Cost effectiveness, strategic diversification lead to BoV profits surge
- Group continues to focus on internationalisation
Citing an effective cost management strategy, Bank of
Valletta last week announced pre-tax profits of Lm6.4 million for the
fiscal period wrapped up at the end of March.
Commenting on the Groups performance BOV Group Chairman Joseph
FX Zahra, states, "The Groups strong fundamentals are reflected
in the fact that operating income continued to rise at a faster rate
than costs. This highlights the validity of the Groups cost management
strategy, especially considering that a number of significant investment
projects continued to be implemented.
"These include the launch of internet banking, the setting up of
a call centre, the consolidation of the centralisation project as well
as the construction of the new processing centre, which is currently
Zahra explained how the Groups continued strategy of diversifying
its sources of income yielded positive results despite the continuing
downward pressure on interest rates, net interest income increased by
2.8 per cent. Concurrently, commission income rose by 11.1 per cent.
Non-interest income accounts for 32.9 per cent of operating income,
up from 32.4 per cent for the same period last year.
Zahra emphasised how the results show that the Group continued to deliver
in terms of its main strategic directions. In fact, the results show
that both interest and non-interest income have continued to increase.
Concurrently, the Group has continued to improve its performance in
terms of cost efficiency.
Over the period, Group total assets increased by Lm33.2 million or 3.5
per cent p.a. to reach Lm1.92 billion. Shareholders funds amount
to Lm114.6 million, an increase of Lm0.8 million or an annualised growth
of 0.7 per cent. Advances, net of impairment allowances, rose by Lm3.7
million, or one per cent p.a. to reach Lm767 million. Customer deposits
remained stable at Lm1.38 billion. Deposits denominated in local currency
showed a steady increase, and the Group maintained its share of this
core market. The profitability of the group continued to be sustained
at a good level during these six months despite a slight decrease when
compared to the corresponding profit figure of Lm 6.9 million registered
The Group continued to strengthen its core sources of income, while
at the same time managing to contain growth in overheads. The satisfactory
performance was achieved despite the prevailing subdued economic conditions
both locally and internationally. Operating income increased by 2.2
per cent, from Lm23.9 million in March 2002 to Lm24.4 million. Operating
expenses, at Lm14.1 million, rose by only 1.9 per cent. Impairment allowances
amounted to Lm4.7 million, reflecting the Groups prudent approach
in line with its credit management policy. Profits from associates amounted
to Lm0.8 million in March 2003, compared to Lm0.7 million for the same
period last year.
BoVs results are a reflection of a number of factors. As expected,
the greater use of voluntary retirement schemes, as part of the restructuring
exercise, affected reported results.
In addition, the reduction in general impairment allowances registered
last year was not repeated. Moreover, the international economic and
political scenarios resulted in a reduction of the fair value of derivatives
employed for hedging purposes.