Bank of Valletta registered a pre-tax profit of Lm18.8 million in the first half of this year, an increase of 92.2 per cent over the same period in 2005.
Bank chairman Roderick Chalmers said yesterday the board of directors had declared an interim dividend of 5c5 per share gross of tax - up 46.7 per cent on the interim dividend of 3c75 per share declared last year.
"These are good results. However, they do require some analysis so as to ensure a proper understanding and to manage expectations," Mr Chalmers said.
Nearly all divisions within the bank did well; financial markets and investments performed strongly, credit improved the loan book, fund management had a "great" half year, as did bancassurance and stockbroking.
"Whereas operating income was up 17.5 per cent, costs in the same period rose by just 4.5 per cent. This resulted in a further lowering of our cost income ratio from 49.8 per cent in March 2005 to 44.3 per cent for the half year under review. Finally, a marked reduction of Lm2.7 million in the impairment charge, and good performance from our insurance sector associates served to further improve the results for the period", Mr Chalmers said.
Mr Chalmers said the board is expecting that, barring unforeseen circumstances, BOV should be able to sustain the rate of profitability achieved in the first six months through the second half of this financial year. "The bank has been focusing hard on big ticket issues for some time, and the benefits of this focus are now showing through in terms of much improved results, and, in particular, a reduced impairment charge. Whereas this focus will continue, future improvements to profitability would necessarily be less dramatic and more incremental in nature", he said, noting that it was important that this was understood and appreciated by the markets.
Mr Chalmers also pointed out that the bank's financial year 2005 results had been skewed somewhat in favour of the second half of the year due to the impact of certain one off charges in the first half of last year and the timing of the Central Bank 25 basis points interest rate hike last May. His expectation was that the two halves of 2006 were likely to be in much closer equilibrium and, therefore, whereas the results for the first six months were up 92 per cent, he believed the increase for the current year as a whole would be more modest.
From a balance sheet perspective, following a period of subdued growth last year, net advances rose in the first six months and stood at Lm936 million at March 31, this year, an increase of 11.7 per cent over Lm838 million as at September 2005. This increase was characterised by more business lending together with higher lending to the personal sector, especially for home loans. Customer deposits stand at Lm1.56 billion when compared with the September 2005 balance of Lm1.51 billion. Shareholders' funds on March 31, 2006 amounted to Lm150 million.