In its latest ratings report on Bank of Valletta just issued, Moody’s Investor Service, the Global Credit Ratings agency said that BOV’s financial strength rating is underpinned by its dominant market position as well as the Bank’s “rebounding profitability on the back of improved operating efficiency, sufficient capitalisation and excellent liquidity and funding profile”.

Moody’s has confirmed all BOV’s credit ratings - Baa1/Prime-2/D+ with a stable outlook.

“With a market share of over 40% BOV ranks as the largest Maltese bank,” confirmed Moody’s, adding that Bank of Valletta’s “strong franchise and complete range of financial services provides it with access to all business activities in the country and supports its financial strength rating (FSR). The bank’s size affords BOV incontestable brand recognition in the domestic market while management makes no excuses for capitalising on the brand, and in fact promoting its image as “the Maltese bank”, the report added.

The report also analysed the competitive situation in the Maltese financial services market and highlighted how BOV has long-established relationships with international banks, which it has historically utilised to broaden its product offering. It said that Bank of Valletta has held its ground even with regard to more sophisticated financial products. In this regard, the international credit ratings agency said that BOV has not only successfully defended its franchise but, in certain areas it has continued to increase its market presence.

In its report on BOV, Moody’s said that the Bank’s franchise value and dominance in the domestic market is supported by its strong retail lending operations which represent a core business objective in sustaining its growth potential and profitability. “This is particularly true for home loans and other property-related loans that have been in high demand in recent years. BOV is quite strong in the household sector – which comprises around 38% of the overall credit exposure – commanding combined market shares of around 42% in domestic mortgage lending and consumer credit. We consider such an entrenched retail franchise as a positive rating driver, given its lower credit risk profile. We also view positively the bank’s steps to further cater for this segment by broadening its product base and seeking to enhance and maintain customer satisfaction at high levels,” added the international credit rating agency.

Moody’s acknowledged that Bank of Valletta is Malta ’s principal deposit-taking institution, commanding a market share of 46% in residents’ deposits. This strong retail deposit base provides BOV with access to ample liquidity, providing further potential for it to grow its balance sheet.

Moody’s noted that BOV’s retail strategy has also been facilitated by its alternative-delivery channel approach. It said that this appears to be paying off, given that more than 73% of the bank’s total transactions are taking place outside its branches. “Its ‘24x7 services’ channels (Internet banking, telephone banking, customer call centre banking and mobile banking) have been increasingly used by the customer base. At the same time the branches’ back-office operations have been centralised, thereby freeing staff for servicing clients,” said Moody’s.

Focusing on the Bank’s use of the latest technology, Moody’s noted that BOV’s investment in technology over the past years has been quite substantial, and a major contributor to its growth-, risk management- and cost containment efforts. “By developing its technological backbone, BOV has made significant progress in recent years and has been able to build a robust infrastructure commensurate with that of other European banks,” noted the report.

Looking ahead, the report noted that significant challenges such as the adoption of the euro, possibly by January 2008, are expected to intensify competitive pressures. In this regard, Moody’s acknowledged how Bank of Valletta’s renewed focus on marketing investment products to non-residents is partly intended to counterbalance future competitive challenges in its domestic market and loss of foreign exchange income.

Commenting on the report, BOV’s Chief Executive Officer, Tonio Depasquale, expressed his satisfaction at the positive report Moody’s Investor Service issued on Bank of Valletta. “The positive report, together with the re-affirmation of all BOV’s credit ratings and stable outlook, acknowledge the strength of the BOV brand in the market and the validity of the strategies being implemented by the Bank’s management,” said Mr. Depasquale. “It also underlines the success that the Bank has registered over the past years, its strong business fundamentals and its high profitability,” he added.

“We are determined to continue strengthening the BOV brand, supporting our position as Malta ’s largest Bank by continuing to offer a customer experience based on supportiveness and mutuality – where our customers’ success is our goal,” said Mr. Depasquale.

“Going forward, we shall continue to concentrate our efforts on achieving further growth and to continue expanding our business franchise,” concluded Mr. Depasquale.