Malta’s payments landscape is undergoing a steady transformation driven by digital innovation, evolving customer expectations, and developments at European level. The increasing availability of instant payments and other electronic solutions is reshaping how individuals and businesses transfer money, placing greater emphasis on speed, security and convenience.

Within this context, the Central Bank of Malta (‘Central Bank’) continues to promote a gradual transition towards more efficient and resilient payment methods, while ensuring that existing instruments remain fit for purpose. The updates to Directive No. 19 on the Use of Cheques and Bank Drafts (‘Directive’) should be seen against this backdrop, ensuring that cheque usage remains proportionate, transparent and aligned with a modern payments’ ecosystem.

As background, the Central Bank acting in its capacity as the authority responsible for safeguarding the stability and efficiency of Malta’s payments landscape, first issued Directive No. 19 in 2021. The Directive came into force on 1 January 2022 and was subsequently amended in 2024.

The Directive was introduced to address recurring risks and operational challenges associated with the issuance and negotiation of cheques and bank drafts, including misuse, inefficiencies in processing and delayed settlement. By setting out clear obligations for issuers and beneficiaries it supports improved governance in the use of such payment instrument while complementing Malta’s broader shift towards more secure and efficient digital payment channels.

In 2025, the Central Bank published an analysis on The Usage of Cheques in Malta, that revealed a sharp decline of 78% in cheque usage between 2019 and 2024. This trend reflects a widespread take-up of digital alternatives based on the implementation of European regulatory frameworks.

In light of these developments and based on the Eurosystem’s comprehensive payments strategy which embrace innovation and forward-looking approach in payments, the Central Bank felt the need to update Directive No. 19. The amendments to the Directive will come into force on 1 January 2027. These updates aim to refine existing procedures and align cheque usage with evolving operational and security requirements, ensuring consistency with current practices. The key changes are outlined below.

Minimum cheque amount raised from €20 to €50

Effective 1 January 2027, cheques may only be issued for amounts of €50 or above. This adjustment is designed to shift routine, low‑value transactions towards digital payment options, such as instant payments, which offer quicker processing and greater convenience.

Limiting this payment instrument to higher‑value payments helps manage resources more efficiently by reducing manual handling costs incurred by institutions and lowering the likelihood of processing errors. For beneficiaries, this shift also promotes the use of digital payment methods, which offer stronger security, faster processing and clearer transaction records. This measure preserves the usefulness of cheques and bank drafts for significant transactions while encouraging more modern, efficient payment behaviour for everyday needs.

Cheques valid for three months

The updated framework shortens the validity of cheques from six months to three months. This reduces the risk that a cheque remains outstanding for an extended period, where it may be misplaced, misused, or simply not presented in a timely manner. A shorter validity window also supports a more efficient movement of funds, as the clearing and settlement process begins more promptly once the cheque is presented for processing.

A shorter validity period for cheques lead to a smoother settlement cycle, giving beneficiaries faster access to funds and a clearer view of their account activity. At the same time, institutions benefit from streamlined operational workflows, simplified account reconciliation, and fewer outdated instruments requiring follow‑up. Collectively, these improvements applicable on 1 January 2027, contribute to a more predictable and reliable processing environment for all parties involved across the payments chain.

Furthermore, the validity of bank drafts will remain 6 months given that this particular payment instrument is mainly used for larger transactions such as property purchases. Bank drafts are considered as more secure when compared to cheques given that the Bank issuer locks the funds upon issuance and thus provides certainty that funds are available.

Mandatory deposit of cheques into a payment account

To enhance transparency and improve the traceability of payments end‑to‑end, the new amendments will require all cheques and bank drafts to be deposited directly into a payment account rather than having the option to encash over the counter, a requirement that comes into force on 1 January 2027. This ensures that each cheque transaction is fully recorded within the banking system. It also supports anti‑money‑laundering controls by ensuring that all fund movements are captured within the payments’ infrastructure.

For beneficiaries depositing cheques and bank drafts into an account it ensures a standardised clearing process, and clearer indications of when funds shall be available, facilitating cash‑flow management and reducing uncertainty. Institutions likewise benefit from reduced cash handling, lower operational and security risks, and improved audit trails, resulting in a more controlled and efficient processing environment.

This update also aligns with Malta’s broader policy objective of strengthening transparency in payment practices. Recent amendments to the Employment and Industrial Relations Act (Cap. 452) require wages payable to third‑country nationals to be settled exclusively by bank transfer or through an electronic transfer executed by a licensed financial institution. Both developments move in the same direction: enhancing transparency, reducing risks of abuse, and supporting stronger oversight across the payments landscape.

Funds credited instantly in the case of over‑the‑counter deposits

Under the new amendments, cheques deposited in person at a branch of the issuing bank should be credited instantly, allowing immediate access to the funds, including cash withdrawal from an ATM. This procedure will also apply from 1 January 2027. By contrast, cheques deposited via an ATM of the same bank will be credited no later than the end of the following business day. The same rules also apply to cheques issued by the Central Bank on behalf of the Government of Malta, including tax refunds and government bonus cheques.

For beneficiaries, such changes provide quicker access to money and clear timeframes that support cash‑flow planning and reconciliation. For institutions, it enables more efficient in‑house processing, reduces risk exposure, and limits cash handling steps.

Key Takeaways

Overall, the updated Directive reflects a balanced approach between preserving payment choice and encouraging the adoption of more efficient alternatives. While cheques and bank drafts will continue to serve specific use cases, particularly for higher-value transactions, their role in everyday payments is expected to diminish further over time in favour of faster and more secure electronic solutions.

Looking ahead, the Central Bank will continue to support initiatives that strengthen the efficiency, resilience and strategic autonomy of the payments’ ecosystem. This includes fostering the uptake of instant payments and promoting solutions that enhance transparency, reduce risk, and align Malta with broader European developments in retail payments. In this evolving landscape, the Directive forms part of a wider policy direction aimed at ensuring that payment services remain accessible, secure and future-ready.

Dr Stephanie Gatt is Deputy Head Legal Department at the Central Bank of Malta

Gianella Azzopardi is Principal Expert Payments Policy and Compliance Office at the Central Bank of Malta

The post Cheque payment instrument: Key updates to Central Bank of Malta Directive No. 19 first appeared on The Malta Business Weekly.

As the financial services landscape grows increasingly digital and complex, the need for informed decision-making by citizens has never been more vital. To lead this effort locally, Sarah Pulis has been appointed as Malta’s Financial Literacy Ambassador. In this capacity, she joins an elite network of experts across the continent supporting the EU’s Savings and Investments Union, a flagship initiative designed to make financial markets more accessible and transparent for everyday citizens.

Tasked with bridging the gap between high-level policy and the “man on the street,” Pulis aims to demystify the world of finance for the Maltese public. In the following interview, she discusses her vision for the role, the specific challenges facing local households, and the roadmap for building a more financially resilient nation.

As Malta’s Financial Literacy Ambassador, how will you go about your duties?

Financial literacy isn’t confined to policy documents or classrooms; it plays out in our everyday lives. It is used when someone receives their first salary, considers taking out a loan, decides whether to start investing, or tries to understand if an investment offer is genuine.

As Malta’s Financial Literacy Ambassador, my role is to make these moments less confusing. This means working with Malta’s many stakeholders, including government bodies, regulators, and social policy actors, while engaging directly with the public. Clear communication, trust, and consistency are key.

What are your main priorities?

My priorities come from what we see happening in everyday life in Malta.

One key priority is helping people move from saving to informed investing. Maltese households are disciplined savers, but many people hold back from investing because they simply do not feel confident enough. Building a basic understanding of risk, diversification, different types of financial products, and the benefits of long-term planning is essential.

Another key priority is keeping people safe in a fast-moving digital environment. Scams are more sophisticated than ever and they affect people across all ages and backgrounds. Awareness needs to be practical, timely, and continuous, given the speed at which scams evolve.

Reaching people at different stages of life is also important. Financial literacy is most effective when it meets people where they already are, whether through media, schools, workplaces, or community settings, rather than expecting them to seek out purely formal education environments.

What do you perceive to be the biggest challenges the man on the street faces vis-à-vis financial literacy? How can you help?

A common challenge is uncertainty. Financial products, terms, and conditions can appear complex, and many people fear making the wrong choice, which can lead to inaction.

My role is not to advise individuals or simplify decisions for them, but to help reduce barriers to engagement by promoting clear, neutral, and consistent information. Encouraging people to ask questions, take time to consider offers, and seek reliable sources can already make a meaningful difference.

There is also a tendency to rely on familiar options, sometimes without reassessing whether these remain suitable. Promoting a basic understanding of risk and limitations can support more balanced decision-making without prescribing specific outcomes.

Digitalisation adds another layer. While many people are comfortable using digital tools, they may not always fully appreciate the implications of what they agree to online. Helping people recognise warning signs and understand where to find trusted information is an important part of the broader effort.

In February, the MFSA, in collaboration with the European Commission’s Reform and Investment task force (SG REFORM), the Organisation for Economic Co-operation and Development (OECD), and the Ministry for Finance of Malta, presented findings of a survey on the financial literacy and investment behaviours of Maltese retail investors. Those results showed that Malta’s overall financial literacy levels are slightly above the OECD average, reflecting strong budgeting and saving habits. But they also revealed persistent gaps in investment knowledge and participation. How do you intend to tackle this?

The survey results from the EU-funded Technical Support Instrument project tell an important story. Malta performs well overall, particularly in budgeting and saving, but clear gaps remain in investment knowledge and participation. Addressing these gaps starts with getting the basics right, such as explaining how risk and return are linked and why diversification matters. There are also widespread misconceptions about certain financial products, such as bonds, guarantees, and perceived safety, which need to be tackled directly.

Addressing this does not mean encouraging greater risk-taking. It means supporting a better understanding of basic investment concepts, while also addressing common misconceptions around perceived safety. The objective is to help people understand their options more clearly so that any decisions they take are better informed and aligned with their individual circumstances.

In March, the EU’s Commissioner for Financial Services and the Savings and Investments Union, Maria Luís Albuquerque, convened the first virtual meeting of national financial literacy ambassadors. Can you tell us what was discussed and any plans of action agreed upon?

The first meeting of EU Financial Literacy Ambassadors made it clear that Malta’s experiences mirror those seen across Europe. Digital fraud, low investor confidence, and gaps between awareness and understanding are common themes.

There was strong agreement that financial literacy plays a central role in building trust in financial markets and supporting the EU’s broader goals under the Savings and Investments Union. Ambassadors were seen as important bridges between policy-level objectives and practical, everyday realities. Going forward, the focus will be on sharing practical experiences, aligning messages where possible, and learning from what works across Member States.

Why is financial literacy such a big focus of the European Commission?

Financial literacy is a major focus of the European Commission because it is essential to achieving the EU’s objective of a genuine Savings and Investments Union. When citizens understand how to save, invest, and manage risk, they are more likely to participate confidently in financial markets, allowing household savings to be channelled into productive investments that support growth and innovation across the EU. At the same time, stronger financial literacy helps protect consumers, promotes inclusion, and builds trust in the financial system, all of which are critical for a resilient and integrated European economy.

Looking ahead

While the road to financial literacy is a long-term journey, Pulis remains optimistic about the impact of these collective efforts.

“One of my biggest challenges is maintaining momentum,” Pulis notes. “Financial products and digital risks evolve quickly, and our communication must keep pace. However, financial literacy is a shared responsibility. While institutions provide the tools, the goal is to empower the individual. In the long run, even small, consistent improvements in understanding can make a meaningful difference to a family’s financial resilience.”

The post Empowering a financially resilient Malta first appeared on The Malta Business Weekly.

During the period, the Group delivered a resilient core operating performance, supported by strong capital and liquidity positions. Solid business activity sustained core income, with net interest income benefiting from continued lending growth and disciplined treasury management, underpinned by a stable, high‑quality funding base. Net Fee and Commission Income remained stable, reflecting strong customer activity and reinforcing the Group’s income diversification strategy.

The bottom line profitability was shaped by specific, non‑recurring factors, including heightened geopolitical tensions that led to increased financial‑market volatility. While not impacting the Group’s core operating activities, customer behaviour or portfolio performance, this resulted in an unrealised valuation impact on the equity investment portfolio. Consequently, a net trading loss of €3.6 million was recorded when compared with a gain of €5.5 million in 2025. This was not material and did not affect the Group’s capital strength or liquidity position.

Profitability was also influenced by higher impairment charges, reflecting specific and identifiable credit developments rather than a deterioration in the broader credit environment. The Group recognised an impairment charge of €5.6 million during the period, primarily driven by the continued material growth in the commercial lending book and the increase in stage 1 assets. Notwithstanding these charges, asset‑quality indicators remained strong, supported by prudent underwriting standards and disciplined credit‑risk management.

Performance highlights

• Profit Before Tax amounted to €54 million, down from €67.1 million.
• Net Interest Income stood at €100.2 million, up from €92.5 million.
• Net Fee and Commission Income increased from €20 million to €20.2 million.
• Operating costs totalled €61.7 million, up from €52.8 million.
• Cost‑to‑income ratio increased to 51.8% from 44.7%.
• Return on Average Equity (pre-tax) decreased to 14.2% from 17.9%.
• Deposits increased by €351.9 million, surpassing the €14.1 billion mark.
• Total assets stood at €17 billion, up from €16.5 billion in December 2025.
• The credit portfolio reached €8.3 billion, up from €8 billion in December 2025.
• Net Asset Value per share stood at €2.4, up from €2.3 in December 2025.
• Capital ratios remained strong and above regulatory requirements.

The Group continues to monitor the evolving geopolitical environment and its potential impact on the Maltese economy and the financial system and maintains enhanced monitoring across key risk dimensions. The assessment remains that Malta entered the current period of heightened geopolitical uncertainty from a position of relative strength, supported by resilient economic growth, low unemployment, moderating inflation and sound public finances.

The Group’s risk management framework incorporates forward looking scenario analysis and early warning indicators to identify emerging stresses. To date, these have not signalled any material deterioration in customer behaviour or portfolio performance. This approach ensures that the Group remains well positioned to absorb potential shocks and continue supporting customers and the wider economy amid an increasingly uncertain global backdrop.

Commenting on the Group’s performance, Chairperson Dr Cordina stated, “The Group delivered a strong start to the year, reflecting resilience, a disciplined approach and solid fundamentals. This performance was achieved in a stable economic environment, alongside the expected normalisation of earnings, interest rate stability and a renewed period of geopolitical uncertainty.

From a market standpoint, the Share Buyback Programme continued to support trading activity in the Bank’s shares, while preparations are now underway for the issuance of a €300 million Senior Preferred Instrument, subject to regulatory approval. Supported by a strong capital base, resilient day‑to‑day performance and consistent execution of our strategy, the Bank’s share price rose to highs of €2.14 during the period.

Looking ahead, the Group remains well positioned to deliver a profit before tax for the year in the range of €210 million to €250 million, in line with previous guidance. We also remain committed to rewarding our shareholders and intend to maintain our policy of distributing up to 50% of after‑tax profits, subject to prevailing market conditions.”

CEO Kenneth Farrugia said, “I am pleased to report another strong performance by the BOV Group, building on the positive results delivered in 2025. During the first quarter of 2026, the Group sustained resilient operating performance, continued to grow its balance sheet and maintained sound asset quality, sustained lending and treasury activities, supported by a diversified business model.

The depth of our deposit base reflects the confidence our customers place in our credibility and long‑term approach. The growth and diversification of our corporate loan book support key commercial economic sectors, while the consolidation of our corporate services under one roof and the broadening of our service offer through non‑life insurance further strengthen our position as the Bank of Choice in Malta.

These results reflect strong fundamentals and continued customer trust. With the largest network of customer touchpoints in Malta, and a resilience underpinned by strong investment‑grade credit ratings, the Group is uniquely positioned to deliver stability and consistency while remaining deeply embedded in Malta’s economy. As we enter the final year of our strategic cycle, our focus remains on disciplined execution, responsible banking and the creation of long‑term value for all our stakeholders.”

Financial performance

Net Interest Income for Q1 amounted to €100.2 million, an increase of €7.7 million when compared to 2025. Growth was recorded in both loans and advances to customers underscoring the relevance of BOV’s products within the lending sector and equally important income from disciplined treasury management. Net Fee and Commission Income is reported at €20.2 million, a marginal increase of 1.1% from the same quarter last year, reflecting resilient customer activity with continued strength in cards and credit-related fees, consistent with ongoing shifts towards digital payment solutions.

Operating costs at end March 2026 totalled €61.7 million, an increase of €8.9 million over Q1 2025. This reflects higher personnel and IT costs, depreciation charges and contributions to the Depositor Compensation Scheme. As a result, the cost‑to‑income ratio increased from 44.7% in 2025 to 51.8%, consistent with the expected low‑to‑mid‑50% range outlined in the forward guidance.

The return on average equity (pre-tax) declined to 14.2%, down by 3.7 percentage points compared to 2025, consistent with the expected range communicated earlier this year and very much influenced by the one off profitability movements and the increased equity base. Earnings Per Share decreased to €0.056 compared to €0.069 for 2025 (restated for bonus issue in Q2 2025), reflecting the lower profit before tax for the quarter and the ongoing share buyback programme that partially mitigated the decline.

Asset quality indicators remain strong, with the NPL ratio improving to 1.57%, while ECL coverage ratio for credit-impaired assets stood at 55.1%, reflecting a sensible provisioning stance while continuing to benefit from improving portfolio quality and dynamics.

Financial position

Total assets stood at €17 billion in March 2026, up by approximately half a billion when compared with 2025. This represents a new high for the Group, with growth reflecting sustained balance-sheet expansion, consistent with the strategic focus on supporting domestic economic activity while maintaining strong liquidity and funding discipline. The Treasury portfolio has now reached €7 billion in Q1 2026, an increase of €119.3 million, reflecting the Group’s deployment of excess liquidity into high-quality debt securities.

The credit portfolio continued to grow, with the balance reaching €8.3 billion in the first quarter, reflecting strong momentum in customer lending. As a result, the gross loan-to-deposits ratio increased from 59% in December 2025 to 59.5% during the quarter. Deposits experienced another significant increase of €351.9 million or 2.6% during the first quarter of 2026, surpassing the €14.1 billion mark, reflecting the strength of the Group’s retail franchise driven by an increase in both retail and business deposits. As a result, the Group maintained very strong liquidity position, with the LCR ratio of 385.8% well above the minimum regulatory requirements.

The Group’s total equity closed at €1.5 billion, marginally higher from December 2025 with the Net Asset Value per share standing at €2.4 per share (December 2025: €2.3 per share), further strengthening the underlying book value position. The Group’s capital ratios remained strong and comfortably above regulatory requirements.

The post BOV reports profit before tax of €54 million for first quarter 2026 first appeared on The Malta Business Weekly.

Addresing the media, Caruana said that Malta’s national GDP is projected to keep increasing from €24.6 billion in 2025 to almost €34 billion by 2030. Forecasts indicate rates of economic growth of between 6-7% for each year, in nominal terms, till 2030, and real growth levels of around 4% annually throughout this coming half-decade. In 2030, the national GDP is forecasted to grow by 7.1% in nominal terms.

As national GDP looks to keep rising, the country’s burden of debt is projected to decrease by 0.6% each coming year, he said.

This information was given following the earlier announcement that Malta has lowered its budget deficit to 2.2% of its GDP, thus falling in line with EU fiscal rules as the country looks to emerge from its excessive budget deficit procedure after incurring recurrent excessive budget deficits.

By the end of 2026, the budget deficit is aimed to decrease to 1.6% of the national GDP, then down to 1.0% by the end of 2027, before being equivalent to 0.4% of the GDP by the end of 2028.

A minor budget surplus of 0.1% is forecasted for 2029 and 2030 respectively, he said

Caruana said that these projections do not include the implementation of the long-awaited national metro project. He told journalists on Wednesday that, at the moment, the metro’s financial feasibility is currently being discussed.

The metro was announced in 2021, some months prior to the 2022 general election. The original proposal for the national metro – a fully underground system – was set to cost the country €6 billion before being scrapped for a hybrid system (with parts underground and overground) worth half the original amount, now projected at €2.8 billion.

Minister Caruana had previously stated that the country would be “royally screwed” if it gets the metro project wrong. On Wednesday, he repeated this sentiment and said that budgets will be adjusted if the metro is to be included in the budget estimates for the coming five years.

The Finance Minister said that the national debt is set to moderately keep rising, in total terms, over the coming years. The national debt is currently measured at €11.4 billion, as of the end of 2025; by 2030, it is set to climb to €13.2 billion.

However, Caruana dispelled “scaremongering efforts” by the Opposition on national debt levels and assured that debt levels are under control.

“We are expecting the burden of debt in the country, till 2030, to decrease to below 40% – in spite of all the global challenges and assistance we are providing to families,” Minister Caruana said.

The burden of debt is set to decrease from 46.4% of Malta’s GDP in 2025 to 38.9% by 2030, reflecting a gradual reduction of 7.5%.

The reduction of Malta’s annual budget deficit to 2.2% of the GDP outperformed expectations outlined by Caruana himself during his last budget discourse. In the last annual budget, he had forecast a deficit rate of 3.3%.

This update shows that “the deficit has gone down substantially and convincingly” – well below the EU’s 3% threshold, as per EU fiscal rules.

Additionally, the national debt is “comfortably below” the EU’s recommended 60% mark, he said.

The Finance Minister said that a few months ago, through a constitutional court ruling that went in favour of national bank shareholders, the Maltese government had to pay out compensations worth a total of 0.3% of Malta’s GDP. He stated that if it weren’t for this ruling, last year’s deficit would have been calculated at 1.9% of the GDP, and so “this is a clear indication that the national deficit has gone down substantially.”

Caruana remarked that according to these forecasts, over the next five years, Malta’s burden of debt shall decrease to levels that haven’t been observed since the mid-1990s. He said that “this greatly contrasts the scaremongering of those attempting to ridicule the numbers, to try and say that our fiscal situation is out of control.”

Referencing Eurostat statistics published earlier in the day, Caruana said that in 2025, Malta recorded the tenth lowest burden of debt (i.e., debt as a proportion of the national GDP) among all 27 European Union Member States.

“If our country has so many issues, what do the other 17 countries ranking worse than us have?” he asked, dismissing criticisms against present fiscal handling.

He added that he remains optimistic that citizens “will not deal with any of the issues” caused by austerity policies that other countries have imposed onto their citizens. Caruana reiterated that implementing austerity measures can be counterproductive, as tightening the belt too much could lead national fiscal performance going down anyway if it results in consumption levels and economic activity reducing too much as a result.

Speaking against the PN Opposition’s criticisms of how national finances are being handled, Minister Caruana said that while the Opposition “is spreading discourses on the national debt like the country is on the verge of bankruptcy,” in his view, results will show “everything they have said is the fruit of their misunderstanding of how fiscal policies work.”

In this regard, he dismissed arguments that the Malta’s budget deficit should have gone down sooner, stating that “the deficit had to decline gradually so we don’t kill the economy.”

The Finance Minister said that following these positive results, his Ministry is now waiting for the opening week of June when the European Commission will recommend which countries can exit excessive budget deficit procedures. He said that this recommendation will be announced on 3 June and, on 10 June, EU countries’ finance ministers will vote to confirm these recommendations.

Minister Caruana observed that Malta has managed to reduce its budget deficit despite all the exogenous shocks that emerged in the 2020s so far, including the ramifications caused by the Covid-19 pandemic, Russia’s invasion of Ukraine, and the sustained turmoil in the Middle East that has recently worsened.

In 2020, due to the pandemic and the financial assistances provided to keep the country afloat during that period, the budget deficit was measured at 8.7% of the GDP.

On the subject of interest payments, another point of criticism by the Opposition, the Minister for Finance said that the burden of interest (i.e., interest payments as a percentage of the GDP) is currently sitting at around 1.2%. He noted that these are among the lowest levels observed in the past 30 years. At peak, in the year 2000, the burden of interest stood at just over 4.0%.

Caruana said that these financial estimates can be reached, noting that they are “conservative” estimates.

The post Government projects to balance its books by 2029 or 2030, Finance Minister says first appeared on The Malta Business Weekly.

The Malta Financial Services Authority (MFSA) has issued a Dear CEO Letter presenting the results of its first year of the Outcomes‑based Supervision (OBS) thematic review on corporate Tied Insurance Intermediaries (TIIs). The review forms part of the authority’s 2025 Supervisory Priorities and aims to ensure that TIIs maintain high standards of conduct, transparency, and consumer protection.

The MFSA assessed 31 corporate TIIs authorised to distribute long‑term (life) insurance products, examining their sales processes, disclosures, governance, remuneration structures, client interactions, and oversight arrangements. The review also evaluated the responsibilities of insurance undertakings appointing TIIs.

Key findings from the MFSA’s review

• Sales processes: Most TIIs adhered to requirements such as conducting demands and needs assessments and providing relevant disclosures. However, some gaps were identified, including limited awareness of certain disclosure obligations, and insufficient record‑keeping of client meeting notes.
• Remuneration: While most TIIs are remunerated solely through commissions, a minority charged additional client fees without always having the documented procedures required to justify and classify these fees. The MFSA emphasised the need for transparency and monitoring of remuneration structures to avoid conflicts of interest or mis‑selling practices.
• Client contact and cross‑selling: 26% of TIIs conducted cold calls, and 23% carried out home visits. The MFSA reiterated that TIIs shall not exert undue pressure or influence on clients, and must ensure compliance with Conduct of Business Rulebook requirements. The review also highlighted concerns around pension product switching encouraged through cold calling.
• Advisory vs non‑advisory sales: While TIIs authorised to provide investment advice were able to evidence suitability testing requirements, some non‑advisory TIIs lacked adequate evidence of appropriateness testing or displayed uncertainty about what constitutes regulated advice.
• Sustainability preferences: Most TIIs regulated to sell on advice demonstrated a sound understanding of assessing sustainability preferences, while ensuring that instances where clients decided to amend their sustainability preferences were clearly documented.
• Complaints handling: 71% of TIIs clearly explained the required procedures, though several were not sufficiently familiar with the role of the arbiter for Financial Services.

Next steps

The MFSA expects all TIIs reviewed to address identified gaps during 2026, with a follow‑up assessment planned for 2027. Insurance principals are reminded of their responsibility to ensure strong oversight, regular monitoring of intermediaries, and appropriate training for staff and TIIs. The Dear CEO Letter serves as guidance for the entire market, including TIIs not directly assessed in 2025.

The post MFSA highlights key findings from Outcomes-based Supervision Review of corporate TIIs first appeared on The Malta Business Weekly.

The Bank of Valletta Group delivered a solid performance in 2025, generating a Profit Before Tax of €260.4 million and achieving a pre‑tax Return on Average Equity of 17.9%. This outcome reflects the strength of the Group’s underlying business model, the resilience of its core income streams, and the disciplined execution of its strategic priorities throughout the year. The Group continued to improve its balance sheet, enhance asset quality, diversify revenues and invest in its operational and digital capabilities. As a result, it enters 2026 with stronger financial foundations and clear momentum for the next phase of its strategic development.

The strong financial performance enabled the Board to propose one of the most substantial dividend distributions in recent years, with a final gross cash dividend of €65.1 million (€42.3 million net) being recommended for approval from H2 profits, equivalent to €0.1014 per share gross (€0.0659 net). Over and above, the Board also proposed a special dividend of €10.4 million gross (€6.8 million net), equivalent to €0.0162 per share gross (€0.0105 net). This special distribution reflects the portion of profitability generated during the financial year that exceeded the upper bound of the Bank’s forward‑looking PBT guidance which amounted to €250 million.

This results in a total cash dividend for FY25 (including interim payment and special dividend) of €0.2032 gross (€0.1320 net) per share, and equivalent to a total gross dividend of €130.5 million (€84.8 million net) out of the year’s profits, with the payout being fully aligned with the Group’s Shareholder Distribution Policy. The distribution underscores the Board’s commitment to delivering sustainable shareholder returns while preserving the capital strength and strategic flexibility needed to support future growth.

Complementing this cash dividend, the Bank has also allocated a €7.8 million reserve during the year to operate the regulated share buyback programme, activated during FY2025. This contributed to improved equity liquidity and more efficient capital management, showing the ever-increasing trust that markets, shareholders and the wider community have in BOV.

During the year, the Group strengthening its long‑term funding through targeted capital‑markets activity, completing the issuance of €150 million in unsecured Tier 2 bonds, concluding the €250 million EMTN programme launched in prior year. The Bank subsequently obtained regulatory approval for a new €325 million programme, under which €125 million in unsecured subordinated (Tier 2) bonds were issued, further enhancing the capital structure and supporting future growth. In parallel, the Group has commenced engagement with international markets in preparation for a €300 million Senior Preferred issuance, aimed at broadening and diversifying its wholesale funding sources while ensuring continued alignment with evolving MREL and strategic funding requirements. Further details will be issued during FY2026, with the issuance being subject to regulatory approval.

Financial Performance and Prevailing Economic Conditions

Despite normalising interest rates and sector-wide cost pressures, the Group delivered a solid financial performance, exceeding profitability targets and forward-looking expectations. While profitability declined when compared to FY2024, core operating performance remained resilient, with operating income increasing by 2.3% year-on-year, supported by disciplined balance sheet management, credit portfolio expansion, non-funded income diversification, and active cost and impairment management.

The Group further strengthened its balance sheet, with total assets increasing by €1.4 billion, with year-end figures exceeding €16.5 billion. Expansion was driven by sustained growth in customer deposits, which increased by €937 million, together with a €277 million rise in long-term liabilities following the successful issuance of Tier 2 subordinated debt, supporting strong loan book performance and expansion of the investment portfolio beyond targets.

One of the most substantial dividend distributions in years – Dr Gordon Cordina, Chairperson

Speaking during the announcement of the Group Financial Results, Chairperson Dr Gordon Cordina, said that “The Bank delivered strong profits notwithstanding the significant geopolitical tensions abroad, the normalisation of interest rates, and upward pressures on operating expenses. This highlights the resilience of our business model, the prudence of our strategic decisions, and our commitment to sustainable performance and effective risk management. The Group’s performance for 2025, which exceeded the initial profit guidance, enabled us to declare one of the most substantial dividend distributions in recent years.”

Dr Cordina continued by stating that, “As the country’s largest bank, developments within the Maltese economy directly influence our performance, just as our actions have a significant impact on households and businesses. Against this backdrop, throughout 2026, we will shape our next three-year strategy, remaining mindful of the risks, opportunities, and responsibilities we carry as Malta’s leading financial services institution.” 

Enhancing Customer Value, Accessibility, and Market Leadership – Kenneth Farrugia, CEO

CEO, Kenneth Farrugia, said that “During 2025, the BOV Group strengthened its leadership position across key customer segments, supported by targeted product innovation and improved customer experience. In retail business, home and personal lending, the Bank achieved double-digit growth. We strengthened our advisory capabilities, upgraded and modernised branches, opened a new Investment Centre in Sliema and upgraded two thirds of our ATM network. Our commercial banking performance also remained strong, with the relocation of our commercial operations to the Quad Central and a new Business Branch marking a strategic upgrade in service delivery. This reinforces our position as the Bank of Choice for both personal and commercial banking needs in Malta.”

Financial Performance

Operating income increased by 2.3% year-on-year, reflecting momentum across core business lines, optimisation of the funding and investment mix, and progress in revenue diversification. Commercial, Retail and Treasury remained the main pillars of income generation, delivering stable and recurring revenues.

Net Interest Income remained central to operating performance, increasing to €387.4 million as the Bank mitigates interest‑rate volatility through focused balance sheet optimisation and strong loan and investment activity. Net Fee and Commission Income also strengthened, rising by 8.2% to €88.1 million, driven by higher customer activity and the shift towards a more diversified, fee‑based earnings model.

Operating costs increased by 13.9% to €246.8 million over the prior year, reflecting a multi‑year investment programme aimed at strengthening technology, risk‑management and customer‑facing channels. Higher technology and cybersecurity expenditure mirrors accelerated digital implementation, transformation and resilience initiatives. Despite this, operating efficiency remains solid, with the cost‑to‑income ratio standing at 49.7% (FY2024: 44.6%).

The Non‑Performing Exposures ratio declined to 1.68%, supported by active remediation, improved portfolio monitoring and continued reduction of legacy positions. The coverage ratio increased to 59.4%, reflecting a resilient provisioning and approach to asset‑quality.

The Group’s profitability translated into a pre‑tax Return on Average Equity of 17.9%, comfortably above the 15% guidance. The year‑on‑year movement reflects both lower overall earnings when compared to the exceptional 2024 base and a higher average equity position driven by retained profits.

Profits from insurance associates increased to €10.4 million, reflecting the solid performance of the Group’s insurance operations in partnership with MAPFRE and their continued contribution to diversified earnings.

ESG remained a core priority, with progress on the Climate Transition Plan and further reductions in Scope 1 and Scope 2 emissions.

Outlook and Risk Management

The Group continues to monitor economic and geopolitical developments through risk monitoring frameworks, with assessments indicating no material emerging risks. Stress‑testing under ICAAP confirms strong capital buffers and resilience, while the Group remains vigilant towards maintaining transparent market disclosure.

The Board remains confident in the Group’s strategic direction, having delivered another year of strong performance underpinned by solid fundamentals, disciplined risk management and investment. Entering FY2026 from a position of strength, the Group remains focused on delivering sustainable growth, shareholder value and continued support for the Maltese economy.

The post BOV closes financial year 2025 with €260.4m profit before tax first appeared on The Malta Business Weekly.

Since its establishment in 2017, the Malta Development Bank (MDB) has supported around 750 firms, more than 90% of which are small and medium-sized enterprises (SMEs), CEO Alison Micallef said in an interview with this media house.

Micallef stressed that the MDB’s role is to intervene where “market failures” exist – in other words, where viable projects struggle to secure financing through commercial banks because of factors such as insufficient collateral, conservative lending appetites, or the long-term nature of the investment.

This focus on SMEs reflects their central role in Malta’s economy. Citing NSO data, Micallef said that 99.6% of all non-financial corporations in Malta are SMEs. Yet despite their dominance in numbers, they generate less than half of the country’s total net turnover.

“While SMEs are the backbone of the economy in terms of numbers and activity, revenue remains concentrated among a relatively small number of large enterprises,” she said, adding that SMEs therefore need greater support.

The MDB works alongside commercial banks rather than replacing them, stepping in through risk-sharing arrangements to make projects more bankable. “We do not want to displace private lenders,” Micallef said. “We want to work alongside them and help them make a project.”

As a development bank, the MDB is barred from financing speculative construction and real estate. Instead, it focuses on projects that create long-term economic and social value, particularly in areas such as productivity, innovation, energy resilience, and infrastructure.

One flagship example is the StudentAssist scheme, which helps students finance higher education in Malta or abroad. Around 900 students have benefited so far, with total support reaching approximately €38 million. Under the scheme, students can access interest-free loans of up to €100,000 to cover tuition, accommodation, and related expenses through partner banks BOV and APS.

Micallef said the scheme is an investment in Malta’s future workforce. “By removing financial barriers, we are helping to develop a skilled workforce in Malta that will materialise in the future,” she said.

MDB-backed projects typically involve long repayment periods and are monitored continuously, with formal annual reviews carried out jointly with partner banks. This allows the bank to track growth, market traction, and the overall impact of the financing.

The MDB’s importance was especially visible during the Covid-19 pandemic, when it estimates that its support helped safeguard around 40,000 jobs. According to Micallef, the bank’s contribution during that period amounted to 13% of Malta’s gross value added, or around €1.7 billion.

The bank has also recently strengthened its position internationally. In early 2026, it became the smallest bank in Europe to pass the European Commission’s pillar assessment, allowing it to access the InvestEU budget directly. This means the MDB can now help Maltese businesses tap into EU-backed guarantees without relying solely on intermediaries.

Looking ahead, Micallef said the MDB is concentrating on sectors critical to Malta’s long-term competitiveness, particularly innovation and energy resilience. She noted that these are precisely the areas where private markets can be more reluctant to take risks, especially during periods of uncertainty.

On innovation, the MDB is working with Xjenza Malta on a blended finance instrument to help businesses commercialise research and development. Rather than relying solely on grants, the new tool will provide longer-term loan financing to help ideas reach the market.

Infrastructure is another core pillar. The MDB focuses on sustainable, bankable projects that address clear market gaps, particularly those with long repayment periods that may exceed local banks’ risk appetite. As Malta’s only implementing partner for the Alternative Fuels Infrastructure Facility (AFIF), the MDB can also help entrepreneurs secure cheaper financing for eligible projects, provided they meet strict EU environmental and technical standards.

Despite its policy alignment with Malta Vision 2050 and EU green and digital priorities, Micallef insisted that “policy alignment never comes at the expense of financial discipline.”

“Our decisions are banking decisions, not political decisions,” she said.

This is an abridged version of an interview which was carried in The Malta Independent on Sunday on 22 March

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The proportion of counterfeit euro banknotes remains insignificant when compared to the 30.22 million genuine euro banknotes in circulation in Malta in 2025.

Among the 1,097 counterfeit euro banknotes seized in Malta during 2025, the middle denominations continued to be the most counterfeited. Nevertheless, the €20 denomination lost in importance, while the share of the €50 denomination increased. Together, these two denominations accounted for 87.5% of all seized counterfeits. The share of the lower denominations (€5 and €10) also decreased, while the percentage of the highest denominations remained very low.

The table below provides a percentage breakdown by denomination of the total number of counterfeits withdrawn from circulation in Malta during 2025, compared with the distribution by denomination across the entire euro area. It must be noted that while the €20 denomination predominates in Malta, the €50 is the most frequently detected counterfeit banknote in the euro area.

Notwithstanding the low figures of counterfeits reported locally, the Central Bank of Malta continues to advise the public to remain alert with regards to banknotes received in cash transactions. Most counterfeits are easy to detect as they have no security features, or only poor imitations of such features.

The post Counterfeit euro banknotes in Malta drop by nearly 30% in 2025 first appeared on The Malta Business Weekly.

The commencement of this series of announcements reflects improvements in the technical and governance systems and structures being used by the Bank for the determination of base rates. It also highlights the Bank’s continued commitment to improve and strengthen its communications with the financial markets, and to meet and exceed regulatory expectations.

The Bank Base Rates operate as a core component within the Bank’s enterprise‑wide pricing framework. It works in tandem with product‑specific parameters (such as risk‑based add‑ons, customer‑level adjustments, and contractual terms) to deliver pricing outcomes that are fair, transparent, and consistent with the principles laid out in the Bank’s internal pricing governance.

By anchoring lending rates to an internally governed benchmark, the Bank promotes coherence between individual credit decisions and broader balance sheet objectives, including profitability, capital efficiency, and portfolio risk appetite. These internal benchmark rates are subject to a structured governance and review process every quarter, the bank said.

In determining the Base Rate levels for the forthcoming period, the Bank undertook a comprehensive assessment grounded in its formal Base Rate Policy. This framework requires that every decision, whether to maintain or amend the rates, be evaluated holistically across key principles that safeguard financial resilience, prudent balance sheet management, and fair outcomes for customers.

Following this scheduled review of interest rate trends and prevailing market conditions, the Bank’s Base Rates applicable to its Credit Portfolio will remain unchanged for the forthcoming three‑month period up to end June 2026. Effectively, the Business Bank Base Rate remains at 2.15% per annum, the Home Loans Bank Base Rate remains at 2.15% per annum and the Personal Loans Bank Base Rate remains at 2.45% per annum.

The decision to retain the Base Rates for its credit portfolio unchanged for the forthcoming three‑month period is underpinned by internal financial projections which continue to indicate consistency with its strategic, budget and risk appetite, Key Performance Indicators and Key Risk Indicators. The capital and liquidity positions of the Bank remain strong without any indications of stresses.

Current geopolitical tensions abroad, the outlook for the economy, the Bank’s competitiveness in the market, and the safeguarding of the interests of the Bank’s clients also vouch for the need for continued stability in interest rates in Malta and in the Bank’s base rates in particular. The Bank also noted that, over recent years, it was able to maintain the Base Rates at stable levels notwithstanding changes in market conditions, including shifts in the European Central Bank’s monetary policy stance.

These rates will remain in effect, at least, until the next review scheduled for June 2026, the bank said.

The post BOV to issue quarterly announcements on credit portfolio base rates first appeared on The Malta Business Weekly.

The Group delivered a pre-tax profit of €26.5 million (2024: €23.8 million), with the Bank posting €26.9 million pre-tax (2024: €22.5 million), driven by higher revenues and transaction volumes, and reduced cost of funding. Net interest income rose by 20% to €78.7 million, supported by increased credit and treasury activity, improved yields, and a strategic shift from fixed-term to overnight deposits that lead to wider net interest margins.

Operating income rose by 8% to €89.3 million, while net impairment losses dropped to €0.7 million, reflecting strong asset quality and disciplined underwriting with the NPL ratio closing the year at an all-time low of 1.4%. Operating costs increased due to continued investment in human resources, multiple technology projects, advisory overheads and regulatory costs, with the cost-to-income ratio closing at 70.7%.

The Bank’s financial position also strengthened, with total assets and customer deposits now exceeding €4.6 billion and €4.1 billion, respectively. Total equity increased to €355 million, boosted by the successful 2025 Rights Issue and retained earnings. Capital ratios improved markedly, with the CET1 ratio of 17.6% and Capital Adequacy Ratio of 23.2%. The Board is declaring a final net dividend of €7.4 million, bringing the total net dividend for the financial year to a highest ever distribution of €9.2 million.

APS Bank CEO Marcel Cassar commented: “We are proud to announce a standout performance marked by double‑digit growth over 2024 and a strong rebound in banking income in 4Q2025 – one of our best quarters on record for both operating and profit results. We strengthened margins, expanded retail and commercial lending, and increased revenues across every business line. Last year we promised an uplift in profitability, we are now delivering that consistently and aim for more – despite a volatile geopolitical and economic environment. With strong liquidity, capital and asset quality, we are exceptionally well positioned for the next phase of growth and confident in delivering even higher returns for our shareholders.”

The post APS Bank reports strong 2025 performance with broad-based growth and double-digit increase in profits first appeared on The Malta Business Weekly.