No new risks were identified that could affect the stability of the Maltese financial system, according to The Central Bank of Malta’s ‘Interim Financial Stability Report 2015’.

It says the outlook for stability is improving and is expected to remain positive for the medium term, supported by a robust domestic economic performance and favourable labour market conditions.

The report covers the banking, insurance and investment funds sectors for the first half of 2015.

It says that despite their positive performance, banks must remain cautious, particularly to reduce further non-performing loans (NPLs), at the same time continuing to strengthen their coverage ratios.

The report says the recommendations proposed in the Financial Stability Report 2014 are being reaffirmed, namely for banks to continue to reduce NPLs and improve further their coverage ratios, enhance collateral valuation practices and maintain prudent dividend policies with the objective of further strengthening capital buffers.