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 at 11c1.
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 to Lm5,221,000.
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The BoV Group’s 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 million.
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 September 2000.
The Group reports that these results are a reflection of a number of factors.
Last year’s results included material gains from the revaluation of in-force business of associated companies as well as prices gains realised on the Bank’s 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 Group’s 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 conditions.
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 Group’s 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 Group’s 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.