Author: Mel Chamber

Bank of Valletta (BOV) staff recently joined forces with the charitable organization Caritas for an olive picking event aimed at supporting community welfare. The event, held in a scenic olive grove on the ground of San Blas in Zebbug, served a dual purpose: to assist Caritas in their philanthropic endeavours and to foster a unique engagement between the bank’s employees and individuals undergoing rehabilitation within the drug rehab system.

The olive picking event was a symbol of collective goodwill, where volunteers from both Caritas and BOV came together to harvest olives. The occasion not only contributed to the noble cause of aiding Caritas’s initiatives but also provided a moment for team-building among the participants. What made this event even more special was the interaction between the BOV staff and the inmates participating in Caritas’s rehabilitation program. Amidst the tranquillity of the olive grove, these two groups engaged in discussions, sharing their experiences, perspectives, and insights. The exchange of views allowed for a deeper understanding of each other’s lives and situations, fostering empathy and understanding.

This interaction was a valuable opportunity for both the BOV employees and the inmates. For the bank staff, it offered a chance to gain new perspectives, challenge biases, and participate in a meaningful social cause, promoting a sense of social responsibility. On the other hand, for the inmates, it was an occasion to feel a sense of inclusion, to be seen beyond their past, and to engage positively with members of the community. The event not only highlighted the importance of community involvement and social solidarity but also demonstrated the transformative power of such interactions. It emphasized that meaningful conversations and shared experiences have the potential to break down barriers, promote understanding, and contribute to the rehabilitation and reintegration of individuals into society.

In summary, the olive picking event organized by Caritas, in collaboration with BOV, not only brought people together for a benevolent cause but also exemplified the positive outcomes of social engagement and mutual understanding between individuals from different walks of life. Such initiatives stand as a testament to the potential for change and unity within communities.

BNF Bank, a leading financial institution with a strong commitment to innovation and customer-centric solutions, is excited to announce a strategic partnership with Aspire Systems and Temenos, a renowned global technology services firm. This collaboration marks a significant milestone in BNF Bank’s ongoing efforts to enhance its banking infrastructure and deliver even more streamlined, efficient, and customer-focused services.

Aspire Systems is a trusted implementor of cutting-edge technology solutions with a proven track record worldwide. The partnership with Aspire Systems and Temenos demonstrates BNF Bank’s commitment to staying at the forefront of the banking industry by embracing state-of-the-art technology solutions to meet evolving customer demands. Aspire Systems also brings its expertise in ensuring the highest levels of security and compliance within the financial industry, helping BNF Bank maintain the trust and confidence of its customers.

Commenting on this exciting partnership, David Power, CEO of BNF Bank, stated: “The implementation of new digital channels will empower BNF Bank to provide our customers with an enhanced and seamless banking experience, through more user-friendly digital banking platforms.”

Mr Power added: “Our collaboration with Aspire Systems is a testament to our dedication to providing our customers with the best banking experience, and our commitment to continuous innovation. This strategic move will equip us with the tools and technologies necessary to adapt to the ever-evolving financial landscape, ensuring we are future-ready, and we are eager to see the positive impact it will have on our customers.”

Gowri Subramanian CEO of Aspire Systems added: “We are thrilled to partner with BNF Bank, a forward-thinking institution dedicated to the well-being of its customers. Our digital channels’ solutions will help BNF Bank remain agile and responsive in a rapidly changing industry, ensuring they are well-prepared for the future.”

‘It is vital to our own business on how we deliver our services to our esteemed customers and help them sustain their businesses for the future while sustaining ours.’ This was stated by Dr Gordon Cordina, Chairman of Bank of Valletta during the 3^rd Conference on Ethics in Business organised by the Gozo Business Chamber.

In line with the conference’s theme, ‘Putting Corporate Social Responsibility into Practice’, the BOV Chairman emphasized that while all those who run a business have a duty to all their stakeholders to make a profit, they must also think of long-term survival by making a fair profit. A company must have solid values and a profit is made while remaining true to their values and respecting their employees, their customers, their shareholders, the environment and the community in which they operate.

‘An organization is responsible for any product or service that it puts out on the market, and all the repercussions of producing that product or delivering that service,’ continued the BOV Chairman. ‘Focus must be on a good return on capital but always keeping Environments, Social and Governance (ESG) considerations at the forefront.’

‘At Bank of Valletta we genuinely care of what happens to our employees, our customers and our society. We believe in constantly sharing information with our employees to make them share the values of the organization and feeling a sense of belonging into an organization that is doing good,’ emphasized Dr Cordina. ‘We accept the fact that we might need to grow at a lower rate while investing more in technology and building socially responsible business models for the satisfaction of our employees and customers.’

Bank of Valletta’s collaboration with the Gozo Business Chamber stems from the Bank’s commitment towards alliances with organisations that share the same values and work positively with motives to do genuine good and change people’s hearts in the process.

Due to overwhelming interest, the submission deadline for the Malta National Transport Awards has been extended to November 13th, 2023. This extension allows more individuals and organisations to participate and be recognised for their outstanding contributions.

Transport is the lifeblood of any nation, connecting communities, driving economies, and fostering progress. In Malta, where transport plays a pivotal role in the daily lives of its residents, recognising and celebrating the tireless efforts and innovations within the industry is essential.

These awards are being organised by the Ministry for Transport, Infrastructure and Capital Projects together with Transport Malta.

Mr. Jonathan Borg, the CEO of Transport Malta, emphasised, “Transport is more than just the movement of people and goods; it is the cornerstone of progress. These awards stand as a beacon of appreciation for the remarkable contributions made by individuals, voluntary organisations, public entities and private companies, and inspire further innovation.”

Nominations are open for the following categories:

1. Innovation: Recognising projects that have broken new ground, employed innovative technologies, or approached transport challenges in a unique way.

2. Sustainability: Projects that have reduced the environmental impact of transport, such as the use of alternative fuels or freight practices that have lowered emissions, are acknowledged in this category.

3. Modal Shift: Modal shift involves changing the way people travel, such as shifting towards cycling or alternative modes of transportation.

4. Infrastructure: Recognising designs that demonstrate innovation, flexibility, and sustainability, which adds value to the transport sector.

5. Safety: This category encompasses all aspects of road safety, traffic management, and enforcement, with a focus on results such as casualty reductions and improved journey reliability.

Transport Malta would like to reiterate that these awards, open to all and, hold several key objectives at their core:

1. Recognising and Honoring Excellence: The awards aim to shine a spotlight on outstanding individuals and organisations whose contributions have left an indelible mark on the transport industry.

2. Showcasing Best Practices and Innovation: In an ever-evolving landscape, the transport sector benefits greatly from innovative solutions and best practices. The awards seek to showcase projects that have pushed the boundaries and set new standards.

3. Fostering Collaboration and Knowledge Sharing: Collaboration is the cornerstone of progress. These awards provide a platform for transport professionals and stakeholders to come together, share ideas, and collectively drive the industry forward.

4. Promoting Sustainable Transport: As the world grapples with environmental challenges, sustainable and efficient transport systems are more critical than ever. The awards also aim to raise awareness about the importance of eco-friendly transport solutions.

For more information about the Malta National Transport Awards and to submit your nominations, visit https://www.transport.gov.mt/nationaltransportawards.

Bank of Valletta Group continued to deliver robust financial performance in the third quarter of 2023 with strong net interest income and capital generation, alongside resilient asset quality. Profit before tax for the nine months was €163.5 million compared with a loss before tax of €48.7 million, as restated, in the comparative period. The favourable performance for the first three quarters of 2023 was attributable mainly to the improvement in the Group’s operating revenues totalling €315.9 million, a growth of €113.7 million or 56% compared with the same period in 2022 (9M 2022: €202.3 million).

Net Interest Income continued to be the dominant catalyst with €253.8 million (9M 2022: €137.3 million), an increase of €116.5 million or 85% compared to the same period in the prior year. This was primarily driven by strong growth in the Bank’s personal and business lending business with the loan portfolio exceeding the € 6 billion mark (December 2022: €5.6 billion). In addition, improved returns from the Bank’s treasury portfolio as well as the positive impact of higher rates of interest on the euro have equally contributed to the strong returns. Net Fees and Commissions, Exchange and other revenues amounted to €62.1 million, down by €2.8 million or 4% (9M 2022: €65.0 million). Net commissions declined by €0.8 million, or 2% vis-à-vis the same period last year mostly due to the removal of deposit-related fees to corporate customers and a persisting slowdown in investment-related commissions as a result of the continued volatility in the world’s capital markets driven by the geopolitical tensions which is in turn dampening investor sentiment.

Operating costs in the first three quarters of the year amounted to €139.0 million (9M 2022: €132.3 million) an increase of €6.7 million or 5% compared to the same period in 2022. Net Expected Credit Losses (‘ECL’) for the period to September 2023 was a net charge of €13.1 million (9M 2022: €10.1 million net charge). As at 30 September 2023, the ECL coverage for credit-impaired assets stood at 53.6% (December 2022: 53.8%) while the ratio of non-performing to the total credit portfolio stood at 4.0% (December 2022: 3.5%).  An allocation of an additional €6.7 million was made in the first nine months of 2023 (9M 2022: €6.6 million) for the execution of strategic actions.

The share of profit from insurance associates for the first three quarters of 2023 amounted to €6.4 million, aligned with the recently adopted IFRS 17 standard implemented by the associates (9M 2022: €1.5 million restated).

BOV Group Financial Position

The Group’s Total assets reduced by €118.8 million and stood at €14.4 billion as at end of Q3 2023, lower by 1% compared to the year ended 2022 (December 2022 restated: €14.5 billion). The Group’s liquidity ratio as at 9M 2023, stood at 458.5%, up from 426.3% as at December 2022, significantly above the minimum regulatory requirement. Effective management of surplus liquidity was upheld in the first nine months of the year with cash and short-term assets decreasing by 35% or €1.2 billion. Net expansion in the loan portfolio was of €401.5 million or 7%.

The treasury portfolio increased by €556.8 million (12%), with the vast majority measured at amortised cost reflecting the Bank’s primary business model to hold securities until maturity with a view to collecting interest revenues over the life of the investment. Customer deposits contracted by circa 1% in the last quarter and 4% since December 2022, in line with the Bank’s expectations. The increase in loans experienced both in the corporate and retail lending portfolios led to a favourable increase in the Group’s net loans to deposits ratio from 46.0% in December 2022 to 49.5% as at the end of September 2023.

Total Group Equity increased to €1.2 billion, up by €108.5 million on December 2022 as restated. Group’s capital ratios remained strong and above regulatory requirements, with the CET 1 and total capital ratios as at September 2023 of 22.7% (December 2022: 21.8%) and 26.1% (December 2022: 25.4%), respectively. The 2023 capital ratios are inclusive of 9M 2023 profits and proposed interim dividend for comparative purposes. The Group’s net asset value as at 30 September 2023 amounted to €1.2 billion resulting in €2.1 net asset value per share (December 2022: €1.1 billion restated resulting in €1.9 net asset value per share).

Benign conditions in the Maltese economy support borrowers’ repayment capabilities and maintain BOV’s asset quality – Dr Gordon Cordina, Chairman

BOV Chairman Dr Gordon Cordina expressed his satisfaction on the announcement of the BOV Group performance for the first nine months of the year. “This sustained performance can be seen in light of developments in both international and local economic environments. The current international economic environment is characterised by subdued growth, dragged by the high inflationary environment and the monetary policy tightening implemented over the past months. The interest rate increases carried out by the ECB since July 2022 have pushed rates to historically high levels. There is broad consensus that rates are close, if not already, at the peak. However, ECB rates are likely to remain high for some time.

The Maltese economy has so far been mostly shielded from the interest rate shock, as the pass-through has been mostly channelled to the bond market via higher yields, and in those cases where interest rates are directly linked to foreign rates. BOV’s large deposit base allows it to benefit from the ECB’s attractive returns on the deposit facility and achieve higher yields from its bond portfolio, thus supporting the Bank’s net interest income. The structure of BOV’s balance sheet allows the Bank to continue offering mortgages and most business loans at attractive rates, while obtaining higher returns from loans linked to foreign rates. BOV believes that the decision to limit the pass-through of interest rates to the domestic economy remains adequate, as demonstrated by the Bank’s profitability and balance sheet dynamics.”

BOV’s focused strategy and commitment to operational excellence, customer satisfaction, and responsible banking will steer us towards sustained growth and success – Kenneth Farrugia, CEO

Speaking about the positive results obtained by the BOV Group as at end September 2023, Kenneth Farrugia, Bank of Valletta CEO stated, “The performance we are announcing today is the result of a number of factors. We have seen an improvement in the Group’s operating revenues, strong net interest income and capital generation, growth in customer lending and proprietary investment portfolios, alongside resilient asset quality. The upward repricing of interest rates, a larger investment book coupled with positive returns on liquid assets invested short-term continue to substantially benefit the interest income revenues.

Whilst we have registered a marginally lower level in customer deposits, our strong liquidity position is enabling the Bank to continue supporting growth in the loan book and optimize returns through investment in treasury securities. During the period to September 2023, the Bank assisted both business and personal clients with their funding requirements, leading to the net expansion in our loan portfolio to a record level of €6 billion shared equally across corporate and personal loans.

The Bank’s focus on customer service experience remains unwavering. We are continually working on enhancing our service delivery, with a keen emphasis on personalisation, responsiveness, and convenience. We are also making significant improvements to our branch experience, which remains the strongest in Malta and Gozo, enhancing service delivery and offering a seamless banking experience. We have equally continued to invest in the training of our human resources which remain at the core of the Bank’s value proposition.

The Bank’s focused strategy and commitment to achieve operational excellence, meet and exceed customer expectations, and responsible banking will steer us towards sustained growth and success going forward. These results are overall attributed to the commitment of our valued employees and equally the loyalty of our strong personal and business customer base.”

Strategy 2023 Update

During the last quarter, the Bank worked diligently to further enhance its banking services and increase operational efficiency. The strategy remains firmly anchored on business process re-engineering, a critical move designed to enhance operational efficiency, improve customer services, reduce costs, and strengthen the Bank’s financial performance. Employees are the backbone of the organisation, and their welfare is paramount to the Bank’s success. The Bank has already undertaken several initiatives to enhance employee satisfaction and productivity, including training, wellness programs, flexible work arrangements, competitive compensation packages and a more inclusive and diverse work environment and is planning to sustain this through a program of upskilling initiatives.  

The Bank also continues to make significant investment in ensuring full compliance with its regulatory obligations. The Bank’s ability to secure the correspondent banking services of Citi, one of the world’s leading banks and financial service providers, with banking relationships in 160 countries and jurisdictions, is testimony to the strong compliance and anti-financial crime standards that the Bank continues to invest in. The Bank has worked closely with national regulatory bodies and established robust systems and processes to meet its compliance requirements.

Environmental, Social and Governance (ESG) Update

The Bank continues to target its efforts towards conducting sustainable and diligent banking. This is in line with the growing appetite from customers and investors alike who seek sustainable financing and investing solutions. At the start of the third quarter of 2023, the Bank launched Climate & Environmental (C&E) questionnaires aimed at corporate clients, to allow the Bank to align its product offerings to better satisfy clients’ evolving needs to adjust towards a more sustainable business model. During 3Q 2023, through a Remuneration Policy Working Group, BOV intensified the process of actively integrating Contributions & Expenses targets into the variable component of remuneration for top management personnel. Moreover, the Bank continuously strives to address social risk matters by providing support to vulnerable members of society.

The Bank remains committed to its Environmental, Social and Governance ESG goals, consciously integrating ESG considerations into its business decisions and is working towards creating a more sustainable, inclusive, and responsible banking model.

In its earliest forms, money was a practical instrument for commerce, like salt or even beer, but trade expansion drove the need for abstraction, from rare metals to paper and then to plastic. For a while now, digital payments have been replacing cash. According to the World Bank, two-thirds of adults worldwide make or receive digital payments.

The transition from cash to digital payments was not smooth nor immediate. There were often fears and risks to security and fraud when sending payments. Some users still juggle multiple payment and banking apps, with fragmented and less-than-intuitive experiences. Small businesses also face hurdles to integrating accounting and payments digitally.

These customer pain-points prove that continuous innovation is essential to unlock digital money’s true potential and to bridge the simplicity gap.

Since 2015, Finance Incorporated Limited (FIL) has pursued technology to dissolve boundaries between physical and digital banking. We have engineered an integrated platform to consolidate complexities, providing intuitive and unified tools.

For example, our payment gateway API enables one-click connections between merchant systems and acquiring banks. Paymix SoftPOS turns any smartphone into a card terminal -a technology that removes the need for separate point-of-sale hardware, saving costs and hassle. When Paymix SoftPOS is integrated with Paymix Pro business account, the payouts are faster and free of charge.

Our vision is an open banking ecosystem, blending payments, credit, data analytics, and more in one secure hub. We leverage diverse in-house expertise to adapt quickly to user needs and have been developing and rolling out systems to simplify the lives of customers across our portfolio. 

Examples of technologies designed to make life more straightforward include digital IBAN accounts to receive salary payments, biometric identity verification for easy onboarding, and our ongoing work to deliver micro-ERP services integrated with accounting and reconciliation.

This simplicity liberates individuals and small businesses, while larger institutions benefit from our robust infrastructure, powering billions in transactions. After all, technological innovation delivers benefits across size and scale.

Another key factor to successfully simplify financial experiences and better serve people’s financial needs is through to user feedback. Through this active collaboration, we can shape an inclusive digital economy, which allows us to implement multilingual user experiences, consider intuitive interfaces that do not exclude the elderly or those averse to technology, and of systems that bring payments to all, regardless of their net worth.

The future remains unwritten. How else can technology simplify money? We hear about emerging technologies like atomic swaps, programmable currency, decentralised money, and so many other emerging notions that are all worth understanding and, occasionally, exploring.

By combining cutting-edge engineering with human wisdom, FIL believes financial innovation will culminate in technology fading into the background. Arthur C. Clarke’s third law is his most often cited and states that “Any sufficiently advanced technology is indistinguishable from magic”. Our tech should work very hard in the background so that our users need not face any barriers to make use of it. After all, frictionless financial experiences will underpin tomorrow’s human aspirations.

Money evolved across millennia from early physical forms where we swapped items that we ascribed value to all the way to its present digital form. At FIL, we see this transformation continuing to a future where payments just work – powerfully yet imperceptibly enhancing our lives.

We have a small part to play in this complex web of user experiences and technologies and we continue to approach it with our core philosophy – that of driving simplicity through innovation.