APS Bank plc registered a profit before tax of €30.2 million at group level during 2023, a 92.4 per cent increase from 2022’s figure (€15.7 million).

The results were published in APS Bank’s annual report and audited financial statements for the financial year ended 31st December 2023, on Thursday (today).

In the report, it was also revealed that it registered €27.8 million in pre-tax profit at bank level, €1.1 million less than the €28.9 million that was recorded in 2022.

Total interest and other related income amounted to €105.7 million at group level, up from 2022’s €79.9 million. When deducting interest expenses, which more than doubled (2022: €14.8 million; 2023: €32.1 million), net interest income for 2023 came in at €73.6 million (2022: €65.1 million). The substantial rise in interest payable was a result in higher repricing on domestic deposits and non-euro funding as interest rates spiked.

There was also an increase in net fee and commission income, with this going up by 21 per cent to €8.3 million (2022: €6.9 million).

The strong performance at group level was largely attributed to robust operating fundamentals and a growth strategy that the bank stated is “driven by ongoing digital transformation, enhancing the customer experience, and maintaining asset quality.” In fact, net operating income amounted to €82 million, a sharp rise of 26.3 per cent from the €64.9 million registered in 2022.

APS Bank registered €52.6 million in operating expenses during the year under review, 11.9 per cent more than in 2022 (€47 million). This increase was largely a result of rises in employee compensation and benefits, as well as other administration expenses. These included licensing and maintenance of technologies, regulatory and compliance requirements, professional and marketing fees, insurance, and other inflationary pressures.

At group level, total assets grew by 17.6 per cent to €3.7 billion (2022: €3.1 billion). This increase was primarily due to net loans and advances to customers and the syndicated loan portfolio which grew by 22 per cent to €2.9 billion. Home financing also remained a key driver, contributing to 56 per cent of the overall increase in the loan book, closely followed by commercial and corporate lending. Cash and balances within the Central Bank of Malta increased by €45.2 million to €131.1 million, while loans and advances to banks contracted by €18.4 million to €54.5 million (2022: €72.9 million), counterbalancing the increase in balances within the Central Bank.

The Board of Directors have recommended a final gross dividend of €0.022 per ordinary share, totalling €8.5 million, which amounts to a final net dividend of €0.015 per ordinary share or €5.5 million in total. It has suggested paying the dividend as Scrip, where each shareholder has the option to receive the dividend in cash or through the issuance of new ordinary shares at an attribution price of €0.55c per share.

Shareholders appearing on the register of members maintained by the Central Securities Depositary of the Malta Stock Exchange as at close of trading on 9th April 2024 will receive notice of the meeting and will thus be entitled to the dividend.

The dividend is subject to approval from the Malta Financial Services Authority (MFSA) and the shareholders at the Annual General Meeting, and has thus not been included as a liability in the financial statements.

Commenting on the results, APS Bank Chairman Martin Scicluna said that the complexities arising out of high interest rates, inflationary pressures, and geopolitical tensions have “continued to present stretching challenges” to the bank.

APS Bank Chairman Martin Scicluna / APS Bank

“Inflationary pressures have started to reduce across many parts of the world including Malta. Whilst there is a correlation between high interest rates and inflation, there are other sources of inflation such as energy and food products’ pricing that will continue to present economic pressures,” he added.

He said that social, economic, and environmental challenges will continue to present a number of risks and opportunities in the future, yet he affirmed that APS Bank’s Board of Directors and management are “determined to continue to contribute to all stakeholders’ needs and requirements.”

“2023 has been another successful year,” Mr Scicluna said, before expressing gratitude to his colleagues on the Board of Directors, the management team led by CEO Marcel Cassar, as well as the bank’s employees.

On his part, Mr Cassar noted that as banks across Europe announce profit surges due to the lift from rising interest rates, APS Bank notes that “such performances will be hard to repeat as the tailwind from interest rates subsides and central banks consider their next policy moves.”

APS Bank CEO Marcel Cassar

“Despite an international backdrop loaded with geopolitical risks and complex economic uncertainties, we look forward to the months ahead buoyed by a healthy business book, solid ratios for capital, liquidity, asset quality, and excellent risk and operating indicators,” he said.

Mr Cassar said that APS Bank “continues to believe in the Maltese market and the opportunities that it offers,” as the bank undergoes transformation and simplification of its channels, products, and services.

“Above all, we are confident that 2024 will present us with exciting prospects for future growth, and to create more value for our customers, communities, and investors,” he stated.