scroll to explore

BOV registers €13.8 million profit for the first six months of 2020

Credit & Financial Institutions

BOV registers €13.8 million profit for the first six months of 2020

by Bank of Valletta

31st July 2020

The Group’s profits have been impacted by the economic downturn caused by the COVID-19 pandemic – BOV remains committed to support its customers to recover from financial difficulties.

FINANCIAL OVERVIEW

For the first six months of 2020, the Bank of Valletta Group is reporting a profit before tax of €13.8 million (2019 – €54.3 million) representing an annualised return on equity (pre-tax) of 2.6%. The reduction in profit is a result of the COVID-19 pandemic which has impacted all the Bank’s business lines, as well as with the de-risking initiatives which intensified over the past months. The results for the period under review also include impacts from a number of other areas, including increased depreciation on new IT investments, staff costs as the Bank invested more in risk and compliance resources and expected reduction in foreign exchange and commission income resulting from the de-risking initiatives which have been carried out over the last 12 months.

Net interest income, which remains the main revenue driver for the Group, amounted to €72.3 million, €5.3 million less than the income registered for the same period in 2019. The persistently low to negative interest rate environment, coupled with a conservative risk appetite, limited investment opportunities and increased levels of liquidity which attract negative interest, resulted in lower earnings on the Bank’s investment portfolio. Demand for credit was primarily related to liquidity shortages brought about by the COVID-19 pandemic. During the period, the demand for home loans was subdued when compared to previous years and this is mostly attributed to changed consumer behaviour influenced by the pandemic situation.

Commission and trading profits was €37.0 million, 19% lower than the first six months of 2019. The economic slowdown caused by COVID-19 had an adverse effect on commissions earned, especially those relating to the card and payment business and investment related products. Income from foreign exchange transactions was also negatively impacted.

The de-risking programme and its execution is proceeding at an accelerated pace and while the Bank is registering lower revenues, within the expected parameters, as some customers and business lines which fall outside the Bank’s risk appetite are exited, it is nonetheless improving the Bank’s risk position and long-term sustainability.

Total costs for the first half of the year increased by €8.2 million to €89.5 million. The increase is attributed to IT costs related to the new core banking system which went live at the start of the year, increasing staff costs mainly in recruitment in the Risk and Compliance areas, and professional fees engaged in the implementation of the transformation programme with ongoing initiatives geared towards lowering the risk profile of the Bank.

In assessing the impairment charge for the six months under review, due consideration was given to the expected impact related to COVID-19, especially in the formulation of forward looking scenarios and expected credit losses relating to exposures in highly impacted risk sectors. Expected credit losses are highly sensitive to judgements and assumptions and, as with any economic forecast, subject to a degree of inherent uncertainty which has been augmented in the current circumstances which remain fluid and undefined. The net impairment charge of €7.5 million includes circa €10 million which is predominantly attributed to COVID-19. This figure has been offset by strong recoveries of past debts previously provided for.

The Group remains highly liquid, with cash and short-term funds increasing by €178.3 million (4.3%) during the six months. Customer deposits increased by over €500 million since the start of the financial year and reached €11.1 billion at the end of June 2020. Net loans and advances increased by €91 million since December 2019, an annualised growth rate of 4%, and stand at €4.7 billion at 30 June 2020.

RESPONSE TO COVID-19

From the very onset of the pandemic, the Bank focused on protecting and supporting its staff and customers in dealing with the various challenges brought about by the pandemic on multiple fronts:

The set-up of a multi-disciplinary Incident Management Team which continuously assessed the situation and implemented preventive and mitigation measures. The Team followed closely and implemented measures issued by the local health authorities to maintain the highest level of health and safety for customers and employees;
Launched the COVID-19 Assist scheme, extending over €140 million in loans with attractive rates of interest to nearly 200 business customers facing liquidity shortages;
Granted loan moratoria to more than 2,900 customers, 70% of whom being retail customers;
Launched a dedicated BOV Assist Team offering banking services through the Bank’s digital channels, e-mail, video and telephone conferencing;
Enabled more than half the workforce to work safely from home, particularly to protect vulnerable employees and to support working parents;
Intensified the sanitising of staff and customer areas, offices, air-conditioners and installed protective screens in customer-facing areas;
Promoted the use of digital channels and facilitated their use through increased limits; and
Launched BOV Safe@home aimed towards creating educational and cultural initiatives mainly targeted towards assisting parents and their children during the stay-at-home period.

Commenting on the results, BOV CEO Rick Hunkin said “In line with the rest of the world, these are trying times for Malta and for Bank of Valletta and we are rising to the occasion by supporting businesses, customers and the wider community. As COVID-19 affected all the local economic sectors, the impact on the BOV Group was inevitable. However, we will come out of this together and as Malta’s leading bank we are committed to continue giving our full support to help the Maltese economy recover and thrive once again.”

NEXT STAGE STRATEGY

The Board of Directors and the Executive Team have been fully engaged in establishing a new strategic approach for the BOV Group which will result in a more efficient, more digitally focused and more customer-oriented Bank. This process spanned many months of background work from the Executive Team led by Mr Hunkin. The interim Chairman Alfred Lupi commented that “Over the past few years, the banking industry has been going through dramatic shifts. Three critical factors which are shaping the new operational models of banks are: the wave of regulatory changes impacting every aspect of our operations, record low interest rates with increased cost of deposits and increased customer expectations from digital channels. We carried out a very thorough analysis of our business environment and we have considered the dramatic shifts in customer behaviours and their expectations from financial services providers. I am confident that the revised BOV strategy will not only deliver marked improvements in customer and employee satisfaction, but it will also lead to improved financial performance, continuing to build upon a stronger risk and governance position. Post COVID, we also expect to be able to demonstrate a more positive and stable return for our shareholders.”

Mr Hunkin added that “The implementation of the BOV strategy has been set in motion and we are very excited to be driving a programme of initiatives, as we transform Bank of Valletta into a more efficient, more digital and more customer oriented Bank.”

Issued by Bank of Valletta p.l.c., 58, Triq San Żakkarija, Il-Belt Valletta VLT 1130. Bank of Valletta p.l.c. is a public limited company regulated by the MFSA, licensed to carry out the business of banking and investment services in terms of the Banking and Investment Services Acts (Cap.370, 371 of the Laws of Malta).

Credit & Financial Institutions

BOV registers €13.8 million profit for the first six months of 2020

'Credit & Financial Institutions' Related News Articles

A creditor’s obligation to assess the creditworthiness of a consumer

BOV TALKS ARTIFICIAL INTELLIGENCE IN THE BANKING WORLD

The MFSA consults on a draft Conduct of Business Rulebook for Banks

MFSA Shifts to Outcomes-Based Supervision in 2024

AIFMD II – A step closer to entry into force

The European Union Global Minimum Level of Taxation for Multinational Enterprise Groups and Large-Scale Domestic Groups Regulations 2024

BOV EXPERTS DISCUSS ECONOMY AND INVESTMENT BASICS WITH RETAIL CLIENTS

Bank of Valletta has supported this year’s opera by Gioachino Rossini – ‘Armida’

EU AML-CTF Package taking shape: Compromise text for AMLR and 6AMLD published

Changing the terms of a credit agreement and forbearance policies and measures: new obligations on lenders in consumer and residential property credit agreements

BOV launches revamped cutting-edge website

The HSBC Malta Foundation supports Three-Year UM Research Project through RIDT

Bank Of Valletta extends Partnership Agreement with Heritage Malta

BOV RETROSPECTIVE EXHIBITION FEATURING WORKS BY NOEL GALEA BASON OFFICIALLY INAUGURATED

Goal-line Defenders: Scoring Victory Against Financial Crime with the Three Lines of AML/CFT Defence

Agreement reached on the establishment of the Anti-Money Laundering Authority (“AMLA”)

FIAU Thematic Review on Company Service Providers when providing Company Formation Services

Directive 93/13/EEC and mandatory statutory or regulatory provisions in consumer contracts

2023 SEES 151 BOV EMPLOYEES GRADUATING

BOV SELLS PORTFOLIO OF NON-PERFORMING LOANS

MALTA Nomad Residence Permit, New Tax Rules.

BOV Boosting Employee Retention through Occupational Pension Schemes

Keeping Tabs on Market Perception and Knowledge about Investments

BOV Announces Profit Before Tax of €163.5 million as at September 2023

Proposed amendments to the Exclusive Economic Zone Act and ancillary laws

MFSA Circular regarding various amendments to the Investment Services Rulebooks

MiCA Update: Consultation Process on the Proposed Updates to Chapter 3 of the VFA Rulebook

Continuing to disclose the topic EU funding for Startups ¦ Startup Definition

BOV keeps up momentum in educating customers about scams

Auditing iGaming Entities

Malta: a state-of-the-art regulatory framework for cryptocurrencies

ESMA issues Second Consultation Package under MiCA

Standard and Poor’s (S&P) upgrades Bank of Valletta’s rating to stable

BOV Asset Management Seminar Discusses Best Practices in Investments

BANK OF VALLETTA ACQUIRES NEW FUNDING TO RELAUNCH THE BOV SME INVEST PACKAGE

BOV Introduces New Digital Portal to Update Customer Records

EU Court’s Landmark Ruling: Restricting Financial Ties to Combat Money Laundering and Terrorism Financing

ESMA and EBA issue Inaugural Consultation Packages under MICA

ESMA issues public statement in relation to sustainability disclosures in prospectuses

FIAU publishes its AML / CFT Supervisory Plan for 2023 – 2024

Reforming Digital Payments – Introducing the new Payment Services proposals

APS Bank delivers best-ever half-yearly results, to pay interim dividend

New Digital Experience For BNF Bank Customers

Proposals for an improved European Banking Union framework – Part II

Proposals for an improved European Banking Union framework – Part I

Opposing trade mark registrations in the realm of financial institutions

Over 24,000 customers respond to BOV’s call for feedback

BOV puts Mobility in the Spotlight on World Bicycle Day

BOV Goes Green for Mental Health

BOV Volunteers at GSSE 2023

The new notified PIFs framework: MFSA publishes consultation document on regulatory changes

MiCA obtains green light from European Council

ESMA postpones annual IFRS amendment of ESEF to 2024

BOV Launches Investor Education Sessions

MiCA – Landmark crypto regulation approved by EU Parliament

BOV ISSUES WARNING ON SCAM CALLS

BOV Asset Management Limited launches the Global Multi-Asset Thematic 60 Fund managed by Fidelity International

MALTA COUNTRY ANALYSIS REPORT

INFOCREDIT GROUP AMONG THE SPONSORS OF MALTA FINANCIAL CRIME COMPLIANCE CONFERENCE 2023

Business Decisions that undermine the Compliance Culture – Part 5

BOV Offers MAPFRE MSV Life Capital Guaranteed Product

Business Decisions that undermine the Compliance Culture – Part 4

Becoming a Data Driven Organisation

Business Decisions that undermine the Compliance Culture – Part 3

BANK OF VALLETTA PROMOTES HEALTHY LIFESTYLES AND ROTA INITIATIVE

Business Decisions that undermine the Compliance Culture – Part 2

ELTIF 2.0 published in the Official Journal of the European Union

The INSIGHT Interview: David Power, CEO of BNF Bank

Sustainable Finance and the Impact on the Financial Services Sector in Malta

Bank of Valletta commemorates International Women’s Day

EU’s Green Taxation: Tackling Climate Change through Tax

The classification of cryptoassets under the new Markets in Crypto-Assets Regulation

Business Decisions that undermine the Compliance Culture – The MLRO Reporting Lines

Welcome to “Enterprise Innovation” ¦ 23 February 2023 at Salini Resort Hotel

Brussels forecasts 3.1% economic growth for Malta, second-highest in EU

BOV Managers Discuss Customer-Driven Strategies

More ATMs For BNF Bank Customers