Banking Sector in Malta Maintains Buoyant Trend
The banking sector in Malta remains very well capitalised, highly liquid and profitable, and has continued to make a significant contribution to the local economy. This emerges from a recent statement issued by the Malta Bankers’ Association (MBA).
The seven “core domestic banks”, which have the strongest ties with the domestic economy, had a combined balance sheet total of € 21.3 billion at the end of 2016 (2015: € 19.7 billion), representing 215% of GDP, a ratio which is well within the EU average. Total assets of all the Association’s 27 member banks stood at € 44.5 billion.
Customer deposits with the “core domestic banks” maintained their upward trend, increasing by a further 8% to reach a record € 17.7 billion (2015: € 16.4 billion). Total deposits with all the banks now stand at € 24.3 billion. Commenting on these statistics, Mr James Bonello, the MBA’s Secretary General, said that “With a loan-to-deposit ratio of around 60%, banks have more than excess liquidity to support the development and growth of the Maltese economy by providing credit facilities to households and businesses”.
Loans and Advances to Customers
Mr Bonello added that the “core domestic banks” remain committed to ensure the proper financing of the economy, despite the new and more restrictive regulatory regime which was put in place following the 2008 global financial crisis, from which Maltese banks emerged unscathed. During 2016, credit provided by these banks increased by 2.9% and stood at € 9.63 at the year-end (2015: € 9.38 billion). Mr Bonello pointed out that “this increase is net of substantial loan repayments effected during the year, partly through normally agreed repayment programmes and partly also through the proceeds of bond issues launched on the market by corporate clients”. He also remarked that new economic sectors such as e-gaming and I.T. are not too capital intensive, and as such do not require high levels of financing as may be the case with other established sectors.
Employment, Wages, Dividends and Taxation
The direct contribution of the banking sector to the local economy remains significant, as can be gauged from the 2016 figures below:
- Full time bank employees 4,376
- Payroll € 171.5 million
- Taxation on profits € 99.7 million
- Dividends paid to resident shareholders € 54.9 million
Continued public confidence and trust in the local banking system is evident from the foregoing. This assertion is supported by the World Economic Forum’s Competitiveness Report 2016 – 2017, which ranked Malta 16th out of 140 countries for the soundness of its banking system. This is key and very gratifying”, concluded Mr Bonello.