Moody's affirms BoV's credit ratings

In its latest credit rating report on Bank of Valletta, Moody's described the bank as having a dominant business franchise, underpinned by a strong brand name.

"Bank of Valletta boasts a dominant position as the largest bank in Malta with a market share accounting for around 40% of the banking system's total assets," Moody's said. "Its strong business franchise ensures the bank with a sustainable earnings capacity driving its ratings (Baa1/Prime-2/D+ with a stable outlook).

"BoV enjoys an excellent brand name and it would not be exaggerating to state that it is present in nearly every important financing deal within Malta. It attracts customer loyalty by carrying the image of being the Maltese bank, compared to its main rivals, which are predominantly subsidiaries of large foreign banking groups."

In its report, Moody's went on to say: "We believe the bank has a defendable franchise and that going forward its financial muscle and efforts to make inroads into other financial services are likely to reinforce its leading role in the system.

"Looking ahead over a medium- to longer term horizon, more cross selling opportunities are likely to arise, while the bank's non-interest income streams are bound to benefit, exerting upward pressure on its financial strength rating."

BoV has a coherent strategy in place to sustain its growth potential and profitability. The Bank's retail strategy, underpinned by its alternative-delivery channel approach, which is resulting in more than 70 per cent of the bank's total transactions, taking place outside its branches.

Moody's welcomed the strengthened corporate governance framework that supports the bank's positive credit rating drivers. It also highlighted the separation between the chairmanship and the position of chief executive officer and the fact that the structure is now more in line with international practice.

"We take a positive view of the new management structure and the newly-appointed chairman, who took over in November 2004. BoV's management team members, and the bank as a whole, are set to benefit from his extensive international experience within the financial markets."