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Record operating profit reported for six months ended 31st March 2007
The Bank of Valletta Group has registered an operating profit before tax of Lm24.3 million for the six-month period ended 31st March 2007. This represents an increase of Lm5.5 million (29.2%) over the restated half yearly net profit figure registered last year. The Group has achieved an annualised return of 30.0% on average shareholders’ funds (March 2006: 25.3%). Earnings per share amount to 14.7 cents (March 2006: 11.7 cents).
BOV Chairman, Roderick Chalmers announced that the Board of Directors had declared an interim dividend of 6.75 cents per share, gross of tax. This represents an increase of 22.7% on the interim dividend of 5.5 cents per share declared last year. The dividend will be paid to shareholders on 30th May 2007.
He said that the results for the six months under review were underpinned by a number of factors. “We have seen an increase in net interest income of Lm3.5 million, which was driven, primarily, by robust growth in the loan book and a favourable (rising) interest rate environment. Concurrently, we have continued to focus on improving the quality of our loan book. In this regard, during the first six months of FY 2007, we have seen a reduction of Lm3.1 million in the impairment charge - the result of continuing improvement in credit quality and certain recoveries of sums previously provided for,” explained Mr. Chalmers.
“We have continued to witness a consistently improving trend, with non performing loans as a percentage of the total Loan book reducing to 5.9% as at 31st March 2007, down from 8.4 % last year, and 11.7% just 24 months ago” said Mr. Chalmers. Net impairment losses amounted to Lm0.8 million, compared to Lm3.9 million in March 2006.
BOV’s Chairman said that the positive results he was able to report to the media showed that the Bank was successfully growing its business. “Besides growing the interest side of our business, we were also successful in generating satisfactory growth of 13.8% in net exchange, fees and commission income,” explained Mr. Chalmers.
Mr. Chalmers said that the very strong performance of the local equity market in the first half of FY 2006, as expected, was not repeated in FY 2007. “As a result, we have seen a reduction of approximately Lm2.2 million in profits from portfolio price movements and the contribution from associates during the first six months of this financial year,” said Mr. Chalmers.
“Taking all these factors into account, therefore, we can report an operating income of Lm39.3 million for the first six months of FY 2007, an increase of Lm3.6 million, or 10%. This was made up of interest margin of Lm27.3 million, an increase of 14.8% over March 2006, and commission and trading income of Lm12.0 million, a marginal increase over March 2006 resulting from the net impact of improved exchange, fees and commission income being counterbalanced by the reduction from portfolio price profits that I have already referred to,” explained Mr. Chalmers.
The strong results achieved for the first half of FY 2007 were also assisted by management’s focus to keep costs under tight control. “Total costs, amounting to Lm16.2 million, increased by Lm0.4 million, or just 2.5%, over March 2006. The main components of this increase are higher personnel remuneration, contributions to the community and IT depreciation. Indeed, this focus on effective cost management enables us to report a further improvement in our cost to income ratio from 41.1% in March 2006 to 39.3% for this half year,” said Mr. Chalmers, who highlighted that this ratio places BOV amongst the best performing banks in terms of cost efficiency by any standard. |
