Rebounding strongly from last year's dismal results, Bank of Valletta yesterday announced half-year pre-tax profits of €47.5 million, up from €6.3 million in March 2009.
The results quashed mounting speculation that the massive losses suffered by Middlesea, in which BOV has significant shareholding, badly dented the bank's profits.
Bank chairman Roderick Chalmers said most of the losses incurred by the bank because of Middlesea were included in the September results with the March figures showing a net loss of €3.6 million for BOV from the insurance company.
The board of directors declared an interim dividend of 7c5, well up from the 2c8 announced in March last year. The dividend will be paid on May 28 to shareholders on the bank's register of members at the close of business on May 12.
The European Central Bank's decision to keep interest rates at a historically low one per cent since last May meant the bank's income from interest improved only marginally by €3.5 million to €61.9 million.
Mr Chalmers said interest rates would likely be maintained at this low level given the fragility of economic recovery throughout 2010 and possibly the beginning of next year.
BOV saw its loan portfolio increase by 7.4 per cent to €3.5 billion and deposits grow by 5.2 per cent to more than €5 billion.
The ratio between loans and deposits stood at about 70 per cent, which Mr Chalmers described as a "deliberately prudent" strategy.
Foreign trade and exchange business was also robust and the cards business continued to demonstrate improved results, the bank reported.
Operating expenses for the six months totalled €40.3 million, an increase of just three per cent over the previous year.
Commenting on the impact of the recession, he said the global economy had been "significantly damaged" but was stabilising. The impact on Malta, he added, was modest and the bank was forecasting the situation to remain the same.
"We are cautiously optimistic that the recovery is under way," he said.
Mr Chalmers would not say whether BOV holds Greek sovereign bonds, which were this week relegated to junk status by credit rating agencies.
"We do not discuss our portfolio but the bank has between 250 and 300 holdings and maintains a wide spread of investments to ensure the bank has the ability to absorb any losses if they arise," he said.
Eurozone countries have a "huge self interest" to sustain the Greek economy and not allow it to falter, Mr Chalmers said. Failure to do so could lead to a domino effect on other eurozone economies such as Portugal and Spain.