Bank of Valletta’s Chairman, CEO and Directors met the Bank’s shareholders during the 49th Annual General Meeting held on Thursday. The Bank’s Chairman, Dr Gordon Cordina, and CEO Mr Kenneth Farrugia addressed shareholders and answered queries related to the resolutions proposed for approval.
Cordina gave an in-depth insight into the current economic scenario, providing the context to the financial performance of the BOV Group in 2022 and to the dividend decision. Mr Farrugia highlighted the milestones achieved by the Bank in the past financial year, while giving an overview of the strategic planned initiatives for the current year and beyond.
“Balancing short-term requirements and long-term aspirations” – Dr Gordon Cordina
Addressing shareholders, Cordina talked about the economic scenario within which the Bank operates, providing an insightful backdrop to the BOV Group’s financial performance in the last financial year. Cordina highlighted the local economy’s growth, the current low unemployment rates, the slowdown in the rate of inflation, and the continued strength of the property market. Within this context, the Bank’s strength is further emphasised, with the size of BOV’s balance sheet over 80% of Malta’s GDP, and growing in line with the economy. Bank of Valletta effectively serves over 60% of Malta’s population and, within the banking system, it accounts for 46% of total deposits, 38% of home loans, and 42% of business loans. This highlights the importance that the Bank plays in the local economy and its role in servicing such a large percentage of the population.
Cordina delved further into the Bank’s decision to keep interest rates unchanged despite the pressure brought about by back-to-back increases by the European Central Bank. “The higher interest rate scenario brought income-earning opportunities to the Bank from Treasury operations and the Euribor-linked segment of its credit portfolio. For as long as the bank continues to be sustained by a very substantial deposit base, it will not need to pass higher interest rates on to deposits and loans, particularly as the Bank is now saving on the costs of excess liquidity which it used to incur in a negative interest rate scenario.”
Cordina went on to say that “when setting its interest rate and product offering, BOV will remain committed to strike the right balance among all its stakeholders, while ensuring that changes are gradual and well communicated.”
The Bank’s chairman highlighted three important milestones achieved in 2022: closing off the Deiulemar litigation, Malta’s removal from the grey list by the FATF, and the successful issue of the Senior Callable Non-Preferred Notes on the international markets.
Looking forward, he said the Board is fully committed to maximise shareholder value, balancing between short-term requirements for dividend distribution and long-term aspirations for business growth in an ever more exacting regulatory environment. “We are focused on fulfilling our unique role in Malta by focusing on our core activities to provide enhanced value, fortifying our risk management to meet evolving regulatory requirements, safeguarding the Bank’s reputation and instilling ESG good practices.”
“We will continue to build on solid foundations” – Kenneth Farrugia
During his address, Bank of Valletta CEO Kenneth Farrugia expressed gratitude to the Bank’s shareholders, employees, and fellow Board and Executive Committee members for the sound performance of the BOV Group registered in 2022, despite several challenges, particularly resulting from the Deiulemar settlement and Malta’s exit from the FATF Grey listing episode.
Farrugia said that the Bank is in the third and final year of its current strategic journey and is in the process of developing a new strategy for the next three years. He highlighted several improvements which the Bank took forward so far, such as the re-engineering and streamlining of processes to deliver customer service improvements. “Through the Bank’s digitalisation efforts, we have already seen early signs of benefit in terms of faster growth in investment and lending businesses, where digital solutions such as the Home Loans Digital Portal provide customers with enhanced ease of access and service delivery. Other initiatives include the introduction of longer opening hours in 10 of its branches and preferential servicing times to the elderly in our society every Friday and Saturday.”
He went on to mention improvements registered in several customer touchpoints. “The branch modernisation programme kicked off in 2021 and is making headway. Five branches are now fully renovated with a refreshed, eco-friendly, and customer-centric layout. We shall continue streamlining our operations to provide a more rapid service and improve efficiency.
In our efforts to offer more value to our customers, a series of Investor Education sessions have recently been launched, seeing the Bank taking a leading role in promoting financial literacy, acting as a catalyst in improving financial knowledge, and helping customers make more informed decisions when managing their finances. The Bank offers an extensive investment offering, including professional advice and expertise to those customers seeking viable alternatives to traditional deposit instruments.”
Farrugia also commented on the Bank’s leadership initiatives on ESG matters citing increasing efforts in embedding ESG within the operations and business of the Bank. The Bank’s aim is to instil a sense of responsibility towards ESG in the Bank’s everyday practices, among customers, staff members, and other stakeholders. Mr Farrugia referred amongst others to the branch renovation which is driven by the use of recyclable material and smart lighting, the introduction of highly favourable terms on eco-financing loan products for personal customers, and equally the introduction last December of a Business Energy Loan which comes with a fully subsidised interest rate for eligible corporate clients.
The Bank's Corporate Social Responsibility programme is another initiative that is having a positive impact on society. The Bank offered its support to various initiatives, such as the national fundraising event BOV Istrina Piggy Bank Campaign, restoration works on statues at Ta’ Ġieżu in Valletta and the restoration of the masterpieces of Emvin Cremona at Our Lady of Lourdes Parish Church in Paola, the latter aimed at safeguarding our national heritage. Bank of Valletta also supports major national sports leagues, such as the BOV Premier League, as well as the national Water Polo and Basketball leagues. On the education front, the Bank lends its support to initiatives such as the Dean's List and the BOV Prize in Medicine with the University of Malta.
Farrugia concluded by saying that the way forward for the Bank is to sustain the momentum and continue to build on the solid foundations being laid today. All these efforts will see BOV achieve its objective of being The Bank of Choice in Malta for its customers and an Employer of Choice for its employees.
New Faces on the Board
In view that Antonio Piras is not seeking re-appointment as Non-Executive Director during this AGM, UniCredit S.p.A, which is the second largest shareholder of the Group, exercised its right to appoint a Non-Executive Director of the Bank in his stead. In this respect, Mr Nicola Angeli has been nominated for this role. Mr Angeli’s appointment is subject to regulatory approval and will become effective from the date of such approval.
One post for Non-Executive Director became vacant during this Annual General Meeting as Mr Alfred Lupi also did not seek re-appointment on the Board. Following a call for nominations, the Bank received one valid nomination for the appointment of director. The nominee, Dr Robert Suban was deemed by the Bank’s Nominations and Remuneration Committee to be fit and proper to act as Non-Executive Director of the Bank. In view that there was one nominee for the one vacancy available, there was no need for an election to take place.