Bank of Valletta Group last Friday announced pre-tax profits for the year ended September 30 of €81.8 million, more than double 2008's pre-tax profits of €40.6 million.
The board of directors is recommending a final gross dividend to shareholders of €0.215 per share. Taken together with the gross interim dividend of €0.035 per share paid on May 28, the total gross dividend per share for 2009 will be of €0.25 per share (FY 2008: €0.16875 per share).
The total dividend will be 1.9 times covered by the post-tax profits for the year, respecting the dividend distribution policy adopted by the board over recent years.
The board is also recommending a bonus issue of one share for every four shares held, effective January 15, 2010. The bonus issue will be funded by a capitalisati on of reserves amounting to €40 million.
Bank chairman Roderick Chalmers explained that the bonus issue will serve to "further increase the permanent capital base of the bank (from €160 million to €200 million), and will also serve to enhance the affordability and liquidity of the bank's shares."
Mr Chalmers attributed the marked improvement in profitability to gradual stabilisation of conditions in the global financial markets, and the consequent write-back of some of the unrealised fair value markdowns on BoV's Financial Markets portfolio.
Net interest margin for the period declined year-on-year by €10.7 million (8.5 per cent), mainly due to the sustained reduction in interest rates implemented by the European Central Bank. A positive influence on profits was the 10 per cent improvement in net commission and trading income compared to the previous year.
The impairment charge for the year at €4 million is just under €1 million higher than the charge for the previous year. Mr Chalmers explained that some deterioration in credit quality is to be expected in the current economic environment.
The net operating profit from core corporate and retail banking operations for the year amounted to €86 million, compared to €92.2 million in 2008. Mr Chalmers noted that the second half of the year had seen the beginning of claw-back of some fair value markdowns (totalling €84 million) registered in FY 2008 and the first half of FY 2009; €38 million had been recovered in the second half of the year, adding that the board believed that most, but not all, of these mark downs will be clawed back over time.
BoV has borne negative share of results of jointly controlled and associated companies: a loss of €9.9 million, as compared to a profit of €1.7 million last year, mainly attributable to the "wholly unsatisfactory" results of Progress Assicurazioni, the Italian subsidiary of the Middlesea group. The domestic operations of Middlesea Insurance and Middlesea Valletta had, however, performed well in difficult market conditions.
BOV currently boasts strong liquidity at 45 per cent, a Tier I capital ratio of 11.2 per cent, well above European and US banking sector norms, and a total capital ratio of 14 per cent.
The loan-to-deposit ratio stands at 69 per cent.
Total assets at the end of September stood at €6.2 billion, much in line with the September 2008 level, while shareholders equity amounted to €434 million, as compared with €393 million of a year earlier.
Advances stood at €3.3 billion at the year end, an increase of €207 million, or 6.8 per cent, since September 2008. Non-performing loans stand at 3.9 per cent of gross advances.
During the year, the bank approved €261 million of new home loans (of which €217 million were drawn down), while credit actually used by the business sector over the year increased by €210 million (10.7 per cent), net of two large identified facilities that were repaid in full during the early part of the year.
Customer deposits have increased by €141 million over the year, to stand at €4.8 billion.