Banif Bank (Malta) will report profits for 2015 that are five times higher than those for the previous year, according to Paulo Machado Fernandes, the chief officer for financial markets and investments.

In spite of this positive result, its head office will still be forced to sell the bank, along with its other international operations in Brazil and the Cape Verde Islands, by 2017.

The head office reported that the aggregate losses from these operations, which have been classified as “discontinued” in its financial report, amounted to €18.3 million (2013: €75.2 million). Last December, it sold Banif Mais to a French credit group for €410 million.

The divestment condition was imposed by the European Commission after the parent company in Portugal received state aid. The divestment is similar to the forced sale of Volksbank in Malta after its parent company in Austria received state aid, and similarly has nothing to do with whether the assets being sold are profitable or not.

“It is all about market compensation, as the bank is getting an advantage over its competitors who did not get assistance,” Adrian Coppini, chief officer for corporate services, explained.

There have been a number of investors interested in buying the bank – but none of them have so far been shortlisted. The transaction is being handled by the investment bank of the head office in Portugal and the bank executives in Malta are not involved, beyond ensuring that all the latest information is available for any due diligence being carried out by interested buyers.

Mr Machado Fernandes believes that this approach is very important. “Our job is to keep operations going – and growing. If we start mixing the two realities, it creates noise which would distract us,” he said.

The results for 2014, which will be released in a few weeks, will show that the returns on equity are closing in on those of other banks’ on the local market. In 2013, it made a pre-tax profit of €253,000, with net impairments of €1.3 million.

Even though the bank was not one of the three which needed to undergo an Asset Quality Review by the European Central Bank, it opted to carry out its own stress test and found that there would be no material impact. Any impact would be much less than other banks, Mr Machado Fernandes said, adding that the bank also managed to comply with regulatory capital requirements, even though it had forecast that it would require an injection of €17.5 million in the second half of 2014 to do so.

“The capital ratio reflects capital on one side and risk-weighted assets on the other. The capital is not increasing by injection but from our results, while on the other side of the equation, the bank managed in 2013 and 2014 to focus on segments where there is less risk.

“We improved our capital ratio by 20 basis points and we expect to do more this year because of the results. Obviously a further capital injection would be welcome because it would strengthen the bank’s capital ratios,” Mr Machado Fernandes said.

The ticking clock has not had any impact on its growth strategy. Banif Bank (Malta) opened two branches in 2014 – bringing the branch network up to what they consider to be “the right size” to meet current client requirements.

And in addition to planning to recruit seven to nine more staff in 2015, it is also considering launching investment services.