APS Consult, the advisory subsidiary of APS Bank, has been put in abeyance, reflecting a disappointing response to its attempts to help particular sectors.

APS Consult is an important part of the bank’s ethos, which is based on the Church’s teachings and a social orientation. It was set up to support the restructuring of several economic and social welfare sectors. Many times it is not resources that are in short supply, but a sectoral vision that is shared by many and the will to cooperate one with another. APS Consult was created to fill this void.

The company started by organising a number of seminars for the agricultural sector – supported by the FAO – trying to encourage the take-up of insurance (critical under the envisaged climate change scenarios), good water policies, the formation of producer organisations, and sound fisheries management. However, chairman Lino Delia was clearly frustrated that the advice had not been taken up.

“We already had links with the agriculture sector through the service we offered at Pitkali. The bank also had loan products for the sector, based on the single-account adopted for home loans, which allow the beneficiary to save on interest whenever the account was in credit.

“But we also always felt that as an economic activity, agriculture was the ‘Cinderella’, overlooked and underestimated. But we were simply not effective to bring about the desired changes and we decided to stop the Farm Advisory Service in January 2014,” he said.

APS Consult also offered advisory services to sports organisations, working with the Kunsill Malti għall-Isport.

“But, again, unless the objectives one is striving to achieve are clearly defined and the organisational set up is such as to lead to the attainment of such aims, there is no point in toiling in such activities. So we decided to put on hold for the time being our involvement in this sector,” he said.

Time has come to consolidate resources

Mr Delia was clearly disappointed that the bank’s efforts had not borne fruit, seeing this as a reflection of the lack of cohesiveness and collaboration endemic in so many sectors in Malta.

“We have to reconsider the role of APS Consult. The time has come to consolidate our resources; if we are not catalysing change, then we are simply wasting our time.”

The bank has retained its commitment to the arts, through music as well as the visual arts, with 15 CDs produced of music by local composers – at first deceased ones but now also seeking new talent through competitions. The bank also brings together artists and will next year look at artists with blood or marital ties.

Bank will not go into any sectors which would not comply with the Church’s teachings

“We want to complement the good work that other corporate sponsors are doing,” he stressed.

APS Bank recently announced a pre-tax profit of €13.8 million, up from €9.9 million the previous year. Mr Delia also said that the bank was focusing more on home loans to continue meeting the demand for homeownership (under certain parameters), even though the returns were comparatively modest. However, the bank has also introduced a product aimed at local producers, Biz Plus, seeking to ease the financial costs of companies operating locally and also abroad, including North Africa.

APS is also co-financing projects overseas, as a way of diversifying into international sectors and fulfilling its objectives of being active in the environmental and energy generating initiatives.

“You have to understand that the bank will not go into any sectors which would not comply with the Church’s teaching. So we clearly do not get involved with the gaming industry, for example,” he explained.

“Our approach is always different. We started being active in the home loan market to bring within reach of a wider share of the population the ability to own one’s home, provided that we make borrowers fully aware of the commitments they are undertaking. It was a time of rising interest rates, and our financial packages were transparent and competitive. ‘’The bank was still, however, under pressure to offer attractive interest rates on deposits, and it managed to generate profits by remaining a lean and cost-effective bank in the medium term. In fact, from the 87 employees it had when Mr Delia moved there from Mid-Med, it now has 240; its balance sheet is now approaching €1 billion.

“This is something that is fundamental when it comes to the current discussion about interest rate margins. Each bank has its own model and that model is based on the bank’s objectives – all within a very competitive market. We need to keep this in mind if we want to make Malta attractive and viable both as a financial sector with an array of businesses hereas well as sustain a robust banking sector to cater for local needs.”

“It helps that our shareholders’ expectation of a ‘reasonable’ annual rate of return gave us the flexibility to implement a strategy to sustain the bank’s capital growth”

This year, the gross dividend was €2.3 million.

Through the APS Funds Sicav plc, the bank also created two successful funds, an income fund and an ethical fund, which have between them attracted €50 million.

“In the end, it is all about resources. As we build up capital, infrastructure and expertise, we expand, slowly but surely. I believe that the only place to get marketplace experience is on the markets. We have a very young workforce and a spread of skills and knowhow.We just opened a branch in Attard, soon after another was opened in Żejtun. Even when we know that there is customer demand, we prefer to wait until we know that we can dedicate the right team to it without compromising other parts of the bank,” he said.

Timeline

1910: Fr Michele Vella set up the Lege dell’Apostolato della Preghiera
1910: Apostleship of Prayer Savings Bank set up
1948: Bank transferred to Archdiocese
1970: APS set up as a limited liability company with Lm100,000 in capital
1990: Commercial bank licence granted
2010: Moved to headquarters in Swatar