Bank of Valletta has reported a profit of €80.7 million before tax for the financial year ending December 2021. 

This is up significantly from the €15.2 million posted by the bank in the previous year.  

In a press conference on Tuesday, the bank’s top brass explained that although BOV had registered a positive performance it would not be paying out a dividend to its shareholders. 

Bank chairman Gordon Cordina said that the board had decided “the distribution of a dividend at this time would not be ideal”.

Bank of Valletta chairman Gordon Cordina (left) and outgoing chief executive Rick Hunkin addressing journalists on Tuesday.

Asked to expand on this, Cordina told Times of Malta that the “main blocker” to the bank releasing a dividend was the need to push up profits to bring them in line with BOV’s capital. 

“I look forward to a time in the not too distant future when we can return to a better dividend performance,” he said.   

BOV paid out a small interim dividend of €0.0264 gross per share earlier this year - the first payment shareholders received since 2019. The bank's share price has also taken a hit over that period, falling from more than €2 in mid-2019 to €0.77 as of Tuesday.    

No major impact from Ukraine

Meanwhile, outgoing BOV chief executive Rick Hunkin said the bank was not experiencing any major outfall from the Russian invasion of Ukraine. 

The bank, he said, was not exposed through any major investments and its direct exposure through customers dealing with the jurisdiction were not large. 

The bank has put systems in place to bring its operations in line with international sanctions and other measures related to the SWIFT secure transfer system.  

Annual highlights

• Profit before tax of €80.7 million (2020: €15.2 million)
• Pre-tax return on equity of 7.3% (2020: 1.4%) and earnings per share of 9.6 cents compared with 2.4 cents in the same period 2020.

Cordina told reporters that the bank had a resilient income stream which showed a good recovery from the impact of the pandemic in 2020. 

While BOV registered growth in some areas, this was partly offset by higher costs. 

Total operating income was up 4.9% to €242.9 million (compared to €231.6 million in 2020). 

The bank’s revenues mostly recovered from 2020 lows.

Net income from interest collected from loans held up overall and net commission related income grew strongly.

 However, foreign exchange income was down. 

The year at a glance 

Employee compensation increased by €2.2 million. This reflected the need for the bank to meet regulatory requirements, and to invest in digital transformation.

The bank incurred a total of €6.1 million in “specific items” such as the €2.6 million fine imposed by Financial Intelligence and Analysis Unit (‘FIAU’) and €1.4 million disbursements on card fraud.

Costs payable to the Deposit Guarantee Scheme (‘DGS’) increased by €4.8 million during the year as the growth in retail deposits continued.· Excluding the impact of items that are not expected to recur and an increase in contribution to the DGS, underlying operating costs increase was €5.7 million, or 3.7%, mainly driven by IT investments due to the Bank’s constant efforts to modernise and digitise key systems.