APS Bank registered pre-tax profits of €23.6 million by the end of the third quarter of 2023, up from the €21.7 million it recorded in the same period last year.
The bank’s profits marginally outpaced that of the APS Bank group (€23.3 million) which saw a period of volatility in late September, hindering a recovery from unrealised, negative investment market trends of 2022.
APS released details of its Q3 financial performance on Thursday morning, shortly after announcing details of a new €50 million bond issue.
It said interest income for the first nine months of the year grew by €19.9 million or 34.7% over the same period last year, largely driven by robust growth in the loans portfolio and generally higher asset yields.
Interest costs were also up by €11 million to reach €21.6 million, as rising rates repriced domestic deposits and non-Euro funding.
Net fee and commission income of €6.2 million was up by 13.9% on the same period in 2022. The bank said this was consistent with the growth in business activity and ensuing commission streams from lending, card-related transactions, investments and local and foreign transaction banking.
Operating expenses of €39.5 million grew by 16.7% compared to the €33.8 million for the same period last year. The bank attributed this to costs related to human resources, recruitment, new technologies, regulatory and compliance requirements, security, insurance and general inflationary rises.
The group’s total assets/liabilities grew by 12.4% during the period under review, reaching a total of €3.5 billion. The main contributor was the growth in loans and advances to customers, which expanded by €363.2 million across retail, mainly home loans, commercial credit as well as the international syndicated loan book.
Cash reserves at the Central Bank of Malta increased by €73.5 million, counterweighed by a contraction of €49.9 million in liquidity with other banks, optimising short-term yields.
Funding from customers and banks grew by €347.5 million, or 12.6%/.
Equity closed Q3 at €278.5 million, up by 6.5% or €17 million over December 2022 and helped in part by a €5.6 million scrip dividend plough-back.
CEO Marcel Cassar said the bank was pleased with the “solid” performance but noted that monetary policy tightening meant its margins were under pressure, as it sought “to pass on interest rate increases to depositors but not on home loan borrowers, and with the concerns of our commercial customers in mind.”
“Thanks to the active management of our bond and syndicated loan portfolios, we are able to pick up good spreads while improving the geographic, industry, ESG and overall risk profile of our book,” Cassar said.
“While banks across Europe, and in Malta, are expected to enjoy a boost to their profits from higher interest rates, our sights are on more medium-to-long term growth areas as the tailwinds from central banks’ measures to curb inflation are expected to slow down.”
Cassar said he expected the bank’s upcoming bond issue would help shore up its regulatory requirements, support a strong close to the financial year and pave the way for more growth in 2024.
€50 million bond
The bond issuance programme will see up to €50 million 5.8% Unsecured Subordinated Bonds 2028-2033 being issued, which will be listed on the Official List of the Malta Stock Exchange.
The offer will open on Monday, October 30 and close on Friday, November 17, or earlier at the bank’s discretion. Applications will be accepted at all APS Bank branches or at Authorised Financial Intermediaries listed in the Final Terms of the Base Prospectus.
Allocation preference will be given to existing holders of the Bank’s Ordinary Shares or the 3.25% Subordinated Bonds 2025-2030 as of October 23. These investors will be receiving a pre-printed application form at the address provided in the Central Securities Depository Register.
The Bond Prospectus and Final Terms may be downloaded from apsbank.com.mt/bonds/