20 million booked for the corresponding period.
Customer deposits grew by €223 million over December 2018, to reach €10.6 billion. Net advances at amortised cost increased by €126 million over the same period and stand at €4.5 billion. Shareholders’ funds, comprising capital reserves, has topped the €1 billion mark for the first time in the Group’s history.
Concurrently, the Standard & Poor long term credit rating for the Bank has been lowered from BBB with a negative outlook, to BBB- with a stable outlook. Short term rating was revised from A-2 to A-3. The agency attributed its decision to perceived weaknesses in the Bank’s internal control frameworks and to the potential impact of ongoing litigation cases. It then cited the Bank’s sound franchise, customer confidence and ample liquidity as being among its major strengths.
When commenting on the results, BOV Chairman Deo Scerri explained that the Group is now operating “in full transformation mode”. He stated that Bank of Valletta has embarked on a two-year transformation programme, in agreement with its supervisors, with the assistance of two international consultancy firms. “The aim is to ensure the long-term sustainability of the institution, by reducing the risk profile of the business model, strengthening capital buffers and enhancing the anti-financial crime framework. The increased costs reported in these results primarily reflect the costs of this programme. We do not see these costs as recurring overheads, but as a solid investment in the future.”