Bank of Valletta today announced its performance for Financial Year ending 31st December 2023, registering a profit before tax of €251.6 million. These positive results are underpinned by strong income growth and high profitability levels achieved across all main business lines. This continued to strengthen the Bank's balance sheet position, with liquidity and capital positions remaining well above regulatory requirements.
The BOV Group experienced a significant increase in operating income primarily due to the enhancement in net interest income for the year 2023. Total operating income amounted to €441.0 million (increase of €147.6m over prior year). Net Interest Income remained the primary driver of operating income, totalling €352.0 million (up by €150.1m), with Net Fee and Commission income increasing by €1.4 million. Total costs amounted to €210.9 million (increase of 10% over prior year). The Group's share of profit from insurance associates amounted to €11.0 million.
Key performance indicators were satisfactory with pre-tax return on equity at a level of 21.1% and cost to income ratio at 47.8%. Earnings per share amounted to €28.8 cents (€5.4 cents restated in the comparative year).
The Group's Total Assets remained on the same levels of the previous year at €14.5 billion. Gross loans and advances reached €6.3 billion, an increase of nearly 9% compared with the €5.8 billion of December 2022. Group's gross loans to deposits ratio increased from 46.0% in December 2022 to 51.7% by end 2023. Capital ratios remained strong and above regulatory requirements, with the CET 1 and total capital ratios as at 31 December 2023 of 22.7% and 25.9% respectively.
Further to the gross interim dividend of €0.0462 per share paid on 6th December 2023 amounting to €27.0 million (net ordinary dividend of €0.0300 per share amounting to €17.5 million), the Board of Directors will, at the forthcoming Annual General Meeting, be recommending a final gross dividend of €0.0700 per share amounting to €40.9 million (net dividend of €0.0455 per share amounting to €26.6 million). This would make for a total gross dividend for the year of €0.1162 per share, equivalent to a total gross dividend payable of €67.9 million. The payment of the final dividend is still subject to regulatory approval.
"The highest dividend in the past decade, with the strongest ever capital base" – BOV Chairman Dr Gordon Cordina
Speaking during the announcement BOV Chairman Dr Gordon Cordina commented that "2023 has been a very positive year for the Bank of Valletta Group, which registered healthy profits in a situation of positive interest rates, while no longer shackled by legacy impediments and risks. The conservation and the generation of capital remain high on the Bank's agenda. Such approach ensures that the Bank has enough capital to sustain its future strategic growth ambitions whilst always acting prudently to remain well capitalised in relation to regulatory thresholds.
On the strength of the financial performance being registered, the Board of Directors is pleased to announce one of the highest dividend distributions paid in recent years, which duly rewards our loyal shareholders. This is being recommended after taking into consideration the Bank's future capital requirements, underpinned by a fully articulated dividend policy which seeks to balance out dividends payout with future growth of the Bank's equity base. It also takes into consideration the sustainability of further dividend payouts in the future.
In 2023, the Board approved BOV's updated strategy for the 2024-2026 period. Among its chief priorities, the strategy emphasises Environmental, Social and Governance (ESG) considerations. The Bank aspires to lead Malta's transformation in this area, not only in sync with more onerous future regulatory requirements, but even more ambitiously, to help steer behaviour along a sustainable path. In 2024, BOV will be celebrating its 50th anniversary and as we reach this milestone, our ambition is that as an institution we remain vibrant, relevant, competitive, and dynamic. Our polar star is to be a leader and innovator in the financial sector and a catalyst for positive change."
"A remarkable performance in BOV's 50-year history" – CEO Kenneth Farrugia
Speaking about these results, BOV CEO Kenneth Farrugia stated that "Bank of Valletta's financial performance over 2023 was undoubtedly one of the best experienced during its 50-year history, with strong income growth achieved across all core business lines. These positive results were achieved in a backdrop of a high interest rate environment influenced by geopolitical tensions, high inflation, and tightening monetary policies across the euro area. The increase in interest rates, 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.
Over this year we continued to intensify our commitment to improve the delivery of a high-quality service experience to our customers. The Bank has been re-engineering processes to deliver service enhancements while providing customers with more efficient alternative channels. We are pleased to see this resulting in continued migration from traditional to more modern alternative channels. We have also taken forward a number of foundational changes to strengthen operational execution to support our key strategic thrusts over the next three years.
On the business front, the Bank has registered strong growth in both our commercial and consumer finance business. It is particularly pleasing to note the growth in green commercial and personal loans and equally the strong quality of our loan book which has been maintained. Moreover, despite the challenges posed by the market due to the impending geopolitical and other related issues, the Bank has also managed to marginally increase its overall net fee and commission income from other banking services provided to its esteemed customers when compared with the previous year.
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. During the year, we have taken forward various projects to continue strengthening our risk and control infrastructure. In this manner we are ensuring that we constantly meet our regulatory compliance requirements and meet the expected cybersecurity standards to ensure that our business can be sustained and at the same time our customers to feel secure.
Our People reside at the very centre of our strategy. Over 2023, we have launched various initiatives to strengthen the engagement of our employees and improve our overall operational efficiency and productivity. In the process, the Bank's training academy has hosted hundreds of our employees, to support their personal development, skills, and experience so that they can grow and thrive within the Bank which we are positioning as a learning organisation.
The Community we operate in remains an important stakeholder of the Bank. Our Corporate Social Responsibility program has been a highly active during the year where we have organised various initiatives across our key CSR pillars to support this highly important stakeholder.
I wish to conclude by thanking our employees across the Bank that are working hard each day with the required dedication to drive forward our "good to great" transformation program. I am highly appreciative for all their contribution as well as that of my Executive Team as well as the Board of Directors as we journey to more exciting years ahead of us. Our aim is to deliver value to our shareholders and customers alike where the Bank remains firmly secure, compliant and sustainable in the process."
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