Bank of Valletta Group has today announced its half-yearly results for the six months which ended on 30 June. Profit before litigation provisions amount to €88.5 million, which is 30% higher than the €67.8 million recorded for the same period last year, and is indeed the highest ever half-yearly profit reported by the Group. The Group has recorded a pre-tax profit of €13.5 million, after recognising a provision against potential litigation losses of €75 million.
Total income for the Group, comprising interest margin, fees and trading income, amounted to €127.9 million, compared to €115.5 million last year, an increase of 11%. Costs were kept under control, rising by 2% to reach €63.9 million. The Group also benefited from an improvement in the credit quality of its loan book, which led to a reversal of impairment provisions of €20.2 million.
The results were impacted by a provision of €75million against potential losses arising on significant litigation cases which arose in previous years in which BOV is involved. The Board of Directors keeps these cases under continuous review to assess the Bank's position from time to time in the light of developments as they occur. Should developments so warrant, the Board will take the necessary measures in accordance with the changed circumstances, including making appropriate provisions. Such provisions are made without prejudice, and do not, in any way, constitute any admission of fault or liability on the part of the Bank.
Lending to customers remains the largest asset on the Group's balance sheet, and showed a satisfactory growth, mostly in the home loans segment. The management of customer deposits was another key focus for the Bank, which was deemed necessary in a period of prolonged low interest rates. While retail deposits continued to increase in a sustained manner, corporate deposits decreased. Total deposits with the Bank today amount to €10 billion.
Mr Deo Scerri, BOV Chairman, explained that the Board is, as always, focused on ensuring the long-term stability and sustainability of the Group, through the build up of strong capital buffers and by keeping the business model under constant review. In this context, the Board has resolved not to declare an interim dividend, and will not be recommending the payment of a final cash dividend. "By re-investing profit rather than paying it out in cash, the capital position of the Bank will continue to be strengthened, as befits a bank which is considered by international regulation as a systemically important institution for Malta," said the Chairman.
The Board is, concurrently, implementing a business restructuring programme at BOV with the aim of reducing the Bank's risk profile. This is a medium term programme which will see the Bank re-dimensioning or closing down certain non-core businesses and relationships which lie at the periphery of the Board's risk appetite, or where the risk being assumed is not adequately remunerated by income generated.
Mr Scerri stated that "these twin strategies of capital conservation and de-risking the business model are the tools which will ensure the long term future of BOV as a safe, sustainable and profitable institution." He concluded by thanking all stakeholders, including customers, shareholders and employees, for their continuing support and their commitment to the Bank.