APS Bank reports strong second-quarter rebound, driving first-half performance for 2025

APS Bank has reported a strong recovery in the second quarter of 2025, significantly improving its financial results for the first half of the year.

The bank’s board of directors approved the condensed interim financial statements for the period ending 30 June 2025 during a meeting held on Thursday.

Despite a challenging global environment marked by geopolitical tensions, trade tariffs, and persistent uncertainty in financial markets, the Maltese economy continued on a path of solid growth.

APS Bank recorded a turnaround in operating revenues and profitability during the second quarter, following a modest start to the year. This positive trend is expected to strengthen further in the second half of 2025.

For the six-month period under review, APS Bank reported a pre-tax profit of €9.1 million at group level, compared to €10.1 million in the first half of 2024. At bank level, pre-tax profit increased to €10.2 million, up from €9.9 million in the same period last year.

Net operating income rose by 10.6% relative to the first half of 2024. However, this growth was partially offset by one-off costs, including higher contributions to the Depositor Compensation Scheme and advisory fees related to the Bank’s ongoing effort to acquire HSBC Bank Malta.

Interest income for the group reached €60.1 million, representing an increase of €4.1 million or 7.3% when compared to the first half of 2024. This growth was largely driven by the performance of the group’s core retail and commercial lending portfolios.

Although interest income from syndicated loans declined compared to the previous year, this was more than compensated by increased income from loans and advances, supported by continued growth in both retail and commercial lending, as well as inter-bank activity.

Interest payable for the period amounted to €24.5 million, which is 7% higher than the €22.9 million reported in the first half of 2024. This increase reflects the year-on-year growth in customer balances and the bank’s commitment to offering competitive rates in a dynamic market environment.

However, funding costs have been easing thanks to a shift toward more efficient pricing and a higher share of overnight and demand deposits.

The bank’s interest pricing strategy has contributed to a strengthening of the Net Interest Margin, which became more apparent during the second quarter of 2025. This was further supported by an increase in net fee and commission income, which rose by 2.9% to €4.6 million, primarily driven by income from advances, card services, and transaction banking. Other operating income decreased to €0.5 million, a reduction of €0.3 million compared to the same period in 2024.

At bank level, a strategic partial divestment of shares in a sub-fund generated a gain of €0.7 million, which was partly offset at group level by adverse foreign exchange movements.

Net impairment losses dropped significantly to €0.5 million from €2.0 million in the first half of 2024. This reduction reflects improved credit quality across the lending portfolio, particularly in the commercial and syndicated loan segments, which faced charges in the previous year. The bank’s Non-Performing Loans (NPL) ratio declined to 1.4%, down from 1.9% in the first half of 2024.

Operating expenditure for the first six months of the year totalled €31.6 million, representing a 17% increase over the same period last year. The rise in costs was largely due to higher contributions to the Depositor Compensation Scheme, increased regulatory and supervision fees, and investments in technology, security, and due-diligence processes. As a result, the cost-to-income ratio rose to 77.4%, compared to 70 % in the first half of 2024.

The group’s total assets reached €4.3 billion, marking a 3.9% increase from December 2024. This growth was driven by a €158.9 million increase in loans and advances to retail and corporate customers, as well as a €25.8 million rise in loans to banks. Additionally, debt securities increased by €42.4 million. These gains were partially offset by a €43.7 million reduction in cash balances held with the Central Bank of Malta, as previously accumulated liquidity was redirected into interest-bearing securities. The syndicated loan portfolio also contracted by €17 million during the period.

Total liabilities grew by 4.2% from December 2024 to reach €4 billion. This growth was primarily fuelled by an increase of €179.5 million in customer deposits. The bank’s funding efficiency was enhanced by a reallocation of deposits toward overnight balances, which contributed to a more optimal cost of funding.

Total equity as of 30 June 2025 stood at €308.8 million, representing a slight decrease of €1.1 million from €309.9 million at the end of 2024. This movement was mainly due to the payment of a €5.9 million cash dividend, partially offset by the recognition of €4.9 million in profit and a retained amount of €0.7 million from a scrip dividend issued in respect of the financial year ending 31 December 2024.

The board of directors has declared an interim cash dividend of €1.8 million, equivalent to a net dividend of €0.00472 per ordinary share. This corresponds to a gross dividend of €2,769,231 or €0.00726 per share. The dividend is subject to regulatory approval and will be paid on 19 September 2025 to shareholders on record as of 1 September 2025, with the last trading day set for 28 August 2025.

Commenting on the results, APS Bank CEO Marcel Cassar described the Bank’s performance as “one of two quarters, rather than a first half,” highlighting that the rebound in net interest income during the second quarter made it one of the Bank’s strongest quarters ever.

He noted that this trend is likely to accelerate in the coming months, supported by improving efficiency, strong profitability, and robust capital and liquidity positions. Cassar mentioned the bank’s continued investment in digital transformation, customer engagement, and new product development, which are helping to solidify APS Bank’s role as a key player in the local financial landscape.

Looking ahead, Cassar confirmed that the bank remains focused on both organic growth and pursuing inorganic opportunities to increase scale and market share. As part of this strategic vision, APS Bank is planning a Rights Issue of ordinary equity shares in the fourth quarter of 2025, with further details to be announced in the coming weeks.