Bank of Valletta registered a pre-tax profit of €89.2 million in 2019 and is recommending that shareholders receive a dividend of 1.71 cents per share, saying its capital strength has improved over previous years.

The €89.2m profit figure represents a sharp 25% increase from that in 2018, when the bank had to set aside €75m as litigation costs.

BOV set aside an additional €25m for ligitation in 2019. 

Without that €23.9m transformation cost and an additional €25m litigation provision, the bank’s pre-tax profit would have amounted to €138.1 million – 6% lower than the equivalent figure (€146.2m) in 2018.

BOV experienced a challenging year, with hackers swiping €13 million and forcing the bank to cease operations for some days and the financial regulator warning the bank in June that it had “serious concerns” about the bank’s internal controls.

Its financial statements for 2019 show that the bank spent €23.9 million last year addressing some of those issues through de-risking its portfolio, increasing internal controls, introducing tighter policies and “remediating any past control failings”.

In a statement announcing its financial results, the bank said it expected to continue investing in this transformation in 2020.

The bank’s core equity tier one ration – a key measure of a bank’s financial strength – increased by 120 base points and now stands at 19.5%.

Net loans and advances were up by €88m, with home loans continuing to grow in importance for the bank’s loan book.

Customer deposits grew by 2.1% to €10.6 billion while international corporate deposits declined by 24%.  

Bank CEO Rick Hunkin, who took over the lead role in January, said the bank’s focus was now on the ongoing COVID-19 crisis.

On Monday, the bank said it was setting aside €10m to make available to struggling businesses.

Hunkin warned that the COVID-19 crisis would most likely impact the bottom line but said it was too early to determine just how significant that might be.

“BOV’s capital buffers, together with measures made available by the regulatory authorities, provide significant mitigation against the additional challenges of this unprecedented event,” he told shareholders.

The bank would continue to de-risk, simplify processes and invest in digital channels in 2020, he said.