Bank of Valletta yesterday posted record pre-tax profits of €110.7 million for the financial year ended September 30, up 72 per cent over 2011’s end-year result of €64 million.

The country’s largest financial institution presented a 2012 balance sheet that exceeded the €7 billion mark for the first time. The business registered a core operating profit of €100.3 million for the year, in line with last year’s €100.2 million.

The financial results were presented by bank chairman Frederick Mifsud Bonnici, appointed in late July, whom critics this week described as lacking personality.

The criticism came as the controversy over compensation to investors in a failed property fund and other securities continued. Mr Mifsud Bonnici said that it was import-ant to put the 138 complaints in the context of “many thousands” of investors.

The amount included in the financials to September 30 represented the estimated ex gratia compensation that will be paid by the bank and the estimated compensation related to claims on other securities, less any recoveries from third parties.

Mr Mifsud Bonnici hoped the review leading to the compens-ation would be completed by the end of the year.

“Even if there had to be someone who did not want to comply with the bank’s objective of getting to a reasonable agreement they cannot, because there is not just one person deciding these things.

“It is in the bank’s interest to come to a reasonable conclusion as soon as possible. It has no in going to court and extending this for years.”

He insisted a “reasonable agreement” implied that both sides had to compromise. The bank had to consider the interests of many stakeholders and the board had to act accordingly.

Asked whether there was a deadline for this chapter to be closed, Mr Mifsud Bonnici replied: “To me, the deadline is today. But the bank has to carry on with its daily work as well. There are only 138 complaints. We have dealt with most of them and we have made offers in the majority of the cases. The ones pending investig-ation number about 45. We are prepared to look again at the ones that are already decided.”

Mr Mifsud Bonnici reiterated that the bank sought to reach a reasonable agreement with everyone.

“But you have to understand – to quote an extreme – that a person comes to the bank and asks to buy Lehman. And we buy Lehman for that person. Should we refund that person? Is the bank there so that if you want to gamble, and you lose, the bank gives you the money back? I don’t think so. It is not the board’s duty to refund someone who did that.”

Reacting to press reports on Mr Mifsud Bonnici’s statements, Finco Trust managing director Paul Bonello, who has been leading the charge by disgruntled investors, said the bank had been found at fault for misrepresent-ation and misleading advice to clients when it put across the securities as “bonds” when, in fact, they were high-risk irredeemable, non-voting, non-participating, non-cumulative preference shares.

The results

At year’s end, customer deposits stood at a record €5.8 billion, up by €285 million on the previous year.

Loans and advances reached €3.9 billion, an increase of €119.5 million over 2011, fuelled mainly by a healthier appetite for mortgages from first-time buyers.

The board has recommended a final gross dividend to shareholders of 13c, which, with the gross interim dividend of 6c, amounts to a total final dividend of 19c.

A proposed bonus issue will see shareholders receive one share for every nine held with effect from next January 17. The issue will be funded by a capitalisation of reserves amounting to €30 million increasing the permanent capital to €300 million.

The end-year results were positively impacted by exceptional items which swung in the books’ favour.

There was a fair value gain on the portfolio of €8.7 million, a turnaround from last year’s loss of €24.9 million. The bank’s share of profits from its 50 per cent holding in MSV Life plc and its 31.8 per cent stake in Middlesea Insurance plc amounted to €6.3 million, an increase of 57 per cent on the previous year’s contribution from insurance activities.

Net compensation related to investors in the underperforming La Valette Multi-Manager Property Fund and some other securities last year totalled €4.6 million, down significantly from the €15 million in payouts in 2011.