BoV shareholder profit down 38%
The Bank of Valletta Group yesterday released its financial results
for the last six months, which reveal a decline in most aspects of its
business compared with the same period last year.
As a result, earnings per share were down by 6c9 when comparing the
October March period of 1999 to 2000, during which earnings had
stood at 18c, to that of the same period for 2000 to 2001, which stood
Accordingly, profits attributable to shareholders per the periods in
question shrunk by some 38 per cent from Lm8,301,000 to Lm5,149,000.
This in line with a reduction in profits after tax from Lm8,579,000
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The BoV Groups profit before tax of Lm6.8 million for the six
month period ended on 31 March 2001, was down by 37.5 per cent compared
to Lm10.9 million for the corresponding period last year. Meanwhile,
net interest income increased from Lm14.4 million to Lm15.1 million
while operating income fell by 2.2 per cent from Lm22.5 million to Lm22.0
During the first half of the current financial year, Group total assets
increased by Lm85.9 million, or 10.9 per cent p.a., to reach Lm1.67
billion. Customer deposits also continued to increase by 5.6 per cent
p.a. over September 2000 and now stand at Lm1.16 billion.
Concurrently, advances to customers, net of provisions, increased by
10.9 per cent p.a. to reach Lm724.5 million. Shareholders funds
amount to Lm101.1 million, an annualised increase of 10.8 per cent over
The Group reports that these results are a reflection of a number of
Last years results included material gains from the revaluation
of in-force business of associated companies as well as prices gains
realised on the Banks 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 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 Groups performance for the period, BoV Group
Chairman Joseph F.X. Zahra, said that he considered Group profitability
to be satisfactory given the current economic situation and international
and national markets volatility.
He adds that the fundamentals of the business are showing continued
strength in the context of increased competition and general market
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 Groups 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 that the past six months were characterised by intense
activity across all areas of the Groups 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.
He explained that the Group has launched several products during the
six months and it is reaping the benefits of its customer-focused strategy
through its relationship banking model and its intensified sales orientation.
The Group continued with its internationalisation strategy with an emphasis
on the Euro Mediterranean region with the opening of a new representative
office in Tunis in October last year, and its advanced plans to open
a representative office in Tripoli.