Business • December 21 2003

BOV’s 30th AGM highlights strategic year, bold future

- 11c per share dividend approved

Addressing Bank of Valletta’s 30th annual general meeting this week, Group Chairman Joseph F.X. Zahra gave an overview of the Bank’s achievements during the past year, explaining how the BOV Group has again registered positive results in spite of the difficult global and subdued local economic environment.
He comments, "The Bank’s two pronged strategic focus in this environment was to contain costs and improve revenue generation. Our efforts gave the desired results, as reflected in our improved cost-income ratio. Whilst being customer focused, we continue to invest in better quality service to ensure a durable profit growth."
Commenting on BOV’s performance for the year Zahra enthused, "During the past year the BOV Group registered a pre-tax profit of Lm14.8 million, which is an increase of 1.7 per cent over 2002. Operating income amounted to Lm53 million, an increase of 13.3 per cent, while net-interest income increased to Lm34.6 million, an increase of 13.3 per cent over 2002. Non-interest income has increased by Lm2.1 million or 13.2 per cent over 2002. Earnings per share amounted to 18c7 an increase of 13.1 per cent over 2002, while customer deposits have increased by Lm45 million or 3.3 per cent. The Group’s cost to income ratio has improved from 58.4 per cent (2002) to 51.2 per cent (2003), while net advances increased by Lm17.7 million, or 2.3 per cent during the last financial year."
Strategic initiatives
Mr Zahra referred to the main strategic initiatives undertaken by the Group during the financial year 2002/03. These were directed at maintaining BOV’s market leadership position and spirit of innovation. Bank of Valletta has continued to improve its internal processes and to offer its customers a wider choice of distribution channels. These two objectives were attained by further streamlining through the centralisation project and the launching of the BOV 24 x 7 Services.
"The Bank of Valletta Group has been focusing on increasing both interest and non-interest income. As results indicate, our core banking operations are performing well whilst we continue to ensure that we have a quality loan portfolio. We are further intensifying our efforts to control costs, amongst other things, by restructuring our branch network and investing in the new processing centre in Santa Venera. On the non-interest income front, both our fund management and bancassurance activities have registered encouraging results despite the intensification of competition," said Mr Zahra.
Strengthening the Euro-Mediterranean growth platform
The Chairman then focused on the Bank’s international dimension. He explained that "the opening of our new representative office in Cairo will further enhance our presence in the Eastern part of the Mediterranean basin, whilst acting as a springboard to tap the Gulf region.
This office further complements the network we have built over the last five years namely in Milan-Italy, Tripoli-Libya and in Tunis-Tunisia."
Making the most of the new European Union challenge
The Chairman also spoke about the Bank’s preparation for EU accession. "For the last few years, the Group has been preparing for Malta’s accession to the European Union. Through membership, we envisage an improvement in the local economy through an increase in foreign direct investment, increased efficiency and productivity resulting in a high standard of living together with increased purchasing power and sales opportunities. We have built up a healthy relationship with our European counterparts particularly in Brussels through the European Savings Banks Group. We are also teaming up with local Government authorities to take advantage of new opportunities arising from the EU’s financial package covering the period 2004 to 2006. With the opportunities available through the Single Passport, the future looks encouraging," said Mr Zahra.
Retail banking
On the Bank’s retail banking policies Mr Zahra comments, "Through our centralisation project, and simplification of procedures and processes, we are ensuring that integrated financial solutions are offered to our customers. By our continuous investment in information technology and modern management techniques, we are optimising the usage of our various distribution channels. Bank of Valletta plc has concentrated on three main consumer-lending products – mortgages, personal loans and credit cards. Our Mortgages Division has retained its leadership role in view of the increased demand for real estate in the context of low interest rates coupled with the competitive pricing of our home loan products that offer a number of solutions to potential home owners to fit ones budget.
Likewise, on the personal loans front, BOV offers innumerable solutions to fit the requirements of all its customers. During this financial year, our credit card division has recorded excellent results. In fact, we have acquired a competitive advantage in this field. In strengthening this, the BOV Group has continued to invest in innovative products and services that are tailor-made to the needs of its customers. Some of the products and services launched last year, include: BOV Flypass Business Card, BOV Personal Loans via the phone, new foreign currency accounts and equity linked deposit accounts and fund management products," added Mr Zahra
Investment banking and financial markets
Mr Zahra also spoke about the Group’s Investment Banking Unit which during financial year ended Sept. 2003 continued to be the leading provider of investment banking services by securing a number of mandates to act as Manager, Underwriter, Trustee and Registrar in Initial Public Offerings and Bond Issues brought to the local capital market.
Looking overseas, the Investment Banking Unit has continued with its ambitious strategy of seeking new business opportunities in the Euro-Mediterranean region. The Financial Markets Division has also secured a syndicated loan of 100 million Euros. This syndicated loan was originally launched for 70 million Euros, but was oversubscribed and raised to 100 million Euros. This clearly shows BOV’s good standing in the international markets.
E-commerce and alternative delivery channels
E-Commerce and Alternative Delivery Channels were two areas characterised by intense activity. Mr Zahra said, "Following two years of intensive work, we achieved another first in the Maltese financial industry by offering a number of E-commerce solutions that were launched in November 2002. Through our E-commerce solutions, we have made available Internet Banking and Telephone Banking supported by a state-of-the-art customer contact centre. When designing the BOV 24 x 7 services, particular attention was given to security through the provision of a BOV Security Key. During the first 10 months of operations, we have a total of 16,000 customers who have signed up for these services and we have processed over 1 million transactions. We have also just have launched a new Mobile Banking service which is a first for the Maltese islands and that further compliments BOV’s 24 X 7 e-commerce solutions. In the near future, we intend to expand the number of services offered in this field."
Achievements
Referring to the Group’s recent award from the UK’s Institute of Financial Services, Mr Zahra said that "Bank of Valletta’s efforts in building a sound and innovative IT infrastructure have been recognised by the UK’s Institute of Financial Services. Bank of Valletta has won the Financial Innovation Award Best Customer Relationship Management Strategy category. Amongst the finalists within this category where Primeline, Barclays, Fortis Bank Asia HK and Allianz Cornhill. BOV’s Relationship Management Strategy focuses on providing a cost-effective value proposition tailored to specific customer needs."
In conclusion Mr Zahra said that "the year under review has been almost certainly the most eventful and challenging for the Group. Malta’s entry into the European Union, the launch of our Internet Banking and telephone banking solution, the opening of our Egypt representative office and the positive results registered have been some of the main highlights of this year. This would not have been possible without the dedication and commitment of our staff that have worked to their utmost to achieve this year’s positive result. Bank of Valletta will continue with its spirit of creativity, innovation, leadership and entrepreneurship to be a prime mover in the Maltese economy and to maximise shareholder value".
Following the Chairman’s address, the Annual General Meeting received and approved the Profit and Loss Account and Balance Sheet for the year ended 30 September 2003 and the Directors’ and Auditors’ Report thereon.
A gross dividend of 11 cents per share, which represents a gross payment of Lm6,095,808-51,0, as recommended by the Directors, was also approved. The meeting also approved the reappointment of Deloitte & Touche Malta jointly with Deloitte & Touche United Kingdom as Auditors.
The AGM also held an election for the Board of Directors which is now composed of: Joseph F. X. Zahra as Chairman, Joseph Borg, Dott. Roberto Cassata, Jonathan Fenech Adami, James Grech, Franco Masini, Marlene Mizzi, George Portanier and Norman Rossignaud.
Joseph F. X. Zahra and James Grech were appointed by Government in representation of its shareholding, Dott. Roberto Cassata was appointed by Banco di Sicilia in representation of its shareholding, while the other board members were elected by the AGM.