BOV Chairman Roderick Chalmers addressed shareholders at the 37th Annual General Meeting held at the Hilton Malta in St Julians. Mr Chalmers started his address with an outline of the financial environment in Europe that formed the backdrop against which the BOV Group operated. The Maltese economy performed better than expected in 2010, registering 4% growth in the first half of the year. Growth in the services and tourist sectors, together with stable employment numbers, contributed to this performance. However, domestic consumer demand remained subdued, mainly due to uncertainty over utility costs.

Despite tough local and international conditions, the Bank of Valletta Group reported profits before taxation of €98.9 million for the year ended 30th September 2010, an increase of 21% over the previous year. The Board of Directors recommended a final dividend of €0.16 per share which, taken together with the interim dividend of €0.075 per share paid on 28th May 2010, makes for a total gross dividend of €0.235 per share. This dividend will be 2.1 times covered by the post tax profits for the year.

The Board also recommended a bonus issue of 1 share for every 5 shares held, effective 12th January 2011, to be funded by a capitalisation of reserves amounting to €40 million. The bonus issue will serve to further increase the permanent capital base of the Bank from €200 million to €240 million, and will also serve to enhance the affordability and liquidity of the Bank’s shares.

International Regulators are taking steps to secure the long term strengthening and stability of the global banking system – through measures referred to as Basel III. The measures require higher minimum Tier 1 ‘core capital’, while building additional ‘capital conservation’ and ‘counter cyclical’ buffers. Internal capital forecasts show Bank of Valletta to be comfortably in excess of the new minimum capital requirements under current Basel III requirements, and an expectation that the Bank will not have to resort to any near term capital raising or dividend constraint measures.

Tonio Depasquale, CEO of Bank of Valletta followed by addressing shareholders with a detailed overview of the Bank’s performance during the financial year. During a tough financial year, the Bank has remained a major participant in the shaping of Malta’s economic activity and growth.

The increase in profits over the previous financial year shows that Bank of Valletta emerged from the financial crisis a stronger institution, one that is ready to face new challenges, and to seek and develop new business opportunities.

Managing a prudent balance sheet remains the Bank’s top priority, along with the ongoing strengthening of capital and liquidity positions. Added value deposit products saw customer deposits increase by 9% or €419 million and exceed €5 billion for the first time. This was achieved despite the substantial bond issuance activity during the year.

Net advances reached €3.56 billion, an increase of €325 million over FY2009 spread over home loans, business and consumer lending. Impairment charges for the year totalled €13 million in the face of difficult conditions faced by certain economic sectors. Non-performing loans accounted for 5.2% of the total loan book, an increase of 1.3% over the previous year.

Public confidence in the group was further consolidated through the overwhelming response of the largest public bond issue ever undertaken by a corporation on the Maltese Islands. Through this issue, Tier II capital was further strengthened by €70 million. Bank of Valletta was chosen as the Maltese bank to participate in the Commitee of European Banking Supervisors (CEBS) stress tests during the month of July. Results confirmed internal studies that robust capital buffers place BOV among the top European banks in terms of capital ratios.

Effective cost consciousness saw the total expenditure for FY2010 increase by only 2%. This resulted in the best ever cost-to-income ratio registered by the Bank at 41.3%.

FY2010 saw the Bank add on to its extensive range of products with various new deposit accounts in different currencies and attractive interest rates. Cards business was further boosted with BOV’s agreement with American Express, whereby BOV is now issuing American Express cards, and also through the introduction of BOV Mastercard Prepaid Cards. Customer benefit through BOV Cards was also enhanced with the BOV Loyalty Rewards Programme that rewards card usage.

The retail network saw new premises for the Bank’s branch at Cospicua while the new branch in Bugibba is expected to be inaugurated in the coming weeks. Just two weeks ago, the Bank was awarded the highly prestigious ‘Bank of the Year 2010’ for Malta by ‘The Banker’, the Banking publication of the Financial Times.

Bank of Valletta’s commitment in the community in which it operates saw the Bank investing back over €1 million of its profits in several projects which included the BOV Adventure Park for the family in Ta Qali, the restoration of four decorated ceilings at the Verdala Palace and the cupola at St Catherine of Italy Church in Valletta. These accompanied various other sponsorships in the fields of Art and Culture, Heritage, the Environment, the social aspect, sports, education and the Business Community.

Looking forward, the CEO highlighted the Bank’s positive performance despite difficult financial and economic conditions. During the next year, Bank of Valletta will concentrate on Payments business, with new investments planned for technology, custody business and the yachting and aviation industry.

The CEO concluded by thanking the Chairman, the Board of Directors, the shareholders, staff members and customers for their continued support. Bank of Valletta will continue to play a major role in the local economy and will continue to support local businesses and will remain the Bank of Choice for customers.

Following the Chairman’s and the CEO’s address, seven resolutions were put to the meeting. These resolutions included approval of the Profit and Loss Account and Balance Sheet for the year ended 30th September 2010, and the Directors’ and Auditors’ Reports thereon. In addition, a gross final dividend of €0.16 per share, which represents a gross payment of €32,000,000 as recommended by the Directors, was approved for payment on 17th December 2010. Approval was also obtained for the proposed 1 for 5 bonus issue, and the consequent increase in issued share capital from €200 million to €240 million. Deloitte Malta, jointly with Deloitte United Kingdom, were reappointed auditors of the Bank.

Changes to the Memorandum and Articles were also proposed to ensure compliance with the EU Shareholders’ Rights Directive (as implemented in the Listing Rules).

The AGM also refreshed (for a period through to June 2012) the authority of the Board of Directors to buy back up to 10% of the Company’s shares within a specified price range. The Board reiterated that it would be a sensible precaution for the Board to have the power to buy back up to 10% of the Company’s shares, should they become available, a power which would only be exercised by the Board if it is considered to be in the best interests of the Bank and all its shareholders.

Pursuant to Article 60 of the Articles of Association, the company received 7 valid nominations for directors. Since there were 6 vacancies an election was held. The Government of Malta and UniCredito are entitled by the Articles of Association to appoint 2 and 1 director respectively. Roderick Chalmers (Chairman) and Gordon Cordina have been so appointed by the Government of Malta until the conclusion of the 2011 AGM, whilst Roberto Cassata was appointed by UniCredito until the conclusion of the 2012 AGM. Following the election held at the AGM, the Board of Directors for the forthcoming year will comprise:- Joseph Borg Roberto Cassata Roderick Chalmers (Chairman) Gordon Cordina George Portanier Manuel Rizzo Norman Rossignaud Paul Testaferrata Moroni Viani George Wells

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