The Bank of Valletta Group registered Lm18.8 million profit before tax for the six-month period ended 31 March. This represents an increase of Lm9.0 million (92.2%) over the half yearly profit, (as restated), registered last year.

BOV chairman Roderick Chalmers announced that the board of directors had declared an interim dividend of 5.5 cents per share, gross of tax. This represents an increase of 46.7% on the interim dividend of 3.75 cents per share declared last year, as restated following the bonus issue.

“These are good results” said Mr Chalmers, “however, they do require some analysis so as to ensure a proper understanding, and to manage expectations on a going forward basis.” He said that “essentially nearly all divisions within the bank did well; Financial markets and investments performed strongly. Fund Management had a

great half year, as did Bancassurance and Stock-broking; Credit Cards paused to deal with some technical and technology issues, but we expect renewed growth to resume shortly. “These were the main drivers behind the strong growth in income which was accompanied by a continuing good performance in terms of cost control. Whereas operating income was up by 17.5%, costs in the same period went up by just 4.5%.

“This resulted in a further lowering of our cost income ratio from 49.8% in March 2005 to 44.3% for the half year under review. Finally, a marked reduction of Lm2.7 million in the impairment charge, and good performance from our insurance sector served to further improve the results for the period”.

Mr Chalmers said that, looking ahead, although the bank does not provide profit forecasts, the board is expecting that, barring unforeseen circumstances, the group should be able to sustain the rate of profitability achieved in the first six months through the second half of FY2006.

However, Mr Chalmers said that at the same time the good results needed to be viewed with understanding and a proper perspective. “The bank has been focusing hard on big ticket issues for some time, and the benefits of this focus are now showing in terms of much improved results, and, in particular, a reduced impairment charge. “Whereas this focus will continue, future improvements to profitability would necessarily be less dramatic and more incremental in nature,” he commented, noting that it was important that this was understood and appreciated by the markets.

Mr Chalmers also pointed out that the bank’s FY2005 results had been skewed somewhat in favour of the second half of the year, due to the impact of certain one off charges in the first half of FY2005, and the timing of the Central Bank 25 basis points interest rate hike in May 2005. His expectation was that the two halves of FY2006 were likely to be in much closer equilibrium, therefore, while the results for the first six months were up 92%, he believed that the increase for the current year as a whole would be more modest.

“These half yearly results underline the strength of the BOV brand in the market. I also attribute this successful performance to our proactive approach with our customer base – and to our business credo that our customers’ success is our goal,” said Mr. Chalmers.

“The first six months of this financial year also saw the official inauguration by the Prime Minister of the new BOV Centre in Sta Venera, the largest development project ever to be undertaken by Bank of Valletta. We also continued with our preparation to deal with important developments that we expect to take place in the coming months including the pension reform legislation, the euro changeover process and the continuing development of Malta as a financial services centre,” Mr Chalmers concluded.