Performance of banking sector in Malta remains healthy
The banking sector in Malta remains well capitalised, highly liquid and profitable, and has continued to contribute to the local economy albeit at levels lower than hitherto observed, a statement issued by the Malta Bankers’ Association has confirmed.
Total assets of all the MBA’s 24 member banks stood at slightly less than €47 billion at the end of 2017. Of these, the six core domestic banks – namely APS Bank Ltd, BOV plc, BNF Bank plc, HSBC Bank Malta, Lombard Bank Malta and MeDirect Bank – which have the strongest ties with the domestic economy, had a combined balance sheet total of €22.5 billion (2016: €21.3 billion), representing 207 per cent of GDP, a ratio which is below the EU average.
Customer deposits with the core domestic banks maintained their upward trend, increasing by a further 3.4 per cent to reach a record €18.3 billion (2016: €17.7 billion). Total deposits held with all banks now stand at €25.4 billion.
Total assets of all 24 member banks stood at slightly less than €47 billion
“This indicates that despite historically low interest rates, Maltese households continued to demonstrate their trust in the local banking sector by increasing deposits at the core domestic banks mainly,” Karol Gabarretta, the MBA’s secretary general, said.
“In fact deposits from residents account for almost 90 per cent of the deposits of the said core banks.”
Mr Gabarretta added that the core domestic banks as the main players within the local banking sector remain committed to ensure the proper financing of the economy, despite the challenges and other costs brought about by the ongoing changes to the EU’s regulatory framework which was originally put in place following the 2008 global financial crisis.
During 2017, credit provided by these banks increased by 1.1 per cent and stood at €10.6 billion at the year-end (2016: €9.6 billion). Mr Gabarretta pointed out that notwithstanding this increase, as has been observed in the CBM’s Financial Stability Report for 2017, “Resident lending to non-financial corporations by core domestic banks decreased as it became evident that NFCs are increasingly relying on other sources of financing, including loans from related companies, retained earnings, as well as debt issuances.”
He also remarked that the services sector particularly new economic sub-sectors such as e-gaming and IT is not too capital intensive, and as such does not require high levels of financing as may be the case with other established sectors such as the manufacturing sector.
The direct contribution of the banking sector – which besides the core domestic banks locally also comprises the non-core domestic banks and the international banks – to the local economy remained significant, employing 4,688 full-time employees with a payroll of €187.7 million, taxation on profits of €111.3 million and paid dividends to resident shareholders of €58.1 million.