Last Updated on Friday, 31 July, 2020 at 1:05 pm by Andre Camilleri
APS Bank plc’s Board of Directors met on 30 July 2020 to approve the Group and Bank Interim Report and Financial Statements for the six months ended 30 June 2020.
After a strong start to 2020, business momentum came to a practical halt by March due to the COVID-19 pandemic. This resulted in both the Group and the Bank posting lower profits compared to 2019. Group pre-tax profit was of €8.9 million (2019 – €15.0 million) while the Bank delivered a pre-tax result of €10.3 million, only marginally less than €11.4 million in 2019. This performance is very satisfactory considering the dramatic impact of the pandemic and resultant global ripple economic effects, which wreaked havoc across financial markets.
Group performance was mostly impacted as the exposure to the APS Funds SICAV generated a net adverse correction of €0.6 million compared to gains of €3.9 million in the first half of 2019. Considering the extent of market turmoil and prevailing global uncertainty, the downside to these asset classes has been fairly contained and it is hoped that more of the adverse performance to date can be reversed by year-end.
At Bank level, Net Interest Income grew by 10% over the same period last year to €23.9 million. This is a remarkable result considering that compressed interest rate conditions continued to prevail and the Bank was largely supporting its business base with moratoria and emergency financial support by the end of Q1. In Q2, in collaboration with the Malta Development Bank, APS Bank announced the launch of its new product – the APS Jet Pack – aimed at local businesses experiencing cash flow problems due to the pandemic. The Bank’s response has been timely and comprehensive however the situation remains fluid as the longer term effects of the pandemic, especially on tourism and related sectors such as hospitality, leisure and accommodation, are still premature to gauge.
The slowdown in new credit activity and focus on support also led to a contraction in fees from processing of new facilities as from March. Plans to launch new investment and pension products were also postponed, overall resulting in fee and commission revenue remaining largely stable year-on-year, at €3.5 million (2019 – €3.5 million). Notwithstanding, Bank Operating Income improved by 7.7% from €26.1 million in 2019 to €28.1 million in 2020.
Operating Expenses & Depreciation for the period totalled €16.6 million, up by 19.2% on the €13.9 million of 2019, with continued investment in human resources, technology as well as the security and risk management infrastructure. Regulation and compliance driven costs also increased substantially. Significant overheads were also incurred consequent to COVID-19, as the Bank spared no expense in ensuring the continuity of business operations throughout the outbreak: from investing in systems and equipment to facilitate remote working, to protecting the safety and welfare of employees and customers alike.
Total Group Assets as at 30 June 2020 stood at €2.3 billion, a growth of €119 million or 5.5%, on 31 December 2019. Bank Gross Loans and Advances to Customers and Debt Securities were the key components of this increase, growing by 6.7% and 22.8%, respectively, over the period under review. Demand for new credit was almost 50:50 between Personal and Commercial lines. Throughout the Bank remained very liquid mainly raising deposits through its traditional retail channels as it sought to price itself away from institutional and other sources of funding. This allowed the Bank to benefit from the strength of its brand while lowering its average funding cost in the process. Total Customer Deposits increased by 6.5% during the six months under review, to €2.05 billion. Consolidated Equity at 30 June 2020 was of €196.0 million (2019 – €191.9 million), while for the Bank this amounted to €185.9 million (2019 – €181.1 million).
CEO Marcel Cassar commented: “These are very positive results for both Group and Bank considering the extraordinary times we are living. With great dedication and commitment, we continued with our operations relentlessly, maintaining over 90% of the branch network active, upscaling our digital presence and standing by our customers. All along, we supported our employees and their families as they adapted to a new reality, as well as the full spectrum of business, personal and investment customers who likewise experienced uncertain and anxious times. Yet we continued to look at the future, to grow and prepare for the next levels, including the raising of additional capital later in 2020 and Business Plan 2021-2023 preparations for which are in full swing. True to our values we focused on our priorities while still posting strong results.”
The full Interim Report and Financial Statements, including additional financial data and ratios, are presented here: www.apsbank.com.mt/annual-reports