APS Bank has announced a strong operating performance at both group and bank for the first half of 2019.

Extracts from the unaudited accounts of the bank for the six months ended June 30, 2019 were released after these were presented at a meeting to the board of directors. The main income constituents continued to show steady growth over the same period in 2018.  

At bank level, net interest income grew by 14.4 per cent, while net non-interest income (in the main part, fees and commissions) increased by 11.9 per cent. As a result, operating income grew by 13.9 per cent, from €22.9 million in 2018 to €26.1 million in 2019. 

Despite continuing cost pressures arising from investment in personnel and other operating expenses, including risk and compliance, technology, security and process transformation, always in support of the orderly business growth, cost-efficiency was maintained around the 53 per cent level. 

Pre-tax profit of €11.4 million (2018 – €10.5 million) showed an increase of 8.6 per cent over last year. Although these numbers are largely mirrored at group level, consolidated results additionally reflect the positive fair value movement in the APS Diversified Bond Fund during the period under review pushing group pre-tax profit to €14.9 million compared to €9.3 million in 2018. 

Balance sheet activity remains the main driver behind the growth, as deposit raising and lending grew by 5.5 per cent and 8.6 per cent, to €1.74 billion and €1.45 billion respectively, since December 31, 2018. High liquidity on the one hand permits liquidity coverage (LCR) and net stable funding ratios (NSFR) to be maintained well above the regulatory minima; on the other hand surplus liquidity creates challenges as a low or negative interest rate environment persists. 

While the bank remains buoyant about its growth prospects in line with its 2019-2021 business plan, funding strategies may need to be adjusted to optimise spread management. Late in May the bank received €13 million of new CET1 equity at the conclusion of a rights issue which, as announced and on top of retained earnings from 2018, marked the conclusion of Phase 1 of its capital development plan. 

This injection not only supports the bank’s capital adequacy but provides a platform for its future progress. The CET 1 capital ratio as at end of June stood at 14 per cent, well above the statutory minimum. Key performance ratios for NPLs and profitability (adjusted ROAE) remained strong, at 3.1 per cent and 10 per cent, respectively.

Commenting on the results, CEO Marcel Cassar said: “APS Bank is continuing with its plans of scaling up around a core business model that looks at selective growth and diversification of both its funding and credit base. At the same time we continue to strengthen governance, risk controls and technology to enrich the customer experience in a safe and prudent way. Our gradual gain in market share also continues in a business environment that remains competitive and challenging.”