Financial results review - Bank of Valletta
Bank of Valletta plc published their interim financial results for the six-months ended March 31, 2007 following a board of directors' meeting held on April 27.During the first six months of the year, net interest income generated by the BOV Group...
Bank of Valletta plc published their interim financial results for the six-months ended March 31, 2007 following a board of directors' meeting held on April 27.
During the first six months of the year, net interest income generated by the BOV Group increased by 14.8 per cent to Lm27.3 million which the directors attribute to "robust growth in the loan book and a favourable rising interest rate environment".
Meanwhile, non-interest income was relatively flat at just under Lm12 million. While net fee and commission income grew by 7.4 per cent to Lm7.4 million, trading profits dropped by 10.6 per cent to Lm4.5 million reflecting unfavourable movements in the fair value of the bank's investment portfolio. The group's total operating income in the first six months of the year increased by 10 per cent to Lm39.3 million.
Share of profits from associates and jointly-controlled companies involved in insurance activities were also negatively impacted by lower investment returns. The group's share of profits from its equity participation in Middlesea Valletta Life Assurance Co. Ltd. and Middlesea Insurance plc of Lm2 million represents a drop of 27 per cent from last year's record level.
The BOV Group's non-interest expenses edged only 2.5 per cent higher to Lm16.2 million. This resulted in a further improvement in the cost to income ratio to 39.3 per cent (March 06: 41.1 per cent). The BOV chairman noted that this ratio "places BOV among the best performing banks in terms of cost efficiency by any standard".
During the six months period under review, BOV's operating profit before impairment allowances increased by 15.9 per cent to Lm23.1 million.
Net impairment allowances dropped by Lm3.1 million to Lm0.8 million reflecting the continued improvement in the credit quality of the loan book and certain recoveries of loans which were previously provided for. In fact, the group reported that non-performing loans as a percentage of total net loans continued to improve and dropped to 5.9 per cent from 8.4 per cent in March 2006.
The lower impairment allowance helped the BOV Group's pre-tax profit rise by 29 per cent to a record Lm24.3 million. After accounting for taxation and minority interests, the profit attributable to shareholders climbed 26.1 per cent to Lm16.3 million with earnings per share of 14c7 (March 06: 11c7).
The board of directors declared a gross interim dividend of 6c75 per share (4c39 net of tax) to all shareholders on the company's register as at close of trading on May 7.
This year's interim dividend represents a 23 per cent increase over the 2006 interim dividend of 5c5 per share and a March 2007 interim payout ratio of 29.8 per cent.
BOV's balance sheet as at March 31, 2007 shows group total assets of Lm2.4 billion. Net advances to customers increased by 11 per cent (Lm109 million) over the past six months to Lm1.1 billion with customer deposits rising by 1.2 per cent (Lm20.6 million) to Lm1.7 billion. This helped the advances to deposits ratio edge up to 0.65 times. Shareholders funds during the first six months of the year increased by Lm6.9 million to Lm165.4 million resulting in a net asset value per share of Lm1.49. The group's annualised return on equity increased to a record 20.6 per cent (Mar 2006: 18.2 per cent) with annualised return on assets of 2.1 per cent (Mar 2006: 1.8 per cent). The group's annualised pre-tax return on equity also increased to a record of 30.8 per cent.
• This is the first of a series of articles where Edward Rizzo, a director of Rizzo, Farrugia & Co (Stockbrokers) Limited, one of Malta's leading private asset management companies, reviewing the financial results issued last week by International Hotel Investments plc and Bank of Valletta plc.
During the first six months of the year, net interest income generated by the BOV Group increased by 14.8 per cent to Lm27.3 million which the directors attribute to "robust growth in the loan book and a favourable rising interest rate environment".
Meanwhile, non-interest income was relatively flat at just under Lm12 million. While net fee and commission income grew by 7.4 per cent to Lm7.4 million, trading profits dropped by 10.6 per cent to Lm4.5 million reflecting unfavourable movements in the fair value of the bank's investment portfolio. The group's total operating income in the first six months of the year increased by 10 per cent to Lm39.3 million.
Share of profits from associates and jointly-controlled companies involved in insurance activities were also negatively impacted by lower investment returns. The group's share of profits from its equity participation in Middlesea Valletta Life Assurance Co. Ltd. and Middlesea Insurance plc of Lm2 million represents a drop of 27 per cent from last year's record level.
The BOV Group's non-interest expenses edged only 2.5 per cent higher to Lm16.2 million. This resulted in a further improvement in the cost to income ratio to 39.3 per cent (March 06: 41.1 per cent). The BOV chairman noted that this ratio "places BOV among the best performing banks in terms of cost efficiency by any standard".
During the six months period under review, BOV's operating profit before impairment allowances increased by 15.9 per cent to Lm23.1 million.
Net impairment allowances dropped by Lm3.1 million to Lm0.8 million reflecting the continued improvement in the credit quality of the loan book and certain recoveries of loans which were previously provided for. In fact, the group reported that non-performing loans as a percentage of total net loans continued to improve and dropped to 5.9 per cent from 8.4 per cent in March 2006.
The lower impairment allowance helped the BOV Group's pre-tax profit rise by 29 per cent to a record Lm24.3 million. After accounting for taxation and minority interests, the profit attributable to shareholders climbed 26.1 per cent to Lm16.3 million with earnings per share of 14c7 (March 06: 11c7).
The board of directors declared a gross interim dividend of 6c75 per share (4c39 net of tax) to all shareholders on the company's register as at close of trading on May 7.
This year's interim dividend represents a 23 per cent increase over the 2006 interim dividend of 5c5 per share and a March 2007 interim payout ratio of 29.8 per cent.
BOV's balance sheet as at March 31, 2007 shows group total assets of Lm2.4 billion. Net advances to customers increased by 11 per cent (Lm109 million) over the past six months to Lm1.1 billion with customer deposits rising by 1.2 per cent (Lm20.6 million) to Lm1.7 billion. This helped the advances to deposits ratio edge up to 0.65 times. Shareholders funds during the first six months of the year increased by Lm6.9 million to Lm165.4 million resulting in a net asset value per share of Lm1.49. The group's annualised return on equity increased to a record 20.6 per cent (Mar 2006: 18.2 per cent) with annualised return on assets of 2.1 per cent (Mar 2006: 1.8 per cent). The group's annualised pre-tax return on equity also increased to a record of 30.8 per cent.
• This is the first of a series of articles where Edward Rizzo, a director of Rizzo, Farrugia & Co (Stockbrokers) Limited, one of Malta's leading private asset management companies, reviewing the financial results issued last week by International Hotel Investments plc and Bank of Valletta plc.