Bank of Valletta held its 46th Annual General Meeting on Thursday 26th November 2020. This AGM was convened remotely in line with current Health Authority recommendations.

Addressing the shareholders, recently appointed Chairman Gordon Cordina said that besides the need to emerge from the COVID-19 episode in a position of strength, the Bank has embarked on an ambitious programme that will transform the way it does business to future-proof it for decades to come.

“This will not be a superficial exercise, but a radical change from the inside out affecting all operations and interactions with internal and external stakeholders, ensuring that the Bank continues to be relevant to the Maltese economy, while delivering better returns to its shareholders.

“The new strategy, dubbed BOV-2023 aims to lift the Bank to a place among the best of its peers in Europe, and its design and implementation are being supported by professionals with international-level track records in these processes,” continued Dr Cordina.

“This strategy will ultimately target the maximisation of shareholder value in the medium term, with a vision to restore the payment of dividends at levels that are adequate, stable and predictable.”

The key highlights of BOV’s financial performance for 2019 are a reported profit before tax of €89.2 million (which compares with €71.2 million for 2018).

Profit attributable to shareholders of €63.5 million result in an earnings per share of 10.9 cents compared to 8.8 cents last year. Adjusting for an additional contingent liability provision of €25 million (2018: €75 million) and additional costs associated with the Bank’s transformation programme of €23.9 million, underlying profit is €138.1 million (2018: €146.2 million).

Bank of Valletta Chairman Gordon Cordina 

This reflects a reduction of six per cent year-on-year, at a time when the Bank has significantly reduced higher risk areas of the business and is reflective also of a positive local economy which has sustained demand for credit.

Continuous growth was registered in the Bank’s balance sheet with gross advances to customers being 1.9 per cent higher than 2018, at €4.7 billion.

Deposits were also up by 2.1 per cent, which reflected growth from local retail economic activity, thus offsetting substantial reductions in deposits held by international clients.

Capital strength was evidenced by an improvement in the CET1 ratio - at the year end this stood at 19.5 per cent, an increase of 120 basis points over last year.

“The BOV 2023 strategy is designed to make Bank of Valletta a more resilient and more profitable bank: better, simpler and faster,” said BOV CEO Rick Hunkin while addressing the AGM.

The three main pillars of this strategy will focus on:

i) investment in the digitisation of products and services, to make it easier for customers to transact with BOV;
ii) the rebalancing of the Bank's Balance Sheet where it will guide a segment of its customers to achieve a better balance in their portfolios by helping them to identify alternative investment products that give them better returns than their deposit accounts; and
iii) to improve customer experience by reforming long and complex processes and updating systems to increase efficiency and support its customers.

Bank of Valletta CEO Rick Hunkin 

“We have continued to put significant effort and investment into de-risking our portfolio through a new risk appetite framework during 2019 and also 2020 and successfully migrated to the new Core Banking System, a modern IT platform which we will continue to build upon to offer improved electronic services and bespoke products and services to our customers,” continued the BOV CEO.

“We have also put a lot of focus and effort into closing out contingent liabilities arising from past legal issues. We very recently closed the Swedish Pension Case with a settlement of €26.5m, a significantly lower settlement than the €88m claimed by the SPA. The historic property fund case was closed in the Bank’s favour in 2019 and we are currently awaiting the legal outcomes of the Deiulemar case.

“Finally, the Board of Directors’ decision to withdraw its original recommendation to the Annual General Meeting to approve the payment of a final dividend in respect of Financial Year 2019 is based on the ECB’s direct guidance on dividend distribution.

“Banks have been directly instructed to preserve all capital until such time when the final effects of the pandemic are known. We understand this is not welcome news for shareholders, but we hope you understand this is an unprecedented situation we are all facing,” concluded Mr Hunkin.

Five resolutions were put to the meeting and approved. The ordinary resolutions included approval of the Profit and Loss Account and Balance Sheet for the year ended 31 December 2019, the re-appointment of the Bank’s Auditors, the Remuneration Policy for Directors and the BOV Variable Remuneration Share Plan. An extraordinary resolution proposing changes to the Memorandum and Articles of Association was also approved at the Annual General Meeting.

The Board of Directors received three resignations of Non-Executive Directors, during FY 2019 and during the first quarter of FY 2020. Following a call of application for nomination of Non-Executive Directors, the Bank received four nominations, two of which were withdrawn whereas the other two candidates were deemed not to be suitable. No election took place and the three vacancies remained vacant.

Thus, with effect from 26 November 2020, the Board of Directors for Financial Year 2020 shall be composed of the following Directors:

• Gordon Cordina (Chairman)
• Stephen Agius
• Miguel Borg
• Diane Bugeja
• James Grech
• Rick Hunkin
• Alfred Lupi
• Anita Mangion
• Alfred Mifsud
• Antonio Paris