Bank of Valletta has reported a profit before tax of €46.5 million during the first quarter of this year, up by €24 million when compared to the same quarter last year.
The bank announced the results at a press conference on Thursday afternoon, with chairman Gordon Cordina saying that the bank had improved its performance despite a rapidly changing economic situation and a scenario of rising interest rates. Demand for investment was still strong, Cordina said and the bank had taken advantage of good business opportunities and benefitted from having the Deiulemar litigation case settled.
In the first quarter of 2023, BOV saw an operating income of €95.5 million, up from 58.9 million in Q1 of last year, and operating costs of €44.2 million while suffering an impairment of €5 million.
The bank’s revenue rose by €36.6 million to €95.5 million during the first quarter of the year, almost all of which it attributed to a growth in net interest income. Around a fifth of this growth, the bank said was impacted by the European Central Bank raising interest rates, while growth in the business and home loan portfolios as well as higher effective rates on the home loan portfolio also contributed to this growth.
BOV’s operating costs were up by 2.8 per cent when compared to the same period in 2022, largely due to staff costs as well as investment in technology in an effort to modernise and digitise the bank.
However, slower growth in deposit levels meant the bank had lower depositor guarantee scheme contributions to pay, which partially offset the increased costs of staff and technology.
A net expected credit loss of €5 million was attributed in part to a “normal consequence” of growth in the loan portfolio as well as improved coverage levels for riskier exposure.
Asked about the bank’s appetite for investing in high-rise development, CEO Kenneth Farrugia said that the bank does not exclude “any cohort of projects”, particularly if these include efforts to meet Environmental, social, and governance (ESG) goals.
Aside from assessing potential projects on their environmental sustainability, Cordina added that projects financed by the bank must be financially viable in the long term and that BOV was uniquely placed, as the country’s largest bank, to assess the financial feasibility of large projects.
“The bank remains open for good business to create the selectively right dividends for our country,” he said.
Last month, banking association chair Marcel Cassar told Times of Malta that local banks were not seeing a demand for properties in high-rise buildings despite the rate at which they continue to be built around the island.
The intensity and scale of certain developments as well as public outrage about others are causing banks to rethink the projects they support, he said.