Good week for Bank of Valletta

Two items of good news led Bank of Valletta CEO Tonio Depasquale to comment to The Sunday Times last week that it had been a "good week" for the bank.

Mr Depasquale was returning from London, where on Tuesday he received the Bank of the Year in Malta 2005 Award from Stephen Timewell, editor-in-chief of The Banker, the monthly banking publication of the Financial Times Group.

Then, international rating agency FITCH upgraded its outlook for BoV from negative to stable. Concurrently, FITCH affirmed all the bank's ratings - Long Term A-, Short Term F2, Individual C.

"Although separate, one is a confirmation of the other," Mr Depasquale said. "This is not something based on perception but on results," he added.

The Banker has been a trusted source of global financial intelligence since 1926 and the Bank of the Year Awards listing has become not only essential reading but also a key indicator of financial performance.

This is the sixth year the awards are being listing by The Banker and covers a record 138 countries. BoV had previously won the award in 2001 and 2002.

In their assessment of each country's award, the global editorial team of The Banker reflects not only on the latest results, growth and banking data (including a detailed questionnaire provided by the bank) but also technology and strategic developments.

The award is for the best overall performance in the previous period, incorporating both performance criteria and qualitative achievements.

Mr Depasquale said this includes the bank's deployment and use of information technology (IT), which he stressed played an important part in the bank's success, the services it provides and its product development.

"One area in which we have introduced the first IT-based service of its type in Malta is e-brokerage," he said.

The bank's structure had also contributed to its success, enabling it to increase business substantially while containing costs. Part of the bank's core relationship-based strategy was the introduction of a brand promise, an internal document, which guides its employees on the customer experience that the bank seeks to deliver.

It follows the introduction four years ago of relationship banking with the appointment of relationship officers and managers. The brand promise is also a driver of organisational change. Based on the principles of supportiveness and mutuality, it forms the basis of an integrated change plan that is being implemented over a three-year period, enabling the bank to further synchronise its operations.

As Mr Depasquale explained, this will be of benefit not only to the bank's over 260,000 customers but also to shareholders because the bank would be in a better position to promote products that will both benefit the customer and produce bottom-line results of benefit to shareholders. In certain areas it would also enable the bank to increase market share.

Winners in The Banker Awards receive a prestigious Bracken award, named after Brendan Bracken, the founding editor of The Banker in 1926 and the chairman of the modern-day Financial Times from 1945 to 1958.

Bracken epitomises the global spirit, vision and integrity of The Banker and the FT Group, and the winning of a Bracken is a fitting accolade for the performances of the world's top financial institutions.

FITCH stated that the rating reflects "BoV's position as the largest bank within the Maltese financial system, its improving profitability and sound capitalisation". FITCH acknowledged the improvement of BoV's asset quality indicators up to March 2005, although Mr Depasquale said the bank was passing on financial information to FITCH right up to last month, a week before the report was issued.

The ratings were based on BoV's performance during the financial year ended September 30, 2004, as well as the half yearly figures as at March 2005. FITCH also highlighted BoV's positive performance during the period under review, resulting in a combination of improved net interest margins, and net fee and commission income.

While noting the challenges ahead, FITCH acknowledged the improvement of BoV's asset quality over the past years.

Mr Depasquale said the FITCH rating was an indication of the bank's progress. "It is not easy for a rating agency to change its rating," he said. "This is confirmation that our progress was sustained.

"The bank has a bullish outlook to the current operating environment and the quality of our loan book has surpassed all expectations."

Asked what opportunities of EU membership the bank was seeking to maximise on, Mr Depasquale said BoV was supporting customers seeking to invest in the EU.

EU membership had given the bank and its customers better credentials as investors in the Union and it also made it easier for the bank to promote Malta.

He also mentioned the bank's involvement in the European Investment Fund, which supports small and medium enterprises (SMEs), a position that enabled it to offer its services within the fund.

Looking back at last week's developments, Mr Depasquale said these developments could only enhance the bank's valuation, inspiring greater confidence. While conceding that other factors were involved, should Government or any shareholder wish to dispose of their shareholding, he said the greater the confidence, the easier the cash conversion of the shares.

"These are two pluses. My job is to run the bank and to add to the shareholders' value," he said.