BOV pre-tax profit at €163.5 million in robust third quarter performance

Bank of Valletta delivered a robust financial performance in the third quarter of 2023 with a pre-tax profit of €163.5 million for the nine months, compared with a loss before tax of €48m in the comparative period.

The favourable performance for the first three quarters of 2023 was attributable mainly to the improvement in operating revenuesm totalling €315.9 million, a 56% growth over 2022 (€202.3m).

“This sustained performance can be seen in light of developments in both international and local economic environments. The current international economic environment is characterised by subdued growth, dragged by the high inflationary environment and the monetary policy tightening implemented over the past months,” said BOV Chairman Dr Gordon Cordina.

“The interest rate increases carried out by the ECB since July 2022 have pushed rates to historically high levels. There is broad consensus that rates are close, if not already, at the peak. However, ECB rates are likely to remain high for some time.”

CEO Kenneth Farrugia said the bank had seen stronger operating revenues, strong net interest income and capital generation, growth in customer lending and proprietary investment portfolios, alongside resilient asset quality.

An upward repricing of interest rates, a larger investment book coupled with positive returns on liquid assets invested short-term continue to substantially benefit the interest income revenues.

“Whilst we have registered a marginally lower level in customer deposits, our strong liquidity position is enabling the bank to continue supporting growth in the loan book and optimize returns through investment in treasury securities.”

BOV’s dominant catalyst were net interes incomes of €253.8m, compared to €137m on the same nine months of 2022 – 85% growth.  This was primarily driven by strong growth personal and business lending business with the loan portfolio exceeding the €6 billion mark.

Net fees and commissions, exchange and other revenues amounted to €62.1 million, down by 4%, while net commissions declined by €0.8 million, or 2% mostly due to the removal of deposit-related fees to corporate customers and a persisting slowdown in investment-related commissions.

Operating costs in the first three quarters of the year amounted to €139m, an increase of 5%.

An allocation of an additional €6.7 million was made in the first nine months of 2023 (9M 2022: €6.6 million) for the execution of strategic actions.

Total assets reduced by €118.8 million and stood at €14.4 billion, lower by 1% compared to the year ended 2022 (December 2022 restated: €14.5 billion). Lliquidity stood at 458.5%, up from 426.3% as at December 2022, significantly above the minimum regulatory requirement.

Total equity increased to €1.2 billion, up by €108.5 million on December 2022 as restated. Capital ratios remained strong and above regulatory requirements, with CET 1 and total capital ratios as at September 2023 of 22.7%.