Bank of Valletta said today a demand for credit primarily driven by strong growth in home loans was registered in the second quarter, boosted by Government measures to assist first-time buyers.

In a statement to the stock exchange, it said that despite the low interest rates, customer deposits continued to grow across all segments.

"The continuing preference for short term deposits is leaving a positive impact on the net interest margin. However, the resulting situation of higher liquidity, poses additional challenges due to the persisting low interest rate environment and negative rates on overnight deposits held with other banks," BOV said.

There was a satisfactory increase in commission income across key business lines. The card related transactions exceeded last year’s, and higher demand for investment products was experienced during the period under review.

Foreign exchange earnings are also up, reflecting the growth in turnover.

BOV said that during the period under review, for reasons of prudence, it set aside provisions on certain accounts taken on in past years, which showed signs of deteriorating quality.

"The provision charge also reflects the bank’s continuing cautious view towards the valuation of collateral."