So-called 'green loans' now make up a third of all personal loans issued by Bank of Valletta, the bank revealed on Wednesday, saying that this was a key factor in the bank’s performance throughout 2023.
The bank was presenting its annual results for 2023, in which it registered a profit of €251.6m before tax. CEO Kenneth Farrugia hailed 2023 as “a record year”, with profits €100m higher than they were the previous year.
While Farrugia acknowledged that the higher profits are partly down to “the tailwinds of interest rates”, which have risen across Europe, he also attributed the performance to income from the bank’s loan facilities, with growth in green loans particularly prominent.
The bank offers loans for several green initiatives, from the purchase of electric vehicles and photovoltaic panels to the installation of energy-saving insulation and double-glazing.
In total, over €38m in green loans were handed out last year, a third of the bank’s total personal lending portfolio. This is a threefold increase from the 11% registered the previous year.
The bank also registered more home loans than ever, rising by €217m in 2023 to reach €2.9 billion.
Dividend payout to shareholders
Having paid out an interim dividend of €0.0462 per share in December, the bank will be recommending a final gross dividend of €0.0700 per share at its upcoming Annual General Meeting.
That means BOV shareholders are poised to pocket a total gross dividend of €0.1162 per share for the year, equivalent to a €67.9 million payout by the bank. The dividend must be approved by regulators before it is finalised.
Bank 'resolved legacy issues’ throughout 2022
BOV chair Gordon Cordina said the year’s results show how the bank had successfully navigated troubled waters in recent years in its quest to “resolve various legacy issues”.
In May 2022, BOV reached an out-of-court settlement to pay a staggering €182m to the bondholders of collapsed shipping giant Deiulemar.
More recently, BOV announced that it had secured a correspondent bank relationship with Citibank, once again giving it access to US Dollar clearing services after its last US Dollar correspondent bank had cut ties with BOV in 2019.
In a nod to measures adopted following Malta’s greylisting by the Financial Action Task Force (FATF), Cordina said that the bank is “in a good place, as our compliance mechanisms are now in line with regulatory expectations”.
Bank pushes for opt-out system of private pensions
Asked about the takeup of private pension schemes, the bank admitted that this is still “a challenge”, with relatively slow growth.
“We are in a situation across the country where 90% of people’s wealth is in real estate, 7% in liquidity and 3% in long-term financial investments. We need to rebalance if we want to ensure pension adequacy in the future”, Cordina said.
Pension adequacy refers to the degree to which a person’s pension enables them to maintain an adequate standard of living.
Cordina believes that the best way to implement this is by adopting an opt-out system for private pension schemes, as opposed to the current opt-in approach.
In practice, Cordina says, this would mean that people are automatically enrolled in a private pension scheme through their employer, with the option of opting out.