During its Annual General Meeting, BOV announced that for the financial year end, it registered a profit of €145.9 million. Outgoing chairman John Cassar White and CEO Mario Mallia gave an overview of the BOV’s state of affairs as well as challenges it is facing and strategies employed.

At the end of November, Fitch ratings agency downgraded BOV’s rating down a notch to BBB, with a stable outlook.

Following the financial crisis of 2008, and the domino effect of economic stagnation experienced by the rest of the Western world, regulators changed up banking requirements in order to prevent or mitigate the disaster from repeating itself. As part of this reform, banks’ capital requirements are far higher than in the past. Tax payers are no longer allowed to bail out a failing bank, therefore shareholders and board members would have to ensure a deep enough cushion, to step in should economic downturn take hold.

In addition to this, financial scandals such as Luxleaks and Panama Papers have tightened regulators grip on due diligence, know your client and overall procedures that seek to ensure no funds coming into the back stem from illicit sources.

In view of this, Mr Cassar White said that over the past two years, the banking sector has changed more radically than ever before experienced. He described the regulators as being “intrusive”, “tough” and that they are being diligent in checking capital requirements.

The reasons for the Fitch downgrade are as follows: a concentration of risk – i.e. concentration of lending to government and for real estate purposes, under developed risk controls, high level of impaired loans (legacy lending), alternative sources of growth business may be limited and risk weighted assets to capital ratio is still low.

Mr Cassar White sounded his approval that regulators now have to approve dividends paid out to shareholders. Prior to this change, it was up to the discretion of the Board to decide on this.

“I think this move is positive, as it helps create that buffer required of us.”

He spoke of changing the banking model to give reputation and risk even more prominence. Overseeing that that money coming in does not come from illegitimate sources is a massive undertaking as it requires ongoing work. He announced that BOV is setting up a financial crimes department.

The need for a culture change was mentioned both by the chairman and the CEO, calling for new ideas to constantly be brought to the boards attention so that it may remain on the ball and remain competitive.

The announcement that BOV would be changing its financial year end from 30 September to 31 December was made, in line with other international banks.

Mr Mallia, as part of his address, gave an overview of the profits earned and other important ratios and figures:

“The Group is reporting a profit of €145.9 million, before deducting income tax, for the financial year which ended mon 30 September 2016. This result incorporates a onetime gain of €27.5 million, arising from the takeover of VISA Europe, in which BOV is a Principal member, by VISA Inc. The Group’s profit, adjusted for this windfall profit, amounts to €118.4 million, as compared to the profit of €117.9 million reported for the previous financial year.

“Pre tax profit represents a return on average equity (ROE) of 16.9%*, down from 18.4% for 2015. This decrease is due to equity having grown by 9% to €729.2 million over the year, while the growth in profit has been marginal. Return on average assets, stands at 1.1%*, compared to 1.3% last year. The cost-to-income ratio, which relates costs incurred to revenue generated, amounts to 44.3%*, against 41.8% in 2015.”

Shareholders attending the BOV Annual General Meeting elected the following Directors:

Stephen Agius, Alan Attard, Paul V Azzopardi, James Grech, Alfred Lupi, Joseph M Zrinzo

As previously announced, the Government of Malta appointed Mr Taddeo Scerri as Chairman and Director and Ms Anita Mangion as Director until the conclusion of the forthcoming AGM. UniCredit S.p.A. has appointed Mr Antonio Pirasas Director of the Bank for a period of three years.

The appointment of all Board members is subject to regulatory approval.