When Bank of Valletta (BOV) posted a record profit before tax of €251.6 million for 2023 last month, it was not exactly a surprise, given its quarterly updates that have kept investors and stakeholders abreast of developments at Malta’s largest bank.

Nonetheless, a quarter of a billion euro in profits is a standout amount – certainly large enough to generate a multitude of headlines and plenty of smiles on shareholders faces, who may now expect a similarly standout dividend payment on top of a 75 per cent year-on-year increase in its share price.

Although the profit figure is undoubtedly huge, even at first glance, it is not necessarily immediately obvious to casual observers whether the results are simply impressive or actually record-breaking.

WhosWho.mt spoke to financial market insiders and stockbrokers who confirmed that the results are in fact the best-ever posted by a Maltese listed company.

Listed companies must post regular financial statements for public review. Such companies are often the largest corporate entities in Malta, making it difficult to imagine that any other Maltese firm has ever posted better results.

And while some truly major global companies are registered in Malta due to its position as an international hub for financial services and online gambling, not to mention the advantageous tax regime offered to companies with a foreign shareholding - Europe's lowest - such firms are decidedly not 'local'. 

A comparison with BOV’s previous annual results reveals that the bank has generated similarly blockbuster returns over the last years, but never on par with 2023’s results.

Put another way, the value of BOV’s profit for 2023 is comparable to what some of Malta’s other largest companies have posted as record revenues.

For example, International Hotel Investments (IHI), the company behind the Corinthia Group – Malta’s most successful hospitality business with a global footprint – registered total revenue of €268 million in 2019 – a record year for the group.

Whether BOV’s results can be repeated is another matter, however, influenced as they were by the rising interest rate environment in Europe and beyond. As they say, a rising tide lifts all boats – and especially those positioned in the right direction.

In essence, since the unprecedented profits came as a result of international development outside the bank’s control – but that it was uniquely positioned to take advantage of – there is no guarantee that the result will be replicated.

So far, the European Central Bank has held firm on keeping its key interest rates at their highest ever levels, but that may be difficult to maintain as inflation is brought under control while European economies struggle to generate meaningful growth.

BOV is of course aware of this, with Chairman Gordon Cordina in the annual report writing that the bank is aiming to “lock in the advantageous rates offered by the current high interest rate environment” by redeploying treasury funds into longer term assets, “thereby supporting net interest income over the long term.”

He said: “This makes the Bank less exposed to cyclical fluctuations in rates and thus generate a more stable positive performance over time. In turn, this can ensure that every year, sufficient internal financing is available to strengthen the capital base to support future growth, while providing a predictable and stable source of dividends for our shareholders.”