Izola Bank interim profits down slightly

Izola Bank plc, the Valletta-based subsidiary of the Van Marcke trading and manufacturing group of Belgium, has announced pre-tax profits of €781,522 for the six months ended June 30, down €56,058 or 6.7 per cent, compared with €837,580 for the same period in 2009.

This was a result of a higher general impairment allowance taken due to the increase in the factoring portfolio and a higher depreciation charge, the bank said.

Operating income of €1,345,186 for the six months ended June 30 is up €42,851 or 3.3 per cent, compared with €1,302,335 for the same period in 2009.

The bank’s cost-to-income ratio increased to 41.9 per cent for the period, an increase of 6.2 per cent. Loans and advances to customers rose 11.3 per cent to €35.86 million. Customer deposits of €66 million showed a 6.1 per cent increase.

Total assets rose by €16.51 million to €92.44 million.

The drop in net interest income was due to margin compression as debt securities, which were re-priced during 2009. Interest spread on certain balance sheet items, such as shareholders’ equity, was compressed due to prevailing very low interest rates.

Net fees and commission income of €656,050 for the six months ended June 30 was up €191,178, as a result of the growth in factoring activity.

Due to this strong growth in net fees and commission income, the operating income increased slightly by €42,851 (3.3 per cent).

The quality of the lending portfolio showed no sign of deterioration while liquidity and capital ratios remained substantially above regulatory requirements.

The board is not declaring an interim dividend.