The BOV Group said on Thursday that it made a pre-tax profit of €22 million in the first quarter of 2022, up by €12.7 million from the same period in 2021.

Bank chairman Gordon Cordina told the media that the improvement reflects the ongoing but as yet incomplete recovery from the COVID-19 pandemic, further underpinned by encouraging economic activity.

Notwithstanding, the group sees risks from geo-political instability which may potentially impact the economy and business.

"Against these developments, the Group retains a cautious outlook especially in respect of its stance towards credit provisioning, with first-quarter performance not necessarily representative of 2022 full year results," BOV said in a statement. 

It said revenues during the first quarter of 2022 amounted to €58.4 million, up by 5% over the comparable period in 2021. This was mainly due to consistent growth in lending, particularly in home loans, coupled with increased revenues from payments and card business.

Operating costs for the first three months increased by 3% when compared to the same period during 2021. This was mainly attributable to higher employee compensation costs, with the increase in headcount being the main driver, as well as the group’s contribution to the Deposit Guarantee Scheme (‘DGS’) linked to higher customer deposit levels.

A reversal in the net Expected Credit Losses (ECL) of €7.0 million contributed to profitability. This, the bank said, reflected more favourable economic circumstances and individually significant exposures. Furthermore, a charge of €4.8 million was taken in the quarter with respect to long outstanding non-performing loans.

The share of results from insurance associates decreased materially when compared to the same period in 2021 largely driven by a more cautious future outlook impacting the outcome of actuarial models.

Net loans and advances to customers increased by 2% during the first quarter of 2022. Growth was reported in both business and home loans, with the latter being the main driver. Customer deposits increased by 1% over the period,

Russia / Ukraine conflict

BOV said it continues to monitor developments for potential impact.  Within its loan book, the bank is not significantly exposed to Russia or Russian nationals. Additionally, exposures stemming from Ukraine, or its bordering countries are also 'low and insignificant' when compared to the total lending portfolio.

The bank said it is also closely monitoring the possible economic and business effects as both Russia and Ukraine are major exporters of key global inputs, in areas such as energy and trade.

Consequentially, the Bank carried out an impact assessment to gauge the indirect impact of the conflict on sectors that may be impacted due to supply bottlenecks for a number of resources or materials. It simulated three severity scenarios, and was satisfied that even in the most stressful of these scenarios it would be able to absorb the adverse impact.  

The bank made no reference to its settlement, announced on Tuesday of  the long-drawn-out Deiulemar bankruptcy case in Italy which will see it pay out  €182.5 million.


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