Moody’s Investor Service, the global credit ratings agency, has confirmed BOV’s credit rating in its latest report on the bank.

Moody’s said that BOV’s financial strength rating is underpinned by its dominant market position as well as the bank’s “rebounding profitability on the back of improved operating efficiency, sufficient capitalisation and excellent liquidity and funding profile.”

Moody’s has confirmed all BOV’s credit ratings – Baa1/Prime-2/D+ with a stable outlook.

“With a market share of over 40 per cent, BOV ranks as the largest Maltese bank,” confirmed Moody’s, adding that BOV’s “strong franchise and complete range of financial services provides it with access to all business activities in the country and supports its financial strength rating (FSR). The bank’s size affords BOV incontestable brand recognition in the domestic market while management makes no excuses for capitalising on the brand, and in fact promoting its image as ‘the Maltese bank’,” the report added.

Moody’s said the bank’s franchise value and dominance in the domestic market is supported by its strong retail lending operations which represent a core business objective in sustaining its growth potential and profitability. Moody’s acknowledged that Bank of Valletta is Malta’s principal deposit-taking institution, commanding a market share of 46 per cent in residents’ deposits. This strong retail deposit base provides BOV with access to ample liquidity, providing further potential for it to grow its balance sheet.

Moody’s noted that BOV’s retail strategy has also been facilitated by its alternative-delivery channel approach. It said that this appears to be paying off, given that more than 73 per cent of the bank’s total transactions are taking place outside its branches.

Looking ahead, the report noted that significant challenges such as the adoption of the euro, possibly by January 2008, are expected to intensify competitive pressures.

BOV’s chief executive officer Tonio Depasquale said: “The positive report, together with the re-affirmation of all BOV’s credit ratings and stable outlook, acknowledge the strength of the BOV brand in the market and the validity of the strategies being implemented by the bank’s management.”