Bank of Valletta has announced its performance for Financial Year ending 31st December 2023, registering a profit before tax of €251.6 million.

The Bank said that “these positive results are underpinned by strong income growth and high profitability levels achieved across all main business lines. This continued to strengthen the Bank’s balance sheet position, with liquidity and capital positions remaining well above regulatory requirements.”

BOV Chairman Dr Gordon Cordina commented that it is “the highest dividend in the past decade, with the strongest ever capital base.”

The BOV Group experienced a significant increase in operating income primarily due to the enhancement in net interest income for the year 2023. Total operating income amounted to €441.0 million (increase of €147.6m over prior year). Net Interest Income remained the primary driver of operating income, totalling €352.0 million (up by €150.1m), with Net Fee and Commission income increasing by €1.4 million. Total costs amounted to €210.9 million (increase of 10% over prior year). The Group’s share of profit from insurance associates amounted to €11.0 million.

Key performance indicators were satisfactory with pre-tax return on equity at a level of 21.1% and cost to income ratio at 47.8%. Earnings per share amounted to €28.8 cents (€5.4 cents restated in the comparative year).

The Group’s Total Assets remained on the same levels of the previous year at €14.5 billion. Gross loans and advances reached €6.3 billion, an increase of nearly 9% compared with the €5.8 billion of December 2022. Group’s gross loans to deposits ratio increased from 46.0% in December 2022 to 51.7% by end 2023. Capital ratios remained strong and above regulatory requirements, with the CET 1 and total capital ratios as at 31 December 2023 of 22.7% and 25.9% respectively.

Further to the gross interim dividend of €0.0462 per share paid on 6th December 2023 amounting to €27.0 million (net ordinary dividend of €0.0300 per share amounting to €17.5 million), the Board of Directors will, at the forthcoming Annual General Meeting, be recommending a final gross dividend of €0.0700 per share amounting to €40.9 million (net dividend of €0.0455 per share amounting to €26.6 million). This would make for a total gross dividend for the year of €0.1162 per share, equivalent to a total gross dividend payable of €67.9 million. The payment of the final dividend is still subject to regulatory approval.

Speaking during the announcement BOV Chairman Dr Gordon Cordina commented that “2023 has been a very positive year for the Bank of Valletta Group, which registered healthy profits in a situation of positive interest rates, while no longer shackled by legacy impediments and risks. The conservation and the generation of capital remain high on the Bank’s agenda. Such approach ensures that the Bank has enough capital to sustain its future strategic growth ambitions whilst always acting prudently to remain well capitalised in relation to regulatory thresholds.”

The highlights for the financial year 2023 are as follows:

• Reported profit before tax (‘PBT’) of €251.6 million (2022 restated: €49.1 million adjusted to €152.0 million when excluding the effect of the Deiulemar settlement).

• The earnings per share for the year 2023 amounted to €28.8 cents compared with €5.4 cents restated in the comparative year.

• The Group delivered solid revenue growth with client-driven activities and positive interest rate dynamics, supported by a net release of Expected Credit Losses (‘ECLs’).

• BOV Group has experienced a significant increase in operating income primarily due to the enhancement in net interest income for the year 2023. Overall, total operating income amounted to €441.0 million, an increase of €147.6 million or 50% over the prior year (2022: €293.4 million).

• Net Interest Income remained the primary driver of operating income, totalling €352.0 million, a surge of €150.1 million or 74% when compared to €201.9 million in the preceding year, reflecting consistent growth in customer lending and proprietary investment portfolios.

• Net Fee and Commission income increased by €1.4 million during the year for a total yearly amount of €78.0 million (2022: €76.6 million).

• Total costs amounted to €210.9 million which is equivalent to an increase of 10% or €18.3 million when compared to the previous year €192.6 million. The increase was driven by the Group’s ongoing pursuit of talent enrichment, enhanced compensation and benefits, continuous investment in technology, the delivery of digital channels and investments in platforms to strengthen regulatory compliance. Employee compensation and benefits increased by €11.0 million or 11% mainly as a result of recruitment in specialised areas of the Bank and associated growth rate in the average compensation. The execution of our strategic initiatives remained swift, and the Bank allocated an additional €11.0 million in investments in 2023 (2022: €7.8 m).

• A release of €10.5 million was registered in terms of net Expected Credit Losses (‘ECL’) (2022: €49.1 million release). The magnitude of this release reflects largely the effects of the Non-Performing Loans (‘NPL’) sale executed by the Bank in 4Q, which is considered a first in the local banking sector and which resulted in a €17.5 million reversal of allowances, which were previously booked against such exposures.

• The BOV Group maintained vigilant oversight over all asset quality metrics with particular attention being placed on the non-performing exposures portfolio (‘NPE’). As at 31 December 2023, the NPE ratio stood at 3.1%, down by more than 40bps when compared to the 3.5% outstanding a year earlier, with the decrease amounting to €11.9 million in terms of absolute amounts.

• The Group’s share of profit from insurance associates for the year resulted in a profit of €11.0 million (2022 restated: €2.2 million profit). The Group’s profits for the comparative year were adjusted by €357 thousand in share of results from insurance associates, increasing the share of profits as had been reported in the previous year. This outcome is due to the Group’s associated companies implementing IFRS 17, an accounting standard that introduced a fresh approach to valuing insurance contracts.

File photo: BOV

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