BoV braced for second round of CEBS stress tests

Bank of Valletta expects to undergo another ‘stress test’ as part of a renewed eurozone drive “in the coming weeks”, the bank said in an interim statement last Friday.

The bank will be working closely with the Central Bank and the Malta Financial Services Authority as it undergoes the testing, as it had done before it was given a clean bill of health by the Committee of European Banking Supervisors last July.

Meanwhile, the bank said it is in regular communication with the MFSA in relation to an “investigation” the regulator has been carrying out into certain aspects of the La Valette Multi-Manager Property Fund, administered by a bank subsidiary. The fund has been the subject of judicial protests to which Bank of Valletta has replied in court.

In its statement, the bank forecast austerity measures implemented across Europe will impact consumer confidence and growth “will besluggish at best”.

Meanwhile, in the first quarter of the current year, Bank of Valletta said it saw subdued demand for new credits both in the personal home loan and corporate sectors. The substantial issuance of government stock in the quarter and the volatility in the international deposits meant customer deposits were flat in the first quarter.

The bank described net interest income “satisfactory”, and said that though commission andtrading income has been marginally ahead of the equivalent period last year, it still fell short ofanticipated levels.

Current lack of confidence in the eurozone sovereign debt market has caused spreads to widen, resulting in unrealised fair value mark downs recorded for the quarter.

The group’s net profit for the quarter is in line with that of the first quarter of 2010 but falls short of expectations, mainly due to the fair value mark downs suffered.