Bank of Valletta registers pre-tax profit of €89.2 million

Bank of Valletta has registered a pre-tax profit of €138.1 million, adjusted for its litigation provision and transformation costs.

The increased litigation provision was of €25 million and transformation costs were €23.9 million, bringing the profit before tax to €89.2 million.

The results come shortly after the appointment of Rick Hunkin as CEO, who is tasked with a significant de-risking programme and improvements in risk, governance and control frameworks.

BOV’s capital strength registered an improvement in the CET1 ratio, which now stands at 19.5%, an increase of 120 basis points over last year. The board is recommending a net dividend of 1.71 cents per share, subject to regulatory approval.

A strong performance in the local economy helped net loans and advances to increase by €88 million, primarily in the consumer finance portfolio, which includes home loans.

Customer deposits grew by 2.1% to €10.6 billion; local retail economic growth has driven up domestic balances whilst international corporate deposits have reduced by 24%.

A new core banking system was successfully rolled out, the culmination of a three-year programme to simplify and enhance the IT architecture.

“2019 was a pivotal year for the BOV Group, with strong results being reported. We successfully delivered the implementation of the new Core Banking System, continued with our de-risking initiatives and strengthened our control functions. At the same time we continued to provide our customers with innovative digital banking services and supported a wide range of businesses across the Maltese economy,” Hunkin said.

“At the current time, all of our minds are on the extraordinary challenges brought about by COVID-19. So far at Bank of Valletta, our staff have continued to serve our customers and we have kept all our branches and operations going with their help and commitment.  My thanks, as always, go to our loyal and hardworking teams here at BOV.”

Hunkin said there was no doubt the next few months were very uncertain and undoubtedly everyone in Malta will be affected in some way. T”he outbreak is expected to have a substantial negative impact on both global and local economies. BOV’s capital buffers, together with measures made available by the regulatory authorities provide significant mitigation against the additional challenges of this unprecedented event.”

Hunkin said an adverse influence on 2020 performance is highly probable but a clear determination of the overall financial impact cannot be made at this early stage.

“There are uncertainties on both the duration of the crisis and the extent of the impact on the local economy as well as the scale and effectiveness of mitigating measures provided by local and EU authorities. The Bank has already taken steps and intends to launch further initiatives to continue to support the local economy as well as to help safeguard the well-being of its employees and its customers.

“Against this uncertain background, our strategic priority remains the long-term sustainability of the Bank underpinned by a strengthening capital base. In 2020 we will focus on growing the business in line with the revised Risk Appetite Framework and enhancing the customer experience by simplifying our processes and investing further in our digital channels. We will also continue to strengthen the internal risk culture through the Risk Transformation Programme and related de-risking activities.”