Bank of Valletta has reported a pre-tax operating profit of €10.1 million for the six months ending on March 31, 2009, compared to €21.9 million for the same period last year.
The bank said its results had been impacted by the strength and commitment of its core domestic retail and corporate banking business, the reduction in interest rates as the European Central Bank acted to combat growing recessionary pressures, and the disruptive impact of the global financial crisis.
It said these six months had seen ongoing nervousness and extreme volatility in global financial markets, and the onset of a vicious global recession. The massive de-leveraging that has taken place had, as expected, kept both bond and equity prices under pressure, as investors continued to re-rate risk and recalibrate return expectations.
"It was, unquestionably, the toughest six month period in the history of modern banking and finance."
It said a semblance of calm appeared to have been restored to the markets since the beginning of March, and it was hoped that the beginnings of what was likely to be a long drawn out period of recovery were being seen. However, sentiment remained fragile, and the environment was one of considerable caution.
"As was generally forecast, Malta’s wide open economy has not been immune to the global recession, although the impact to date has been relatively mild. However, the expectation must be that the situation could become more challenging in the short to medium term," the bank said.
The bank said its final net profit for the period has been reduced by the loss of €3.8 million, being BOV’s share of the results of associates and jointly controlled entities (2008: profit of €3.1 million). As a result, its pre-tax profit was of €6.3 million (2008 = €25 million).
Net interest margin for the period has declined year on year by €6.0 million or 9.3% following the extraordinarily rapid reduction in interest rates implemented by the ECB in its efforts to combat growing recessionary pressures.
The bank has decided to declare an interim dividend of €0.035 per share (gross).