The two major banks in Malta have been having talks with representatives from the European Central Bank and the European Commission, it was revealed at last week’s annual general meeting of Bank of Valletta.
This was revealed by BOV CEO Charles Borg who was replying to questions at the AGM.
The ECB and Commission representatives were studying the Maltese banking business and in particular the role of property in the banking system.
Although Mr Borg did not specify, it would seem the visit by European representatives is part of the investigation, already announced, into Malta’s financial services.
Mr Borg said the reply by the Maltese counterparts to the questions by the Europeans was “quite simple” – many hotels have themselves as security. The hotel is thus not just the security for the bank loan but also the reason for the bank loan and its operation. The HSBC representatives made much the same argument. The European representatives, Mr Borg added, looked satisfied with the explanation given.
Bank of Valletta shareholders on Wednesday approved a gross final dividend of €0.13 per share, which represents a gross payment of €35.1m for the financial year ending 30 September 2012.
This was the first Bank of Valletta AGM for both chairman Frederick Mifsud Bonnici and chief executive officer Charles Borg. They explained the macroeconomic context in which the bank operated during the financial year, as well as giving a breakdown of what led to the €110.7m pre-tax profit made by the bank.
Mr Mifsud Bonnici gave an overview of the international economic situation in which he noted that the European Commission, the European Central Bank and the International Monetary Fund had, since earlier this year, all revised downwards their growth forecasts for the coming year.
He noted that following a short recession, economic growth in Malta recovered moderately in 2012, noting that while there had been a marked contraction in construction, other sectors like specialised manufacturing, tourism, health, recreation and professional services had seen increased activity.
The CEO highlighted a number of the operational achievements of the bank – including its launch of mobile banking. BOV was the first bank in Malta to do so. Mr Borg explained why the bank was a “shaper” of the Maltese economy, and a catalyst for its growth – mainly because, as in previous years, it remained committed to support the Maltese economy in a responsible manner
He noted that the growth in deposits and take-up of the bank’s products and services showed the trust that Bank of Valletta enjoyed in the community.
Profit before tax, at €110.7m, rose 72% over the same period a year before. Return on equity stood at 22.3%, up from 13.5% a year before. Interest margin was up by 8% to €147.8m due to higher volumes.
Operating costs increased by 6% to €87.1m, mainly as a result of the new Collective Agreement, the investment in IT and a higher contribution to the Deposit Investment Scheme.
Non-performing loans have led to a charge of €22.8m, part of which is a collective charge on sectors identified as problematic while non-performing loans have actually decreased to 4.4% from 5.1% the previous year. The collective charge was of €13.5m.
Fair Value estimation contributed €8.7m to the bank’s results where in the previous year a loss of €24.9m had been registered.
Middle Sea Valletta Life contributed €4.8m where the previous year had seen a €2m loss while Middlesea contributed €1.7m where in the previous year there had been a loss of €1.4m).
As regards the La Vallette Multi-Manager Property Fund, Mr Borg said, each investor file is being examined to find out if the investors were what are called “ineligible investors” and who will thus get compensation.
There has been a 3% growth in net advances to €3.9bn, an increase of €115m. This has been mainly in the home loans sector, mostly from first-time buyers.
It is estimated the bank has injected €280m into the economy, of which no less than €100m have been injected into the property sector.
The Jeremie programme has led to an investment of €34.4m into 410 programmes, mostly by SMEs. Steps are being taken to extend the programme.
The bank has received a number of awards – an equality award from NCPE, an FHRD award while Planet Banking has chosen BOV as one of the top 5% banks in the world; Fitch has reaffirmed its B&B rating for the bank and Global Finance has chosen BOV as one of its star performers, along with World Finance.
The bank is increasingly environmentally conscious: it is setting up PV panels on 16 branches.
In question time afterwards, it was noted there was not, this time, the animosity that marked many previous AGMs especially because of issues raised by members of the Small Shareholders Association.
On the contrary, it was revealed a meeting had been held some time ago between the new chairman and CEO and members of the association. Although the chairman said he has still to talk to the board with regards to the issues raised, which included a demand for members of the association to be present at press conferences and meetings with shareholders held by the bank, the atmosphere is definitely a changed one.
This was shown by the fact that it would have been unheard of in previous years, a resolution authorising an increased directors’ remuneration was approved without any comment. Mr Mifsud Bonnici even joked and joshed Guz Bonnett where other chairmen get hot under the collar.
This does not mean, however, the AGM was all plain sailing. Some shareholders raised the issue about the share price as it was when they bought the shares in the 1980s and the price of a share today and would not hear reason when the chairman explained about share splits and the workings of shares on the Stock Exchange. They also urged more cost cutting so that they get a better dividend. When one attacked the ATM refurbishment, Mr Mifsud Bonnici defended the investment as good for the bank. He also explained again and again the bank’s policy of one third of profits being taxes, one third given out as dividend and one third retained profits. This latter, he explained, will help the bank get to the Basel III levels without needing extra capital.
A number of resolutions relating to share capital and directors’ remuneration in addition to the standard statutory resolutions were approved during the annual general meeting, which was held at the Hilton Hotel.
The shareholders voted to choose six directors out of eight candidates who submitted their nomination.
The candidates were the following:
? Joseph Borg
? Ann Fenech
? George Portanier
? Publio Danny Rosso
? Robert Martin Suban
? Paul Testaferrata Moroni Viani
? George Wells
? Franco Xuereb
The shareholders attending the annual general meeting elected the following directors:
? Joseph Borg
? Ann Fenech
? George Portanier
? Paul Testaferrata Moroni Viani
? George Wells
? Franco Xuereb
In this regard, Mr Mifsud Bonnici and Gordon Cordina were appointed by government until the 2013 AGM, while Roberto Cassata was appointed by UniCredit until the 2015 AGM.