Cost-cutting contributes to rise in bank profits

The Bank of Valletta Group has registered a pre-tax profit of Lm14.8 million in the past year, an increase of 1.7 per cent over 2002.

Chairman Joseph F. X. Zahra announced the results yesterday when addressing shareholders at the bank's 30th annual general meeting held at the Mediterranean Conference Centre, in Valletta.

He said the group had again registered positive results in spite of the difficult global and subdued local economic environments.

"The bank's two-pronged strategic focus in this environment was to contain costs and improve revenue generation. Our efforts gave the desired results, as reflected in our improved cost-income ratio. While being customer focused, we continue to invest in better quality service to ensure a durable profit growth," Mr Zahra said.

Operating income amounted to Lm53 million, an increase of 13.3 per cent, while net-interest income rose to Lm34.6 million, an increase of 13.3 per cent over 2002. Non-interest income increased by Lm2.1 million or 13.2 per cent.

Earnings per share amounted to 18c7, an increase of 13.1 per cent over 2002, while customer deposits increased by Lm45 million or 3.3 per cent.

The group's cost-to-income ratio improved from 58.4 per cent last year to 51.2 per cent this year, while net advances increased by Lm17.7 million, or 2.3 per cent, during the last financial year.

Mr Zahra said BoV continued to improve its internal processes and to offer its customers a wider choice of distribution channels. These two objectives were attained by further streamlining through the centralisation project and the launching of the BoV 24 x 7 services.

"The BoV Group has been focusing on increasing both interest and non-interest income. As results indicate, our core banking operations are performing well whilst we continue to ensure we have a quality loan portfolio.

"We are further intensifying our efforts to control costs, amongst other things, by restructuring our branch network and investing in the new processing centre in Santa Venera.

"On the non-interest income front, both our fund management and bancassurance activities have registered encouraging results despite the intensification of competition," Mr Zahra said.

The chairman said that the opening of the new representative office in Cairo would further enhance the group's presence in the eastern part of the Mediterranean basin, while acting as a springboard to the Gulf.

He said the bank had built a healthy relationship with its European counterparts, particularly in Brussels through the European Savings Banks Group. It was also teaming up with local government authorities to take advantage of new opportunities arising from the EU's financial package covering the period 2004 to 2006.

"With the opportunities available through the single passport, the future looks encouraging," Mr Zahra said.

He said the investment banking unit carried on with its ambitious strategy of seeking new business opportunities in the Euro-Mediterranean region.

The financial markets division secured a syndicated loan of €100 million. This loan was originally launched for €70 million but was oversubscribed and raised to €100 million.