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Bank of Valletta half yearly results: Profits down 38 per
cent for six-month period
The Bank of Valletta Group has recorded a profit before tax
of Lm6.8m for the six-month period ended on 31 March 2001, a
drop of 38 per cent to Lm10.9m for the corresponding period
last year.
Net Interest Income increased from Lm14.4m to Lm15.1m and Operating
Income fell by 2.2 per cent from Lm22.5m to Lm22.0m.
During the first half of the current financial year, Group total
assets increased by Lm85.9m or 10.9 per cent p.a. to reach Lm1.67bn.
Customer deposits also continued to increase by 5.6 per cent
p.a. over September 2000, and now stand at Lm1.16bn.
Concurrently, advances to customers, net of provisions, increased
by 10.9 per cent p.a. to reach Lm724.5m.
Shareholders’ funds amount to Lm101.1m, an annualised increase
of 10.8 per cent over September 2000. These results are a reflection
of a number of factors.
Last year’s results included material gains from the revaluation
of in-force business of associated companies as well as prices
gains realised on the bank’s investment portfolio which
were not repeated to the same extent this year. The level of
profit arising from these two sources for the current period
was significantly lower.
The prevailing circumstances in the stock market had an adverse
effect on the commission income generated by the Group through
the sale and management of investment products.
Also, as part of its already declared policy, the Group continued
with its prudent approach on provisioning. By the 31 March 2001,
provisions on advances and credit facilities had increased from
3.7 per cent of total lending in September 2000 to 4.1 per cent
in March 2001.
Commenting on the Group’s performance for the six-month
period ended 31 March 2001, Joseph F.X. Zahra, BOV Group chairman
said he considered group profitability to be satisfactory given
the current economic situation and international and national
markets volatility.
The fundamentals of the business are showing continued strength
in the context of increased competition and general market conditions.
The decrease in non-interest income reflects the drop in investment
product sales due to the
situation in the stock market, which was still not wholly compensated
for by the sharp growth in other non-interest income sources
such as investment banking and bancassurance. Notwithstanding
the above, he added that he was pleased to note that Operating
Income was only marginally lower than the previous year.
The BOV Group continued to consolidate on its internal restructuring
process, which included the merger of two of its subsidiaries
into the Bank, and the attainment of economies of scale through
centralisation.
Mr Zahra announced that the group’s operating expenses
for the period had increased by only 4.4 per cent as against
the 26.6 per cent increase registered during the same period
last year. Continuing efforts to restrain further growth in
operating expenses together with improved HR practices aimed
at increasing results orientation,
suggest that this trend will be maintained.
Mr Zahra said the past six months were characterised by intense
activity across all areas of the group’s operations. BOV
was the first bank to take advantage of continued market liberalisation
by venturing into the stockbroking business through the setting
up of a new subsidiary, BOV Stockbrokers Ltd.
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