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APS Bank announces all-round growth, €19m pre-tax profit and other record numbers for 2018


APS Bank announces all-round growth, €19m pre-tax profit and other record numbers for 2018

APS Bank announced a strong 2018 operating performance for both Group and Bank, with activity also reaching all-round record levels. Group Operating Income expanded by 4.6%, from €42.8 million to €44.7 million (Bank: by 6.3% to €45.7 million) and Pre-tax Profit increased by 1.5%, from €18.4 million to €18.6 million (Bank: by 7.7% to €19.7 million). Deposit raising and lending activity grew by a strong 34.7% and 28.1%, to €1.65 billion and €1.31 billion, respectively, over 2017. This result was achieved on the back of continued growth in business momentum and heavy investment in people, technology, network transformation, functional and process reorganisation. 

These results emerge from the Audited Financial Statements for the year ended 31 December 2018 as approved by the Board of Directors on 21 March 2019. All main income constituents grew strongly, namely Net Interest Income (up by 15.3% on 2017) and Fees and Commissions (up by 24.7%). Households and home finance remained the largest source of credit activity, however 2018 saw more diversification taking place towards commercial real estate and a growing book of international syndicated loan participations. Correspondingly, the Bank operated within very prudent Liquidity Coverage (LCR) and Net Stable Funding (NSFR) Ratios which were maintained well above the regulatory minima, as the funding diversification strategy returned liquidity levels without necessarily compensating spreads. On the contrary, Central Bank of Malta and other bank balances continued to attract negative interest throughout the year under review.

Cost-Efficiency at 50.7% was only marginally higher than the 50% of 2017, as personnel, operating and compliance expenses increased in support of the business growth. It should be underlined that realised gains in excess of €2 million on the transfer of securities to form the APS Diversified Bond Fund in 2017 were not repeated in 2018. On the other hand, the 2018 Group results reflect a net, unrealised negative fair value movement in the performance of the Bond Fund during the year under review. 

Overall credit quality at Bank level continued to improve, with NPLs to Gross Loans reducing from 4.2 % in 2017 to 3.8% in 2018, with the stock of NPLs fairly distributed across sectors. A prudent credit loss experience (ECL estimated at 12 bp for 2018) and sustained recovery efforts also resulted in lower net impairment provisions compared to the previous year.

The Group’s ROE remained strong at 9.7% (2017: 10.9%) while Balance Sheet growth was robust, with total assets increasing by 26.4% to €1.9 billion. At 12.51% (Bank: 12.47%), the Group Total Capital ratio, consisting primarily of Tier 1 equity, is down from last year (14.82% and 14.19% for Group and Bank, respectively) yet still affording an adequate headroom above the regulatory minimum. A Capital Development Plan has now been formulated, discussions with shareholders have taken place and the first phase of a Rights Issue is planned for the second quarter of 2019. 

More numbers and statistics from the Audited Financial Results will be published in the 2018 Annual Report which the shareholders will be invited to approve at the Annual General Meeting called for 25 April, 2019. More news about the growth plans of APS Bank will be released in due course, starting from the conversion into APS Bank plc with effect from 1 April 2019.

Commenting on the results, CEO Marcel Cassar said: "The transformation of APS Bank into a strong market player continues across a number of fronts: organisational, network and processes, technology to enrich the customer proposition, strengthening governance and risk controls and improving the quality of the income statement. We also continue to gain further market share. The message that these numbers transmit is that amidst a competitive and challenging environment, we have been able to draw on our market strengths and maximise on the business and revenue opportunities that they offer.”

Salient numbers and key indicators:

Financial Results 2018


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APS Bank plc is licensed to undertake the Business of Banking and to conduct Investment Services business by the Malta Financial Services Authority and is enrolled in Tied Insurance Intermediaries List under the Insurance Intermediaries Act 2006