BOV registers €13.8 million profit for the first six months of 2020

Last Updated on Friday, 31 July, 2020 at 4:04 pm by Andre Camilleri

The Group’s profits have been impacted by the economic downturn caused by the COVID-19 pandemic – BOV remains committed to support its customers to recover from financial difficulties.


For the first six months of 2020, the Bank of Valletta Group is reporting a profit before tax of €13.8 million (2019 – €54.3 million) representing an annualised return on equity (pre-tax) of 2.6%.  The reduction in profit is a result of the COVID-19 pandemic which has impacted all the Bank’s business lines, as well as with the de-risking initiatives which intensified over the past months. The results for the period under review also include impacts from a number of other areas, including increased depreciation on new IT investments, staff costs as the Bank invested more in risk and compliance resources and expected reduction in foreign exchange and commission income resulting from the de-risking initiatives which have been carried out over the last 12 months.

Net interest income, which remains the main revenue driver for the Group, amounted to €72.3 million, €5.3 million less than the income registered for the same period in 2019. The persistently low to negative interest rate environment, coupled with a conservative risk appetite, limited investment opportunities and increased levels of liquidity which attract negative interest, resulted in lower earnings on the Bank’s investment portfolio. Demand for credit was primarily related to liquidity shortages brought about by the COVID-19 pandemic. During the period, the demand for home loans was subdued when compared to previous years and this is mostly attributed to changed consumer behaviour influenced by the pandemic situation.

Commission and trading profits was €37.0 million, 19% lower than the first six months of 2019. The economic slowdown caused by COVID-19 had an adverse effect on commissions earned, especially those relating to the card and payment business and investment related products. Income from foreign exchange transactions was also negatively impacted.

The de-risking programme and its execution is proceeding at an accelerated pace and while the Bank is registering lower revenues, within the expected parameters, as some customers and business lines which fall outside the Bank’s risk appetite are exited, it is nonetheless improving the Bank’s risk position and long-term sustainability.

Total costs for the first half of the year increased by €8.2 million to €89.5 million. The increase is attributed to IT costs related to the new core banking system which went live at the start of the year, increasing staff costs mainly in recruitment in the Risk and Compliance areas, and professional fees engaged in the implementation of the transformation programme with ongoing initiatives geared towards lowering the risk profile of the Bank.

In assessing the impairment charge for the six months under review, due consideration was given to the expected impact related to COVID-19, especially in the formulation of forward looking scenarios and expected credit losses relating to exposures in highly impacted sectors. Expected credit losses are highly sensitive to judgements and assumptions and, as with any economic forecast, subject to a degree of inherent uncertainty which has been augmented in the current circumstances which remain fluid and undefined. The net impairment charge of €7.5 million includes circa €10 million which is predominantly attributed to COVID-19. This figure has been offset by strong recoveries of past debts previously provided for.

The Group remains highly liquid, with cash and short-term funds increasing by €178.3 million (4.3%) during the six months. Customer deposits increased by over €500 million since the start of the financial year and reached €11.1 billion at the end of June 2020. Net loans and advances increased by €91 million since December 2019, an annualised growth rate of 4%, and stand at €4.7 billion at 30 June 2020. 


From the very onset of the pandemic, the Bank focused on protecting and supporting its staff and customers in dealing with the various challenges brought about by the pandemic on multiple fronts:

  • The set-up of a multi-disciplinary Incident Management Team which continuously assessed the situation and implemented preventive and mitigation measures. The Team followed closely and implemented measures issued by the local health authorities to maintain the highest level of health and safety for customers and employees;
  • Launched the COVID-19 Assist scheme, extending over €140 million in loans with attractive rates of interest to nearly 200 business customers facing liquidity shortages;
  • Granted loan moratoria to more than 2,900 customers, 70% of whom being retail customers;
  • Launched a dedicated BOV Assist Team offering banking services through the Bank’s digital channels, e-mail, video and telephone conferencing;
  • Enabled more than half the workforce to work safely from home, particularly to protect vulnerable employees and to support working parents;
  • Intensified the sanitising of staff and customer areas, offices, air-conditioners and installed protective screens in customer-facing areas;
  • Promoted the use of digital channels and facilitated their use through increased limits; and
  • Launched BOV Safe@home aimed towards creating educational and cultural initiatives mainly targeted towards assisting parents and their children during the stay-at-home period.

Commenting on the results, BOV CEO Rick Hunkin said “In line with the rest of the world, these are trying times for Malta and for Bank of Valletta and we are rising to the occasion by supporting businesses, customers and the wider community. As COVID-19 affected all the local economic sectors, the impact on the BOV Group was inevitable. However, we will come out of this together and as Malta’s leading bank we are committed to continue giving our full support to help the Maltese economy recover and thrive once again.”


The Board of Directors and the Executive Team have been fully engaged in establishing a new strategic approach for the BOV Group which will result in a more efficient, more digitally focused and more customer-oriented Bank. This process spanned many months of background work from the Executive Team led by Mr Hunkin. The interim Chairman Alfred Lupi commented that “Over the past few years, the banking industry has been going through dramatic shifts. Three critical factors which are shaping the new operational models of banks are: the wave of regulatory changes impacting every aspect of our operations, record low interest rates with increased cost of deposits, and increased customer expectations from digital channels. We carried out a very thorough analysis of our business environment and we have considered the dramatic shifts in customer behaviours and their expectations from financial services providers. I am confident that the revised BOV strategy will not only deliver marked improvements in customer and employee satisfaction, but it will also lead to improved financial performance, continuing to build upon a stronger risk and governance position. Post COVID, we also expect to be able to demonstrate a more positive and stable return for our shareholders.”

Mr Hunkin added that “The implementation of the BOV strategy has been set in motion and we are very excited to be driving a programme of initiatives that will be unveiled in due course, as we transform Bank of Valletta into a more efficient, more digital and more customer oriented Bank.”

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