BOV Reports Profit Before Tax Of €63.7 Million For The First Three Months Of 2024

Finance Malta


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The beginning of 2024 marks a promising start for the Bank of Valletta Group as it maintains its strong financial standing, achieving a profit before tax of €63.7 million for the first three months of 2024...
Malta Finance and Banking
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The beginning of 2024 marks a promising start for the Bank of Valletta Group as it maintains its strong financial standing, achieving a profit before tax of €63.7 million for the first three months of 2024, a 36.8% increase over the same period in 2023. These results reflect the Group's thrusts to grow its commercial and retail loan portfolios, as well as deploy excess liquidity in high quality treasury assets.

This positive performance was influenced by the improvement in the Group's operating income, reflecting a growth of 22.9% to €117.4 million when compared with the same period in 2023. This was driven by increased returns both from an interest and non-interest income perspective. Net Interest Income stood at €98.3 million, an increase of €24.8 million when compared with the first quarter of 2023. This reflected additional expansion in both the customer lending and proprietary investment portfolios over the last 12 months, as well as improved rates on cash balances. Net fee and commission income was up by 11%, mainly influenced by higher amounts being achieved on credit-related business.

Operating costs including strategy amounted to €49.1 million, equivalent to a 6.8% increase on previous year results, as the Bank sustained its efforts to enhance talent, improve compensation and benefits, invest in technology, and comply with regulations. The Cost to Income Ratio continued trending downwards, standing at 41.8% in the first quarter. These developments were reflected in a 20.4% pre-tax Return on Average Equity, which is a 4.4% improvement over that recorded in the first quarter of 2023.

The Bank's balance sheet optimisation strategy related to the deployment of cash reserves into medium-to-longer-term interest-bearing assets continued, with the main shifts registered from balances with central bank to the credit and investments portfolios. With a gross loan-to-deposit ratio of 53.4% and strong sanctioning levels of business and retail loans, the Group is well positioned for further growth and to deliver its 2024 targets. The €47 million reduction in the deposit base equivalent to a 0.4% drop on FY23 end results aligns with expectations; nevertheless, the Group retained high levels of liquidity.

These results allow the Group to continue operating a robust capital position with the Common Equity Tier 1 (CET1) closing at 21.5%, which is well above regulatory thresholds. The net asset value per share at the end of the first quarter of 2024 stood at €2.2 per share.

"A strong first quarter, with sustained momentum in business growth" – Dr Gordon Cordina

Speaking during the announcement, BOV Chairman Dr. Gordon Cordina expressed satisfaction on the BOV Group performance. "These positive results are extremely encouraging and are testament to the Bank's ongoing efforts to grow its core business. The operating performance of the Group's revenue pillars was well in line with established targets, with market share (residents) figures on business portfolio also very encouraging with the percentage closing in on the 49% mark.

While the European Central Bank (ECB) has maintained the rate on its Deposit Facility fixed at 4% since September 2023, it is expected that the ECB may consider appropriate to start reducing the current level of monetary policy restriction sometime in 2024. In preparation of a falling interest rate scenario, the Bank has been proactively restructuring its balance sheet, through the redeployment of treasury funds into longer term assets, and a productive expansion in good-quality credit. The Bank's exposure to cyclical fluctuations in rates has thus been reduced and this should generate a more stable positive performance over time.

We also believe that Malta's current and near-term economic environment has remained benign, supporting our positive expectations vis-à-vis further growth in our loans, and the preservation of asset quality over the coming months."

"These results show that we are steering the Bank from good to great, aiming to meet our customers' expectations and deliver sustainable growth in the process" – Kenneth Farrugia

BOV CEO Kenneth Farrugia echoed Dr Cordina's comments. "In the first quarter of 2024, the Bank continued to strengthen its position as a leading financial institution in Malta. During this quarter we have seen improvements in operating revenue, an increase in net loans and advances across our commercial, home, and personal loans business lines, as well as growth in green lending. During the quarter, €58 million of green loans were originated by the business, equivalent to nearly 9% of total sanctioned facilities.

This performance is being sustained by an ambitious strategy for 2024-2026. Over this first quarter we have successfully taken forward several initiatives to enhance employee satisfaction and productivity, including training, wellness, flexible work arrangements, competitive compensation packages and a more inclusive and diverse work environment. Our focus on customer experience remains unwavering and we are continually working on enhancing our service delivery and product offering. We have also been making significant strides in streamlining processes and automating routine tasks. In line with our commitment to uphold the highest standards of corporate governance, we also continue to make significant investment in ensuring full compliance with regulatory obligations."

Both Chairman Dr Gordon Cordina and CEO Kenneth Farrugia thanked customers, shareholders, and employees for their continued support and commitment to the Bank as it supports the growth and development of Malta's economy and seeks to achieve its overarching goal of being the Bank of Choice and Employer of Choice in Malta.

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