BOV’s 2023 market share for corporate loans and household deposits ‘slightly less than 40%’

Illustrating the crucial role played by Bank of Valletta within Malta’s economy, Chairman Gordon Cordina shared that the bank’s market share for 2023 with respect to corporate loans and household deposits stood at “slightly above 40 per cent”.

In the case of home loans, the bank’s 2023 market share was just below the 40 per cent mark.

His comments were made as he was addressing shareholders, together with CEO Kenneth Farrugia, at BOV’s 50th Annual General Meeting (AGM).

The year 2023 was characterised as one of the best on record in terms of its financial performance, within a context of higher interest rates. Indeed, in 2023 the bank recorded a profit before tax of €251.6 million, among the highest ever registered by a Maltese company.

Read more about BOV’s 2023 financial performance here

Addressing shareholders during the meeting, Dr Cordina commented that “2023 was a very positive year for the Bank of Valletta Group, which registered healthy profits in a situation of positive interest rates.

“The Bank’s performance can be seen within the context of an economic scenario that, despite the headwinds of high interest rates, elevated inflation, and uncertainty, saw the Maltese economy continue to grow at a sustained pace”.

Dr Cordina commented on the Bank’s balance sheet, that exceeded €14 billion at the end of 2023. “The Bank’s balance sheet accounts for almost half the total assets of Malta’s core domestic banks. BOV’s market share for 2023 was slightly above 40 per cent with respect to corporate loans and household deposits, and slightly less in the case of home loans. These statistics clearly highlight the systemic importance of BOV, and the crucial role that the Bank plays in sustaining the local economy.

The resumption of a dividend payment, supported by the safety offered by the Bank’s strong capitalisation and liquidity, was also described as a key accomplishment in 2023. The dividend payout in 2023 was one of the highest dividend distributions paid in recent years.

Indeed, shareholders approved a final gross dividend of €0.1162 per share (representing a gross payment of €67.9 million), consisting of the interim dividend of €0.0462 per share (representing a gross payment of €27.0 million) already paid to shareholders on 6 December 2023 and the dividend proposed of €0.0700 per share (representing a gross payment of €40.9 million).

“This has been distributed after taking into consideration the Bank’s growth ambition and corresponding capital requirements, affordability, as well as regulatory and shareholder expectations. This structured approach is aimed to ensure the sustainability of dividend payouts in the future and supportive of our commitment to all our stakeholders, including our shareholders, clients, and the economy at large,” said Dr Cordina.

The Annual General Meeting also brought the directorship term of Kevin J. Borg and Elizabeth Camilleri to an end, after they chose not to seek re-appointment to the Board. This led to two vacant Non-Executive Director positions, where Christian Bonnici West and Jonathan Spiteri were appointed to the Board. Their appointment is subject to regulatory approval and will become effective from the date of approval.

Address by BOV CEO Kenneth Farrugia

During his address, CEO Kenneth Farrugia expressed his satisfaction on the remarkable performance registered by the Bank in 2023. “Bank of Valletta’s financial performance was undoubtedly one of the best experienced during its 50-year history, with strong income growth

achieved across all core business lines. The increase in interest rates, the strength of our balance sheet, our robust risk management framework, and organic growth in core business lines, were all key enablers of the financial results registered during the year.”

Mr Farrugia also referred to the strategic objectives set by the Bank for the period 2024-2026 and commented that several foundational changes are in place to strengthen the Bank’s business and operational model, supporting the key strategic thrusts over the next three years.

One of the areas where BOV has been taking a more prominent role is in the area of ESG, with Mr Farrugia citing the Bank’s Corporate Social Responsibility program, improvement in operational efficiencies, as well growth in green commercial and personal lending.

“I am pleased to note the leadership position that the Bank is taking on ESG matters. In 2023 we saw 33 per cent of the total facilities sanctioned in loans with green credentials. We have introduced incentives in our credit pricing model to support our customers in their transition to ‘Green’, while on the investment side we have seen 9.3 per cent of total purchased instruments carried out in Sustainable Treasury Investments. Apart from our focus on ESG we continue to focus on our customers. The digitalisation of our operational model remains a high priority and various initiatives are in progress to ensure that across our physical, digital, and hybrid channels, we deliver the service experience expected by our customers.”