business

BoV profits of Lm14.4m down by Lm3.2m

According to a preliminary statement released this week, the BoV Group registered a pre-tax profit of Lm14.4 million for the financial year ended 30 September. However, the profit figure represents a reduction of Lm3.2 million over that registered last year, which had included a particularly strong contribution from its insurance and fund management businesses which did not repeat itself to the same extent this year.

Despite this, the Group states that its business fundamentals remain strong as evidenced by the resilience of core income in the context of stronger competition and less favourable market conditions.

During the financial year shareholders’ funds increased by Lm7.6 million, or 7.9%, and amounted to Lm103.5 million. Group Net Asset Value per share is Lm2.24 (September 2000: Lm2.08).

Given the strong business fundamentals of the Group, the Board of Directors has recommended an increased gross dividend payment of 11 cents per share, up 2 cents from the dividend paid last year.

Group Total Assets continued to increase by Lm163.6 million, or 10.4% and currently stand at Lm1.74 billion. Customer deposits increased by Lm117.0 million, or 10.4%, over September 2000 and today amount to Lm1.25 billion - representing 71.4% of Group Total Assets. Meanwhile, advances to customers, net of provisions, stand at Lm722.7 million, representing an increase for the year of Lm35.7 million, or 5.2%

Commenting on the results Group Chairman Joseph F. X. Zahra, highlighted a number of interesting trends observed from the results. He explains, "First of all, the performance of the BoV Group during the second semester of this financial year was better than that registered during the first six months, contributing to stronger overall results. This has been an encouraging year during which we have increased our interest income, despite strong competition in the market, thus consolidating our core business.

"We have also managed to contain costs in line with our declared objective to place cost-effectiveness at the basis of all business decisions. Costs are today well under control and have only increased by 5.7% this year compared with an increase of 20.6% the previous year".

Mr Zahra added that the BOV Group results also have to be assessed in the light of various constraints under which the organisation operated during the financial year just ended. He explains, "The BOV Group has scored well in terms of profitability despite that this year did not see a repeat of the material gains realised last year from associated companies. The volatility of international markets also resulted in lower price gains on the Bank’s investment portfolio. Commission income from the sale of collective investment schemes was also lower and this is a reflection of the situation prevailing during this year on the stock exchange market."

The Chairman also said that the Bank has continued on its declared policy of prudent provisioning, both in line with international standards and also in accordance with the recently introduced CBM directive on provisioning., The Group has, accordingly, increased provisions for bad and doubtful debts to Lm34.9 million which represents 4.6% of the Bank’s loan portfolio.