Bank of Valletta has announced it intends to issue new bonds in the second quarter of the current financial year.

The bank in a statement said that it is the intention of its board that longer term bond issues should become a more regular feature of the bank's funding policy.

The new issue will coincide with the redemption of the current subordinated bond issue due on March 15, thus providing existing investors with an opportunity to reinvest in a fresh issue.

In its statement, BOV said that overall, its operating profits for the first quarter of the financial year was satisfactory, but, as anticipated, the current difficult economic environment has been reflected in an increased impairment charge.

"However, overall credit quality remains sound."

Bank of Valletta warned, however, about the impact of the performance of Middlesea Insurance.

"It is apparent from the prospectus issued by Middlesea Insurance plc and the subsequent company announcement, that the financial performance of our associated company investment will once again involve a negative charge on the consolidated income statement of Bank of Valletta Group for the current financial year."

BOV said that during its first quarter is had enjoyed a sustained an encouraging growth in customers' deposits.

"Bank of Valletta's deliberately prudent funding, asset quality, liquidity and capital ratio policies have also been maintained."