BoV Group profits increase by 21%

The Malta Stock Exchange index closed the last week of October on a positive note, gradually edging upwards in every session except one. By Friday, the index had climbed an encouraging 1.01%, therefore reversing some of the losses experienced during the month.

Overall, the past month was still negative for the index which shed a minor 0.37% during October. The index took the shape of a mild U-turn given the moderate comeback experienced since the mid-month lows. This contrasts with the performance of most indices abroad during the past four weeks, which continued building on the hefty gains achieved in September.

Judging from the low volume of trading in the equity market, the local exchange last week was characterised by the anticipation of Bank of Valletta Group’s annual reports, which were announced on Friday. Less than 190,000 shares were traded, possibly indicating the nervousness preceding this financial news. Investor sentiment was on edge, with very few wanting to take a decisive plunge into the market without having full clarification of BoV’s results.

Towards the very end of the week this sentiment turned positive, particularly surrounding BoV’s share price, which swung the index decisively upwards on Friday. Of the 11 equities traded last week, four managed to improve in value, another four settled in the red, while the remaining three closed unchanged.

The spotlight was firmly focused on BoV’s annual results last week. Indeed, BoV was the week’s most widely traded equity. A certain positive vibe was tangible throughout the week, yet hesitation grew as the days passed with fewer of the bank’s shares being exchanged.

However, on Friday, the scepticism was swept aside and investors bid BoV’s share price higher. In fact, the bulk of trading in this stock took place on this day, with the share price closing the week 3.40% higher prior to the actual release of the anticipated results.

In fact, the BoV Group’s annual results for the period ending September 30 were issued only after the market closed on Friday. The group’s pre-tax profit increased 21% compared to the previous year. Among the main contributors to this overall positive result was the improvement in the margin due to higher volumes and time lag effect on re-pricing of deposits as well as strong growth in commission income.

The restructuring of Middlesea Insurance and other cost-cutting measures also helped.

The board of directors proposed the payment of a final gross dividend of €0.16 per share (hence making a total gross dividend for the current year €0.235 per share) and a bonus issue of one share for every five shares held by BoV shareholders on the bank’s share register as at close of business on January 12, 2011.

The positive sentiment sur­rounding BoV only had a minor spillover effect on HSBC Bank Malta plc. Fewer HSBC shares than usual changed hands throughout the week, and there was no major upsurge in trading on Friday. Nevertheless, the equity price managed to end the week 1% higher at €2.80, thereby snapping a downbeat trend that had continued for well over a month.

A total of 28,589 International Hotel Investments plc (IHI) shares were exchanged last week, yet their price remained stuck at €0.80. IHI was one of October’s under­performing equities, having lost nearly 6% over the past four weeks.

By contrast, Malta International Airport plc (MIA) was the month’s best performing equities, powering on to a new for the year and closing last week’s trading at €1.64. Since the end of September, MIA has soared well over 9%, powering ahead from an initial period of profit-taking.

Last week, the share price added 2.5% to its overall gains. However, volume traded was a bit low, with just under 16,000 shares changing hands.

Fimbank plc and Maltapost plc both had a bad week, yet the volume of trading in their shares was unimpressive. Fimbank lost 2.11%, sustaining its downward spiral, while Maltapost plc shed 1.09%, although in this case it was more of a minimal correction of the equity’s all-time highs.

Lombard Bank plc’s share price got hammered again last week, heading south to reach a new yearly low of €2.50, thereby erasing nearly 9% of the share value for the past month and a total of 16.4% since the start of the year. Losses in this equity’s share price have been gathering momentum over the past weeks. However, these falls in price have had little backing as volume remains very unconvincingly low.

Minimal trading resulted in gains for Simonds Farsons Cisk plc shares, and losses for Island Hotels Group Holdings plc, while Go plc and Middlesea Insurance plc kept the previous week’s prices.

Nearly €400,000 worth of trading in local corporate bonds took place, with prices remaining fairly unchanged. On the other hand, Malta Government Stock prices sustained the downward trend which started some weeks ago, with nearly all MGSs traded last week suffering losses. The value of trading in MGSs was again very heavy, easily surpassing the €5 million mark.

There was over €7.8m worth of trading in Treasury bills last week.

Last week, the Treasury announced that the government will be issuing two fungible issues on November 8. The Treasury will be accepting an aggregate total of €100m worth of applications for the MGS 3.75% 2015 (VI) issue and the MGS 5.25% 2030 (I) issue. The prices of the issues will be announced next Thursday.

This article, which was compiled by Jesmond Mizzi, joint managing director of Atlas JMFS Investment Services Ltd, does not intend to give investment advice and the contents therein should not be construed as such. Atlas JMFS is licensed to conduct investment services by the MFSA and is a member firm of the Malta Stock Exchange. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this article. For further information contact Atlas JMFS at 67/3, South Street, Valletta, or on Tel: 2122 4410 or e-mail jesmond.mizzi@atlasjmfs.com.