Malta leads EU in growth in monetary financial institutions

Malta leads the EU in growth in monetary financial institutions and new licences were issued in all areas of financial services last year, the regulator’s annual report reveals.

The Malta Financial Services Authority report, which was tabled in Parliament on Monday, shows the financial services sector succeeded in sustaining its standing, despite the adverse business environment in the eurozone.

Above average rates of growth were registered in electronic money and payments services, pension fund activity, non-life insurance business, and trustee services.

Meanwhile, the MFSA kick-started the groundwork on a plan to introduce upgraded consumer protection measures last year, including wide-ranging consultation with stakeholders. The regulator has a commitment with International Monetary Fund to produce a blueprint for stronger consumer protection regime.

“We will listen to all voices and take advice from expert quarters,” MFSA chairman Joseph Bannister wrote. “We have embarked on a necessarily complex road that has implications for future consumer and investor confidence, finance industry costs and Malta’s competitiveness and reputation.”

The fund industry is maturing rapidly and continues to attract sophisticated fund management activity, the report pointed out. The MFSA licensed 128 new Collective Investment Schemes, including 117 Professional Investor Funds and nine UCITS funds, a decline of about 28 per cent on 2011. Licences for 81 PIFs, 14 UCITS and one non-UCITS fund were surrendered.

Last year, there were 144 non-Malta domiciled funds which were administered by Malta-based fund administrators. Some figures related to a number of funds’ NAV were still provisional and subject to review. However, the total net asset value of funds domiciled in Malta increased by almost 17 per cent last year to around €9.7 billion.

A new vehicle, the Recognised Incorporated Cell Company, was introduced last year, designed to enable fund platform operators to offer a range of administrative services to fund clusters. Five new insurance activities were authorised to carry out general business last year – the sector now consists of 58 insurance undertakings, including 11 affiliate insurance operations and eight protected cell companies.

The total investment assets of all insurance undertakings expanded by almost seven per cent last year to €9.4 billion.

Gross premiums written by Malta-domiciled companies writing general business reached €1.31 billion, up 10 per cent in 2011.

International interest in Malta’s two-year-old retirement regime continued to grow and four new schemes were created, bringing the total to 17. Asset value reached €533 million.

Bank assets grew by 4.3 per cent to €52.9 million, while assets of the core domestic banks reached €14.4 billion, an increase of €0.5 billion. Assets of the non-core banks and other banks also increased. Loans and advances across the banking sector continued to fall, and were dented by €1.7 billion to total €21.4 billion.

Core domestic banks experienced a decrease of almost two per cent at the end of last year, while non-core banks and other banks registered a decline of nearly 29 per cent and 10 per cent. Core domestic banks’ lending to households and individuals totalled €3.9 billion (46 per cent) of the total core domestic banks’ lending; 11 per cent were advanced to the construction sector and nine per cent was granted to wholesale and retail trade, and vehicle repair. Finance and insurance took 46 per cent of lending by other banks last year, followed by manufacturing (10.7 per cent) and transportation and storage (7.8 per cent).

Bank deposits across the sector totalled €27.4 billion, an increase of €2 billion over the previous year.

Deposits of the core domestic banks rose by five per cent to €12.1 billion.

More than 4,000 new companies were registered last year – one of the highest increases on record – with nearly three quarters stemming from outside the EU. Additionally, 68 companies were redomiciled to Malta under the Continuation of Companies Regulations, an increase of 20 per cent.