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BOV Chairman, Roderick Chalmers announced that the Bank of Valletta Group has registered Lm10.1 million profit before tax for the six-month period ended on 31st March 2005.
The Board of Directors this week approved the Bank’s Half Yearly Report for the period October 2004 to March 2005, and declared an interim dividend of 7.5 cents per share, gross of tax, an increase of 25% on the interim dividend of 6.0 cents per share declared last year.
Chalmers stated: "These positive results demonstrate the resilience of the core businesses of Bank of Valletta. The faster rate of growth in non-interest income reflects the Group's strategic priority towards diversification of its sources of revenue”.
Focusing on the financial results just announced, Chalmers explained that during the first half of the current financial year, profit before tax rose by 26.2% when compared to the corresponding profit figure of Lm8.1 million registered for the same period last year. Return on equity rose from 12.6% in March 2004 to 15.4%.
The BOV Group’s strategy to focus on both income generation and cost containment yielded the desired results, and the core sources of income increased at a higher rate than costs. This is evidenced by the cost income ratio which improved from 50.1% in March 2004 to 47.5% in March 2005. Operating income grew by 13.5%, from Lm27.1million in March 2004 to Lm30.8 million. The Group performed well both in terms of interest margin, which increased by Lm1.6 million to Lm20.1 million (8.9% ) as well as in non-interest income. The latter increased by Lm2.0 million to Lm 10.7 million (23.5%). Operating profit for the six months totaled Lm9 million, an increase of 30% on the Lm6.9 million recorded to March 2004. Profits from associates, at Lm1.1 million, are at the same level as last year. Costs increased by 7.1%, arising mainly from increased personnel and depreciation charges.
Net impairment losses amounted to Lm6.6 million, compared to Lm6.0 million in March 2004. These include a specific impairment charge amounting to Lm5.2 million (March 2004: Lm5.6 million) resulting mainly from the Group taking a more conservative view of the estimated realisable value of collateral on certain accounts. The charge for general impairment allowance amounted to Lm1.4 million (March 2004: Lm0.4 million) following a change in the method of computation. The profits for the period are also impacted by a one-off charge of Lm3.5 million resulting from a change in policy on the treatment of suspended interest on impaired accounts.
Net advances rose marginally and now stand at Lm826.7 million, an increase of Lm0.7 million, or 0.1% p.a from Lm826.0 million as at September 2004. During the period under review, the decrease in business lending was offset by higher lending to the personal sector, especially for home loans. Customer deposits at Lm1.45 billion were fractionally below the September 2004 balance of Lm1.46 billion. Shareholders’ funds amount to Lm133.2 million, an increase of Lm3.5 million (2.7%).
Commenting on the operations of the Group during the first half of the financial year, Chalmers said, “During these six months, the Bank has directed considerable effort towards upgrading the quality of its loan portfolio. The Group has also continued to invest heavily in its people, processes and technology, introducing electronic stockbroking, wireless EPOS machines and performing various upgrades. The introduction of new services on the Bank’s Internet Banking platform offers a more straightforward and efficient service to customers. The ease of use and high level of security make these services highly attractive, with over three million transactions being processed annually. The Bank has also recruited additional employees to continue to strengthen the relationship-based service it offers through its branch network”, said Chalmers.
Looking forward, Chalmers noted that the underlying profit trend for the Bank had been positive, but that there were signs of increasing competition on all fronts. “The Board of Directors does not issue forecasts” he said, “but is expecting that the positive improvement in results seen in the first six months can be sustained for the second half”.
The Chairman announced that the new BOV Centre in Sta. Venera is now nearing completion and the first departments are expected to start moving into this modern, state of the art building over the coming weeks. “Having most of the Bank’s departments under one roof will enhance communication and ensure a more efficient flow in the Bank’s operations”, said Chalmers.
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