APS Bank registers €15.5 million pre-tax profit in 2020
APS Bank saw its pre-tax profit drop by €6.1 million to €15.5 million in 2020 in the face of numerous challenges presented by the COVID-19 pandemic
by Paul Cocks
APS Group registered a pre-tax profit of €15.8 million (2019 - €26.8 million) while the Bank posted a pre-tax result of €15.5 million (2019 – €21.6 million).
The Group’s Annual Report and Audited Financial Statements for the year ended 31 December 2020 show that the Group’s total assets expanded by a further €252 million, or 11.6% reaching €2.4 billion. Lending activity grew by 13.8% to reach €1.8 billion, with over 60% of the growth coming from households and mortgage financing.
Net interest income grew by 9.4% to €48.9 million, driven mainly by the continued growth in the Bank’s lending book. Interest receivable on loans and advances increased by €5.8 million to €56.5 million, counterbalanced by a €1.5 million contraction in interest receivable on debt securities used for liquidity purposes.
This was largely the result of maturing fixed-income securities repricing at lower rates of return and was compounded by the pandemic-related financial market volatility.
Other operating income totalled €7.9 million, dropping by 34.4% from the €12.0 million reported in 2019. This was mainly a result of the performance of the APS Diversified Bond Fund and the APS Global Equity Fund, which during 2020 recorded net gains on financial instruments of €0.5 million as opposed to the €4.0 million for 2019.
In terms of liquidity management, debt securities stood at €316 million, up by 32.7% on 2019 while balances held at the Central Bank of Malta reduced as planned to €108 million. Funding grew by 12.0% to reach €2.2 billion, resulting from increases in both customer deposits and €55 million from the 10-year 3.25% Subordinated Bond issued during 4Q2020. The year closed with Group equity of €206 million, an increase of €14.3 million compared to prior year.
The Group’s CET1 ratio stood at 15.1% (2019: 16.2%) and the Capital Adequacy Ratio at 19.5% (2019: 16.2%) – both ratios well above the regulatory minima including buffers. The Directors will be recommending the payment of a scrip dividend of €3.7 million (net dividend of €2.4 million) (2019: Nil) in line with the ECB and MFSA recommendations, and subject to regulatory approval.
Despite the unprecedented economic circumstances, the Group’s positive performance underscores its resilience in the face of numerous challenges presented by COVID-19. Along the different phases of the pandemic, the Bank continued to stand by its personal and business customers with credit support and moratoria. It also maintained accessibility to its branch network while scaling up and enhancing its digital channels. Throughout all this, the Group was investing heavily in protecting the safety and wellbeing of its staff and customers while sustaining the community with its product offering and CSR commitment.
