The local business of Volksbank Malta has registered an increase of 60 per cent and reported a profit after tax of €8.687 million, the financial results for 2008 show.
Although this profit represents a marginal decrease of 5.1 per cent when compared to the profit registered in 2007 of €9.151 million, last year's profits included dividend income of €2.226 million. As a result earnings per share for the year ended December 31, 2008 dropped to €3.76 as against €3.96 registered in 2007.
Net interest income increased by 19 per cent to €12.376 million from €10.403 million registered in 2007. The main contributor to a higher interest margin was the increase in the local exposures entered into during the year. The bank also reported an increase in net fee and commission income of €38,000 or 45 per cent compared to the previous year.
Herbert Skok, Volksbank Malta's managing director, said: "The result is satisfactory when considering the impact of Malta's adoption of the euro which, as expected, led to increased competition and pressure on the bank's margins. The bank remains one of the most strongly capitalised credit institutions in Malta, closing the year with equity of €170 million. This strong capital base and the high credit quality of the portfolio resulted in a capital adequacy ratio, on a Basel II basis, of 27.6 per cent, which is well above the legal minimum of eight per cent."
In the year under review Volksbank Malta Limited continued on its strategy to expand the portfolio of local assets and to increase non-bank customer deposits, while retaining its international business. In December the Bank inaugurated an agency in Victoria.
The bank entered into a tied insurance intermediary agreement with Citadel Insurance plc, through MIB Insurance Agency Limited, to enable the bank to offer life assurance policies to its clients. During the year, the bank invested €820,000 in capital projects, mainly to improve its information technology infrastructure.
The bank closed the year with total assets of €885 million on its books, which is slightly below the previous year's volume.
Although still very strong, the capital base decreased by five per cent (€9 million) when compared to the previous year. This was due to the turmoil in the international markets which resulted in extreme volatility in the prices of financial assets, especially those issued by counterparts operating in the financial sector.
In the year under review the bank increased its staff complement to 37 employees and continued to support several staff members in their academic studies.
In its outlook and strategy for 2009, the bank's annual report says the global and Maltese economies are expected to experience negative economic growth in 2009.
"In times of crisis it is best to aim at stability rather than growth. Therefore, going forward, the bank's main focus is to continue building on the detailed know-ledge it has of its customer base and to keep providing a very personalised service to its clients, while we ensure to attract only the best quality credit business of medium-sized volumes, even if this means a slower increase in assets," it says.
Volksbank Malta Limited is a licensed credit institution providing a full range of commercial banking services to both residents and non-residents.
In view of the volatility being experienced in the world financial markets, the available-for-sale investments portfolio of the bank was marked down by €10.4 million during the year. However, Volksbank Malta believes that the quality of its portfolio remains strong and that this adverse movement will reverse over the coming years.
The board of directors paid a net interim dividend of €3.08 per share amounting to €7.1 million. The directors did not propose the payment of a final dividend.
At balance sheet date the bank had retained earnings amounting to €11.649 million and a negative revaluation reserve amounting to €9.230 million.
At their AGM the shareholders of Volksbank Malta elected Joseph Bugelli as executive director of the bank. "As a local commercial bank, we wanted an experienced Maltese banker on the board," managing director Herbert Skok explained. "Even though Volksbank does not intend to penetrate the mass market, our local business is growing continuously and the appointment of Mr Bugelli as board member was a logical decision."
Besides Mr Skok and Mr Bugelli, the other directors of Volksbank Malta are Winston V. Zahra (chairman), Werner Wess (non-executive board member) and Michael Smutny (non-executive board member).
Volksbank Malta is a wholly-owned subsidiary of Österreich-ische Volksbanken AG, which is the fourth largest banking group in Austria. It operates in 12 countries and has over 7,700 employees.