The banking sector in Malta remains well capitalised, highly liquid and profitable, and has continued to contribute to the local economy albeit at levels lower than hitherto observed, according to the Malta Bankers’ Association.
Total assets of all the association’s 24 member banks stood at slightly less than €47bn at the end of 2017. Of these, the six “core domestic banks”, which have the strongest ties with the domestic economy, had a combined balance sheet total of €22.5bn (compared to €21.3bn in 2016), representing 207 per cent of GDP.
Customer deposits with the “core domestic banks” maintained their upward trend, increasing by a further 3.4 per cent to reach a record €18.3bn (€17.7bn in 2016). Total deposits held with all banks now stand at €25.4bn. Karol Gabarretta, the MBA’s secretary general, said: “This indicates that despite historically low interest rates, Maltese households continued to demonstrate their trust in the local banking sector by increasing deposits at the core domestic banks mainly. In fact deposits from residents account for almost 90 per cent of the deposits of the said core banks”.
Mr Gabarretta added that the ‘core domestic banks’ as the main players within the local banking sector remain committed to ensure the proper financing of the economy, despite the challenges outlined above and other costs brought about by the ongoing changes to the EU’s regulatory framework which was originally put in place following the 2008 global financial crisis.
During 2017, credit provided by these banks increased by 1.1 per cent and stood at €10.6bn at the year-end (€9.6bn in 2016). Mr Gabarretta pointed out that notwithstanding this increase, as has been observed in the CBM’s Financial Stability Report for 2017 “resident lending to non-financial corporations (NFCs) by core domestic banks decreased as it became evident that NFCs are increasingly relying on other sources of financing, including loans from related companies, retained earnings as well as debt issuances”.
The direct contribution of the banking sector to the local economy remains significant, as can be gauged from the 2017 figures: full-time bank employees: 4,688; payroll €187.7 million; taxation on profits €111.3 million; dividends paid to resident shareholders: €58.1 million.