Author: Mel Chamber

The latest economic outlook for Malta issued by PwC reveals a robust performance in the face of moderate global growth projections. According to recent data, Malta’s GDP growth rate stood at 6% in 2024, although decelerating somewhat from 6.8%, and is forecasted to dip below the 4% mark by 2026. This growth is driven by sectors such as real estate, construction, financial services, and the public sector. However, traditionally higher value-added sectors such as professional services, ICT, and arts & entertainment (including i-gaming) have slowed down or even contracted slightly. In fact, official statistics for FY24 at a sectoral level suggest a negative correlation between a sector’s growth rate and that same sector’s output per employee in euro terms.

The latest global projections from the PwC Network suggest that global growth will moderate somewhat, at 2.6% in 2025 and 2026, down from 2.8% in 2024. The US economy is expected to grow at just over 2%, while China’s growth is projected to moderate to around 4.5%. Growth in the eurozone is expected to remain slow, at 1.1% in 2025, picking up marginally to 1.3% as the German economy recovers somewhat. Meanwhile, India’s economy remains robust, with growth expected to be over the 6% mark.

Despite the global moderation, Malta’s economic performance remains above its European peers. Expenditure data for FY24 indicate that this growth was driven by expenditure related more to entertainment & leisure and tourism-related activity, rather than more domestic expenditure. Furthermore, economic sentiment indicators such as The Economic Sentiment Indicator (ESI) suggest
decreasing confidence for the first two months of FY25 after a temporary upturn towards the end of 2024. However, Malta’s real GDP growth is projected to remain higher than that of the Euro Area, although the disparity is expected to narrow over time.

To access the full report, visit here.

Disclaimer: The data presented in this Economic Outlook does not reflect the recent tariffs unveiled by the US government.

Bank of Valletta recently hosted a very well-attended seminar for business representatives, focusing on one of today’s most pressing concerns – cybersecurity. This event was designed to equip business leaders with essential knowledge and tools to protect their operations from the growing risks of fraud, scams and digital attacks.

In his opening remarks, BOV CEO Kenneth Farrugia described the event as the first of its kind for Bank of Valletta, underscoring the Bank’s commitment to supporting the business community beyond the provision of financial services. “Cybersecurity is no longer just an IT concern. It is a business risk that demands attention across all sectors,” he said.  “The evolution of technology has changed the way companies operate, but it has also enabled cybercriminals to become more sophisticated, exploiting advancements in artificial intelligence and machine learning.”

Mr Farrugia stressed the role of education and awareness in building a strong first line of defence. “Cybersecurity is one of BOV’s key initiatives. We are committed to safeguarding our systems, our people, and most importantly, our customers.”

Organised by the Bank’s Business Development and Customer Value Unit, the seminar covered real-life examples of cyber incidents – from phishing emails to AI-driven fraud. BOV specialists in Payments, Cards, and Information Security delved into several critical areas. The speakers offered practical strategies to strengthen information security and defend against fraud. Attendees were also given tips on how to identify common scam tactics and implement safeguards to protect outgoing payments.

With the rise in digital transactions, businesses face increasing threats, including bank impersonation scams. These often involve criminals posing as bank employees to deceive victims into disclosing sensitive financial information. The seminar highlighted the importance of recognising red flags, adopting strong security protocols, and fostering a culture of cyber awareness within teams. The event concluded with an interactive Q&A session, giving attendees time to raise real concerns and get expert advice on shielding their businesses from cyber threats.

Bank of Valletta urges anyone who suspects that they may have fallen for a scam to report it by calling +356 2131 2020.

HSBC Bank Malta will once again join other HSBC Group sites worldwide in marking Earth Hour, demonstrating its ongoing commitment to environmental sustainability. Organised by the World Wildlife Fund (WWF), Earth Hour is a global initiative encouraging individuals and organisations to switch off lights as a symbolic act to raise awareness about climate change and energy conservation.

This year, Earth Hour took place on Saturday, 22^nd March 2025, from 20:30 to 21:30. HSBC Malta participated by turning off all external lighting at its landmark offices in Valletta and Qormi in alignment with the global initiative. The Ministry for the Environment, Energy & Public Cleanliness (MEEC) coordinated Malta’s participation, with a central event scheduled at St. George’s Square between 18:00 and 21:45. The event featured informational stalls, entertainment, and the lighting of a large ‘60’ logo with candles which represents the one hour during which lights are switched off to highlight the importance of sustainability.

HSBC Malta has actively supported Earth Hour since its inception in 2009, recognising the importance of fostering long-term environmental awareness. The initiative serves as a reminder that sustainable practices should extend beyond just one hour and become part of daily life.

Glenn Bugeja on behalf of the HSBC Malta, commented: “As a responsible corporate entity, HSBC Malta remains dedicated to promoting sustainability and reducing environmental impact. By taking part in Earth Hour, we reaffirm our commitment to tackling climate change and inspiring positive action within our communities.”

Beyond turning off lights at its buildings, HSBC Malta encouraged its people and the public to participate by switching off non-essential lighting and engaging in activities that contribute to a greener future. Whether it’s reducing energy consumption at home, participating in clean-up initiatives, or adopting more sustainable lifestyle choices, every action counts.

Ms. Adriana Baldacchino has been honored with the BOV Special Prize in Science for her exceptional academic performance throughout the BSc(Hons) program from 2020 to 2024. This prestigious award recognizes her achieving the highest overall mark in her cohort, highlighting her dedication, hard work, and passion for science.

Adriana’s journey through the BSc(Hons) program has been marked by consistent excellence. Her ability to grasp complex scientific concepts and apply them effectively has set her apart from her peers. Her commitment to her studies and her unwavering pursuit of knowledge have earned her this well-deserved accolade.

Ms Baldacchino was presented with her prize by Prof. Emmanuel Sinagra, Dean of the Faculty of Science at the University of Malta and Silvio Cassar, Manager Business Generation at Bank of Valletta.

“Ms Baldacchino has demonstrated exceptional skill and commitment in her studies, consistently achieving top marks across all subjects,” said Prof.  Sinagra. “Her hard work and passion for science have set a remarkable example for her peers and the academic community. We take this opportunity to congratulate her on her well-deserved achievement and will continue to follow her successes in the field of science.”

“The BOV Special Prize in Science is a collaboration between BOV and the University of Malta with the aim of encouraging academic excellence, promoting scientific research while fostering a culture of achievement and celebrating the hard work of top students,” said Mr Cassar. “This prestigious prize highlights academic excellence and dedication and is definitely a prestigious addition to Ms Baldacchino’s resume and will definitely be an asset to motivate her to continue striving for excellence.”

Fitch Ratings has upgraded Bank of Valletta’s Long-Term Issuer Default Rating (IDR) to ‘BBB’ from ‘BBB-‘ and the Viability Rating (VR) to ‘BBB’ from ‘BBB-‘. The Outlook on the Long-Term IDR is Stable. Fitch has also assigned BOV a long-term deposit rating of ‘BBB+’ and short-term deposit rating of ‘F2’.

This upgrade was announced by Fitch on Tuesday 25th March, in a statement that acknowledged “BOV’s dominant domestic franchise, which has allowed the Bank to consistently capture the profitable business opportunities offered by Malta’s benign operating environment, while maintaining adequate asset quality and capitalisation”.

Both BOV Chairman Dr Gordon Cordina and CEO Kenneth Farrugia expressed their extreme satisfaction on this announcement. Dr Cordina stated, “This upgrade by Fitch is another acknowledgement of the transformation journey that we’ve been on for the past years and is a testament to our dedication to sustain the Bank’s positive performance. This announcement enables us to look to the future with confidence and continue in our efforts to positively impact our stakeholders, shareholders and the wider community.”

CEO Kenneth Farrugia echoed the Chairman’s statement and commented, “This upgrade by Fitch Ratings is a substantial milestone for Bank of Valletta, reflecting our robust financial position and strategic vision. It follows a series of prestigious accolades we received in 2024, including an upgrade of our credit rating by Standard & Poor’s, the esteemed FHRD HR Quality Mark, two awards at the Malta Business Awards, and being named Company of the Year 2024 by the Malta Stock Exchange. These recognitions, culminating in Fitch’s upgrade, validate our sustained efforts and dedication to maintaining the Bank’s positive performance and supporting the growth of our business for the years to come.”

In the official statement, Fitch continued by saying that BOV’s ratings reflect its leading domestic franchise, which contributes to the bank’s sound earnings generation despite limited business diversification, but also its small scale and concentrated operations in a small economy. BOV’s lending standards and investment guidelines are in line with global industry practices, and its risk framework has strengthened in line with regulatory expectations.

The full report on Bank of Valletta’s upgrade can be viewed here.

Profit Before Tax of €302.4 million and Gross Dividend Payout of €130.7 million

Bank of Valletta achieved a record performance for financial year 2024, with profit before tax of €302.4 million, representing a growth of 20.2% when compared to FY2023. This was announced during a press conference hosted by BOV Chairperson Dr Gordon Cordina, CEO Kenneth Farrugia and CFO Kevin Cardona. The main highlights can be summarised in the following points:

• Profit before Tax: Profit before tax for FY2024 amounted to €302.4 million, up from €251.6 million in 2023, reflecting a 10.1% increase in operating revenues and contained cost growth.
• Dividend: The Board of Directors will be recommending a final gross dividend of €0.1314 per share, bringing the total dividend for FY2024 to €0.2238 per share, up by 92.5% from the 2023 level; this equates to a distribution of €76.7 million from H2 profits (€49.9 million net). Combined with the interim distribution, the total gross dividend payout amounts to €130.7 million (€84.9 million net).
• Bonus Issue: The Board will also recommend a bonus share issue of one (1) share for every ten (10) shares held. This is subject to regulatory approval.
• Share Buy-Back: The Board will be proposing a share-buyback initiative to increase the liquidity of the Bank’s equity instrument in the market, without cancelling shares. This is subject to regulatory approval.
• Bond Issue: The Board will also be considering a further issuance of Bonds (Tranche 2) out of the Euro Medium Term Bond (EMTB) programme of up to €250 million.
• Balance Sheet Growth: The Bank’s balance sheet expanded to €15 billion (67.1% of GDP, and 107% that of all other domestically oriented institutions taken together), while credit grew by €700 million during the year, with the Bank’s interest rates remaining among the lowest in the euro area.

	FY 2024	FY 2023	Change
Profit Before Tax	€ 302.4 m	€ 251.6 m	+ € 50.8 m
Proposed Gross Dividend	€ 130.7 m	€ 67.8 m	+ € 62.9 m
Proposed Gross Dividend per Share	€ 0.2238	€ 0.1162	+ € 0.1076
Proposed Payout Ratio	42.6%	26.3%	+ 16.3%

Performance Highlights

The BOV Group’s performance was driven by a strategic focus on both revenue and cost management. Total operating income for FY2024 amounted to €485.8 million, marking a 10% increase from the previous year. This was driven by the expansion of loan portfolios, improved net fee and commission income, and a sustained treasury activity to continue investing in high quality financial instruments.

Net Interest Income: This increased by 9.6%, reaching €385.9 million, with the Bank expanding its lending activities and proprietary investments and benefitting from improved deposit rates on cash reserves. The growth in Net Interest Income was spearheaded by a dynamic balance sheet optimisation approach undertaken during the last years, where liquid assets were diverted into interest bearing investments with a view of stabilising income over a longer period and reducing volatility.

Net Fee and Commission Income: The BOV Group equally managed to register a 4.3% year on year growth over 2024, as this rose to €81.4 million.

Associates: The Group’s share of profit from insurance associates resulted in a profit of €9.5 million (€11.0 million in 2023).

Costs: Total Costs for the year amounted to €216.7 million which is 2.8% above the previous year. Personnel costs remained the primary cost driver, where the Bank continues to invest in talent followed by technology-related expenses where the Bank continues to invest as part of its strategic drive for digitalisation. The Bank has set out a cost management framework, encompassing a procurement excellence methodology, to ensure that cost levels are optimised over the medium to longer term both on the operational front, and on human resources, where a capacity planning exercise is currently underway. 

Expected Credit Losses: The movement on Expected Credit Losses (‘ECL’) for the year amounted to a net release of €23.8 million (2023: €10.5 million net release), which was influenced by an improvement in both the non-performing and under-performing ratios as well as strengthened collateral position on a number of key non-performing assets. The Group’s unwavering commitment to improve the quality of the portfolio resulted in the non-performing loans ratio to continue heading downwards and closing at 2.68% which is equivalent to a 0.38% below the 3.06% outstanding as at December 2023.

Customer Deposits: BOV Group deposits increased by €651.7 million to €12.8 billion, driven both by non-personal and personal deposits. This was productively deployed in long-term interest-bearing assets with the credit portfolio increasing by more than €700 million and the investments portfolio up by €983.2 million.

Loans and Advances to Customers: Net loans and advances increased by 11.6% to €6.9 billion at end 2024, with the credit portfolio showing consistent growth primarily due to sustained business across all segments including business, home and personal loans, whilst also maintaining a strong focus on credit quality. As a result, the Gross Loan-to-Deposit ratio increased by nearly 3% by year end to 54.5%, and the Group’s liquidity remains well-above the minimum regulatory requirements.

Key Financial and Regulatory Ratios

	FY 2024	FY 2023	Change
Return on average equity ratio	22.6%	21.1%	+ 1.5%
Earnings per share	34.2 euro cents	28.8 euro cents	+ 5.4 euro cents
Net asset value per share	€2.41 per share	€2.17 per share	+ €0.24 per share
CET 1 Ratio	22.31%	22.66%	– 0.35%
Total capital ratios	27.13%	25.94%	+ 1.19%

BOV’s impressive results are the fruit of years of transformation – Dr Gordon Cordina

Dr Gordon Cordina reflected on the results achieved by the BOV Group in 2024 as it celebrated 50 years of service to the community and the Maltese economy. “Bank of Valletta’s impressive results are the fruit of years of transformation that saw the Bank resolve legacy challenges and exploit new opportunities amid complex external dynamics on the regulatory, financial, economic and technological fronts. We continue to focus our efforts on delivering shareholder value, driven by prudent capital management as well as strategic and sustainable initiatives. The dividend we are announcing today, which is by far one of the strongest dividend payouts ever, as well as the bonus share issue, which is subject to regulatory approval, are a just reward to our trusted shareholders and reflects our dedication to maintaining a secure and profitable institution.

In the coming months, the Bank will also continue to focus on community and environmental issues. We have already made important strides in this regard, both in the way we operate by significantly reducing our carbon emissions, and by being more demanding on our customers to drive the green agenda. Our ESG and CSR initiatives will become even more pronounced in 2025 and will lead us on the sustainable path we have embarked upon.”

2024 was yet another outstanding year for the Bank – CEO Kenneth Farrugia

CEO Kenneth Farrugia echoed Dr Cordina’s comments on the BOV Group’s robust financial performance. “Building on the record performance achieved in 2023, I am pleased to announce that 2024 was yet another outstanding year of strategic growth and accolades for the Bank as we continue taking forward various key strategic initiatives carried in our Strategic Plan for 2024-2026. Our elevated customer focus, drive to deliver operational efficiency and the dynamic management of risks associated with our operations have all led to improvements in profitability across key business and operational segments. Notable growth was registered in the core credit financing and investments lines of business. The Bank will be pursuing further growth through new opportunities in bancassurance and voluntary occupational schemes, leveraging on the strong partnership with MAPFRE.

This year we continued to invest in our human capital and have implemented various initiatives to support the wellbeing of our employees. These actions have contributed to support our business and operational projects which centred on modernising our service channels, simplifying processes for better efficiency and strengthening risk controls. Over the course of this year, we also continued to strengthen our customer service experience as evidenced by the surveys carried out every month and also launched innovative products and services to our esteemed personal and business customers.

Standard & Poor’s Global Ratings recognised the Bank’s various initiatives and results achieved so far by raising the Bank’s credit rating to BBB. Another notable achievement in 2024 was the launch of the €100 million 5% unsecured subordinated bond, which was significantly oversubscribed on the first day of its launch, reflecting the trust and confidence placed in the Bank by the public and local and foreign institutions. At the end of 2024, the Bank was also awarded ‘Company of the Year’ by the Malta Stock Exchange as a reflection of the Bank’s achievements, and BOV Fund Services was voted as Best Fund Administrator in Malta 2024 by Capital Finance International reflecting our focus on service excellence.”

Corporate Social Responsibility and ESG

Mr Farrugia went on to say that “Sustainability remains firmly embedded in both our business and operational model. During this year, the Bank launched the BOV Foundation, reflecting the importance that we attribute to the Bank’s deep roots in many aspects of Maltese society where the communities that we operate in remain important stakeholders for us.

Our drive in this area culminated with the launch of the Rebbiegħa CSR Initiative, which secured Gold under the Project Green category during the Malta Business Awards. This initiative highlights BOV’s leadership as an active citizen in promoting sustainability. Our activities in support of our communities continued unabated and were equally recognised with the Silver Social Impact Award during the Awards event following the launch of BOV’s Volunteering Initiative. Since its launch, Bank employees supported various NGOs by participating in tree planting, clean-ups, and activities supporting vulnerable groups, including assisting children in care and animal shelters. On the ESG front, the Bank launched an innovative ‘green’ credit financing product for SMEs to support the country’s transition to a more sustainable future.”

Both the Chairperson and CEO underscored the paramount importance of the Bank’s dedicated employees in achieving these record financial results. They praised the unwavering commitment, exceptional talent, and relentless efforts of the entire team, which has been instrumental in driving the Bank’s success. The Board of Directors’ ongoing guidance and support, combined with the strong loyalty and trust of the Bank’s esteemed customers, were also recognised as pivotal factors in this remarkable performance.