Bank of Valletta said on Thursday that its performance in the first quarter of this year was 'somewhat below expectations' owing to the late March impact of COVID-19.

It said in a company announcement to the stock exchange that asset balances
and customer deposits were in line with expectations and no reduction in asset growth or customer balances were observed. The loans to deposits ratio remained solid at 44.5%.

Reduced customer interactions through restricted branch operations, lower economic activity and reduced international trade were starting to indicate potential reductions in commission and exchange income.

"Although it is too early to estimate the full impact of COVID-19 on the bank,
especially as the duration of the current situation remains unknown, lower income and potentially growing credit losses will lead to reduced profitability this year," the bank said.

Highlights of the bank’s financial position

BOV said that as of March 31, net interest income was marginally down on the same period last year, driven by volume growth in the loan book and the continuing preference for very low yield deposit products. This continued to be offset, however by lower returns on treasury investments.

Net interest income was also affected by margins which remained under pressure due to the negative interest environment and continuing high levels of liquidity.

 Commission and Trading Income were initially in line with plan, albeit showing some decline during March.

The bank said liquidity remained extremely strong with short term funds continuing to grow above the €4 billion mark.

The situation on Impairment provisions remained favourable to date, but the current difficult trading environment was likely to necessitate further provisions, the bank added.