The Bank of Valletta Group has recorded a profit before taxation of €50.7 million for the six months ended March 31. An interim dividend of 4c25 was announced.

This represents a decrease of 21 per cent when compared to the pre-tax profit of €64.6 million earned in the first six months of the previous financial year.

Core profit was down by five per cent because the fair value movement in 2013 was much higher than this year.

Gains attributed to external factors, namely fair value gains and contribution from the group’s insurance business, were €11.7 million below those earned during the comparative period.

Core profit for the period was also down by €2.2 million when compared to March 2013.

Return on equity for the period was 17.5 per cent, down from 21.1 per cent for full year 2013.

Chairman John’s Cassar White defended the bank’s interest rates saying it was important to consider the context of local businesses which were very undercapitalised and, therefore, had a very different risk profile as they put so much of their extra money into business.

He quoted from an Economist report which showed that Malta had one of the highest rate of private debts of any member state amounting to 220 per cent of GDP, 150 per cent of which was corporate lending.

The importance of this figures can be seen from the fact that the European Commission recommended threshold is only 160 per cent.