Kenneth Farrugia

Bank of Valletta plc CEO Kenneth Farrugia has described 2022 as a year which was “both challenging and rewarding in equal measure” for the group.

This came following the publication of the group’s Annual Report for 2022, in which it posted a pre-tax profit of €48.7 million, a 39 per cent decrease from 2021’s €80.7 million. However, this mainly came about due to the Deiulemar case, a long saga that saw BOV pay €182.5 million to curators in a final settlement of the disputes and claims against the bank. When excluded from the results, the group’s profit before tax amounted to €151.7 million, an increase of €71 million from 2021’s figures.

BOV’s operating income rose by 20.8 per cent to €293.4 million in 2022. Employee compensation and benefits also increased, rising by €18.5 million to €100 million during 2022.

The group’s total assets stood at €14.5 billion as at the end of 2022, a marginal increase when compared to 2021’s €14.4 billion. The group’s Directors did not declare any interim dividends due to the net loss reported for the current period due to the Deiulemar settlement, as well as because of the need to remain “aligned with regulatory expectations within this context”. While the bank enjoyed a “significant recovery” in underlying profitability during 2022, it remains “weighed down” by the cost of the settlement. As a result, the Directors did not propose a dividend for the year.

Commenting on the results, Mr Farrugia stated that 2022 “followed on the heels of the previous year” and ended up being “both challenging and rewarding in equal measure” for BOV.

Despite the effects of the war in Ukraine, rising prices, and the global economic recovery from the COVID-19 pandemic, as well as the Deiulemar legal case, he noted that due to the bank’s “strong franchise in the domestic market and robust business model foundations”, it delivered “strong organic growth”, while maintaining a strong capital ratio.

“These positive results have been driven by the collective collaboration and commitment of our loyal, and highly committed employees. This has enabled us to further drive forward our strategic journey towards a lean, and at the same time digital-led, business and operational model,” Mr Farrugia explained. He added that the group’s focus remains centred around the “optimisation” of its business and operational model, with the aim to “ensure” it creates and delivers value to its customers and stakeholders.

Turning to the Deiulemar case, Mr Farrugia said that BOV has been “conservatively preserving capital to ensure it can withstand any eventuality” and so the settlement would not impact the group’s ability to “comfortably meet continuing regulatory capital requirements”. He confirmed that a total of €363 million in pledged assets previously held with an Italian bank are now “free from any encumbrance”.

With regards to BOV’s digitalisation journey, Mr Farrugia remarked that the group has already witnessed the “early signs of benefit” in terms of the faster growth of its investment and lending businesses. This includes the launch of its Home Loans digital portal, which is providing customers with “ease of access to a home loans financing calculator and the ability to apply for a home loan through a completely digital channel”. The bank has also started working on the enhancement of internal data capabilities.

He proceeded to thank BOV’s customers and employees, before saying that going forward, the group remains “anchored” to maintain a strong balance sheet, sustain its business value streams, nurture investment in its human capital, strengthen its risk, governance and controls, remain relevant to customers, and also support the development of the community it operates in through ESG principles.

“During the course of financial year 2023, we are also excited to actively develop and prepare a new three-year strategic plan – BOV2026. Our strategic thrusts revolving around our customers, operations, risk management, and our people will be driven by both data and digital-led initiatives as key enablers, ensuring ESG is embedded in our business and operational model in the process,” Mr Farrugia concluded.

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BOV CEO Kenneth Farrugia

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