APS Bank saw its pre-tax profit in 2022 increase to a record of €28.9 million, up from €23.7 million in 2021.

The group as a whole made a pre-tax profit of €15.7 million last year, down from €24.1 million in 2021.

"These contrasting outcomes evince the trend already emerging in the first half of the year, as global markets were confronted by persistent economic instability and rising inflationary pressures," APS said.

"Notwithstanding these challenges, and despite the unrealised negative market trends at group level, the bank once again delivered excellent operating results." 

The APS Group's performance

The bank said in a statement that net interest income remained a key driver of the revenue mix, growing by 17.6% from €55.4 million in 2021 to €65.1 million in 2022.

An overall expansion of the group’s home finance and commercial loan books, and the fixed-income portfolio were the main contributors to the growth in interest revenue, as spreads on the syndicated loan book also improved.

Interest income grew by 15.5% from €69.1 million in 2021 to €79.9 million in 2022.

On the other hand, interest expense of €14.8 million increased by 7.2% on the €13.8 million of 2021, demonstrating the group’s management of its asset-liability mix and cost of funding in a period which saw interest rates move higher in years.

As at the end of the reporting period, the group total assets stood at €3.11 billion, a year-on-year growth of 11.3% on the €2.8 billion at the end of 2021.

Loans and advances to customers grew by 15.1% to €2.22 billion while the fixed income portfolio, held mainly for liquidity and income diversification purposes, grew by 40.1% to €459.6 million, as improved yield pick-up opportunities were created especially in the second half of the year.

Corresponding to the increase in the group’s asset base, amounts owed to customers grew by 11.5% or €278.9 million, to reach €2.71 billion.  

The directors are recommending a final gross dividend to the ordinary shareholders of 2.68 € cents per ordinary share, totalling €9,846,153 (net dividend of 1.74 € cents per ordinary share, totalling €6,400,000). The recommendation is also to pay the dividend by way of Scrip, with each shareholder having the option to receive either cash or new ordinary shares, at an attribution price of €0.57c per new ordinary share. This final dividend is in addition to the interim dividend paid by the Bank in the fourth quarter of 2022. 

The final dividend is subject to approval at the Annual General Meeting. Shareholders appearing on the Bank’s register of members maintained by the Central Securities Depositary of the Malta Stock Exchange as at close of trading on April 14, 2023 (trading session of April 12, 2023) will receive notice of the AGM and be entitled to receive the dividend.

An eye on interest rates

Marcel Cassar, the bank's CEO said the group had navigated choppy waters - such as the post-COVID scenario and the war in Ukraine -  and had again delivered excellent results, with the bank having its best solo performance ever.

As geo-political tensions heightened the risk of a recession, central banks have been raising interest rates after a decade characterised by low, zero or below.

"2022 saw policymakers and central bankers across borders persist in fighting inflation notwithstanding the implications for the capital markets and potentially, loan quality," he said.

In the Eurozone alone, since July the European Central Bank raised its deposit rate progressively to 2.5% from -0.5%, making it the largest and fastest increase in rates in the monetary union’s history.

As banks adapt their strategies to the reality of higher interest rates, we shall manage this new scenario with the concerns of all our customers in mind, he said.

"We look forward to more exciting prospects for the APS Group, encouraged by strong customer confidence in our model and as opportunities to gain further market share continue to unfold," Cassar said.