Weekly Round Up – 25 October 2004

Stock Exchange – Weekly Round Up   Closing Monday 25th October to Monday 1st November       The Malta Stock Exchange Index gained 0.5% over the week after good trading in the four large capped stocks. Malta International Airport reached a record high of Lm1.13c after 25 deals consisting of a total 32,121 shares. Bank of Valletta announced a positive earnings report and showed good corporate performance. The shares prices remained somewhat subdued increasing by only 1.1%. HSBC Bank Malta continued its good performance closing the week at Lm7.61c, 0.66% higher over the week. Plaza shares were the biggest losers of the week after the share price fell 3c to 0.62c. Overall the equity market has maintained its strong upward momentum. The Central Bank of Malta left interest rates unchanged at 3%.       The Malta Stock Exchange Index gained 0.5% this week led by gains in the four largest capped stocks. This week there were four gainers, four losers and five equities whose price remained unchanged. The total year to date return of the Malta Stock Exchange Index now stands at 43.4%.   HSBC Bank Malta maintained its good run of form gaining another 0.66% over the period under review. This brings the total return of HSBC shares to almost 40% since the beginning of the year. This week 18,544 shares were traded whilst 30 deals were struck. The share price closed Monday’s session at Lm7.61c.   Plaza Centres suffered a second weekly loss falling over 5%. Just 2 deals were closed consisting of 2600 shares.  Lombard bank and IHI lost 2.38% and 2.35% respectively. Volumes in these equities remain subdued with just 3 deals being struck on each. Fimbank was also on the losers board closing at USD0.95c a loss over 1% over the week.   Maltacom Plc gained 1c this week closing Monday’s session at Lm1.56c. 18 deals were struck in which 32,684 shares were traded.  Malta International Airport hit new record highs closing the week at Lm1.13. This brings the total year to date gain to over 61% making it the second best performer on the stock exchange after bank of Valletta.                   Bank of Valletta reported its much awaited financial results this week which overall showed an excellent rise in profitability and also offered investors a good final dividend. The Bank of Valletta Group has registered a profit of Lm18.4 million before tax for the year under review representing an increase of 24.5% over last year. Net interest income increased from Lm34.6 million in 2003 to Lm40.9 million, an increase of 18.1%. This improvement arose from a lower cost of funds as well as a shift from liquid assets into higher yielding advances.   Non-interest income increased by 3.4% over last year to reach Lm19.0 million. Costs, at Lm29.4 million were Lm2.2 million or 8.5% higher than the previous year, mainly due to higher retirement benefits. Despite the increase in costs, the cost/income ratio improved from 50.1% in 2003 to 48.0% for the year under review. The charge for net impairment losses amounts to Lm13.4 million, or Lm1.2 million more than the Lm12.2 million charge for 2003. Return on average assets is of 0.9% (2003: 0.8%) while return on average equity stands at 14.3% (2003: 12.3%).   The all important Earnings per Share (EPS) increased from 18c7 in 2003 to 21c1 a rise of over 11,37%. Group total assets increased by 2.2% to reach Lm2.03 billion. This growth was financed by both retail and wholesale deposits. Customer deposits increased by 2.1% and now amount to Lm1.46 billion, while bank borrowing increased by 3.3% to reach Lm348.0 million. Net advances to customers grew by 5.8% and stand at Lm826.1 million. Shareholders’ funds rose by 2.2% and amount to Lm129.8 million. Equity multiplier, being the proportion of total assets to equity, remained at last year’s level of 15.7 as at balance sheet date.   The Group solvency ratio, which is computed in accordance with the Banking Directive on the Solvency Ratio of Credit Institutions, issued in terms of the Banking Act, Cap 371, is 14.1% (2003: 16.5%).   Regarding the dividend policy, a gross interim dividend of 6c per share, resulting in 3c9 net per share, was paid in May 2004. An interim dividend was not paid out in 2003.  The directors propose a gross final dividend of 10c per share, equivalent to 6c5 net per share. Total gross dividend for the year is 16c per share, equivalent to a total net dividend of 10c4 per share. In 2003 the total gross dividend per share stood at 11c (7c2 net per share). It is important to note that the final dividend is going to be paid out to investors who are on the company’s registry by Friday 5th November 2004 on the 18th December 2004.   The Central Bank of Malta left the central intervention rate unchanged at 3%. The decision was taken by the Governor at the end of the Monetary Policy Advisory Council.The Governor considered that the central intervention rate remained appropriate at its current level in the absence of pressures on the exchange rate peg. The underlying level of the Bank’s external reserves was stable, while the premium on the Maltese lira widened marginally as long-term yields abroad eased and domestic interest rates remained largely unchanged.   In a forward-looking perspective, the Governor noted that although the economy was expected to expand modestly during 2004, the recovery remained fragile. The sharp rise in oil prices on international markets was likely to dent external demand and would put pressure on domestic prices through higher energy costs. He stressed that these costs had to be absorbed by the country as a whole, without unduly burdening the productive sectors. To further safeguard competitiveness, moreover, it was important not to allow the higher energy costs to generate secondary price effects, particularly at a time when inflation was already relatively high. The Governor, therefore, appealed for wage moderation and the containment of administrative and other charges. In this light, the process of fiscal consolidation, which was a pre-requisite to achieve macro-economic stability, should primarily be pursued through measures aimed at reducing Government expenditure. The Monetary Policy Advisory Council is due to meet again on 29th  November 2004.       Tuesday’s Trading   The Malta Stock Exchange Index fell 0.88% on Tuesday after a 2.64% (12c) drop in the price of Bank of Valletta shares as well as a 0.64 (1c) drop in the price of Maltacom. HSBC Bank Malta was the only gainer of the session. 9 deals were struck consisting of 9357 shares. HSBC’s share price closed the day’s session at Lm7.63c.Overall trading volumes remained rather thin and most equity prices on the exchange remain unchanged.             This report was issued by the Research Unit of Jesmond Mizzi Financial Services Limited. For further information please call at our offices on 21224410 or email [email protected].  This article does not intend to give investment advice and the contents therein should not be construed as such. Readers are encouraged to seek professional advice regarding their personal financial situation. The value of investments can go down as well as up.  Past performance is no guarantee for future performance. Jesmond Mizzi Financial Services Limited is licensed to conduct investment services by the Malta Financial Services Authority.