First nine months of 2022 sees Bank of Valletta register a pre-tax loss of €55.7 million

Bank of Valletta (BOV) Group has reported a loss before tax for the first nine months of the year amounting to €55.7 million.

Excluding the effect of the settlement of the Deiulemar claim in May this year, the nine-month profit amounted to €47.8 million, up by three per cent compared to the same period last year.

The settlement sees BOV pay €182.5 million to the curators of the bankruptcy of the Deiulemar Group as a “full and final” settlement, finally putting to bed a 12-year-old saga. For more information about the case, click here.

BOV posted its Q3 update on Thursday and reported that revenue for the first nine months of 2022 stood at €202.3 million.

This constituted an improvement of 16.8 per cent, reflecting the increase in Eurozone interest rates coupled with a rise in volumes in the retail sector, particularly in home lending, cards, and payments.

Commission income also grew, particularly in card business. Operating costs rose at a slower rate, by 6.7 per cent, compared to the same period in 2021. This increase, the bank reported, was in good part due to human capital requirements in specialised areas, growth in average salaries, and the

Group’s contribution to the Depositor Compensation Scheme.

The need for a non-recurring external specialist support relating to Environmental, Social and Governance (ESG) also contributed to the growth in costs.

A net impairment charge of €10.1 million as at the end of the third quarter of 2022 was taken on account of evolving risks emanating from geo-political instability factoring in higher inflation and lower GDP growth based on published Central Bank of Malta forecasts.

The bank says that it continues to actively assess its expected credit losses as economic circumstances evolve.

BOV’s share of results from insurance associates declined significantly compared to the same period in 2021, largely driven by the volatility of global financial markets.

Net loans and advances to customers increased by 5.8 per cent during the first nine months of 2022. Growth was reported in both business and home loans, with the latter being the main driver. Customer deposits were up by four per cent over December 2021, predominantly driven by current and savings accounts.

On the European Central Bank’s recent policy change to increase interest rates, which it has done so three times since July 2022, BOV reported that this has actually benefited the bank, as it is no longer paying negative interest when depositing its surplus liquidity.

“The Group will continue to monitor the situation, as well as the actions of the other major banks in Malta, with the aim of striking the right balance among its stakeholders when setting its interest rate structure. The strong liquidity situation will help to ensure that any future changes would be well-managed and gradual.”