At a meeting held on 31 July 2009, the Board of Directors of HSBC Bank Malta p.l.c. approved the Group and Bank Interim Accounts for the six-month period up to 30 June 2009.
“The first half of 2009 has been difficult. As predicted, the bank’s short-term financial performance has been affected. However, HSBC Bank Malta remains in very good shape and we are actively working to support the local economy,” said Alan Richards, HSBC’s CEO.
“Profit before tax for the six months ended 30 June 2009 of €34.8 million represents a decline of €11.8 million, or 25.3 per cent compared to €46.6 million for the same period last year.
“This is a resilient performance in light of current market conditions. These results were achieved in spite of a general slowdown in economic activity, continued low interest rates which have resulted in significant margin compression and ongoing volatility in equity and bond markets which have impacted our investment related businesses.
“Notwithstanding this, overall profitability relative to history, peers and industry benchmark remains strong with a return on equity of 15.6 per cent. I would like to thank our staff, whose commitment and dedication in challenging markets support these results,” said Mr Richards.
Operating expenses of €41.0 million are 2.5 per cent lower compared to the same period in 2008. This reflects the bank’s commitment to maintaining a strict discipline on expenses. The cost efficiency ratio increased to 54.7 per cent from 47.0 per cent for the same period in 2008, primarily as a result of a 15.9 per cent decrease in operating income to €74.9 million.
Loans and advances to customers stood at €3,180.6 million at 30 June 2009, up €68.3 million, or 2.2 per cent, compared with 31 December 2008.
“In gross terms, the Bank sanctioned €337.9 million in new lending for the first six months of this year. Loans to customers have grown by over seven per cent in the last 12 months. This is a strong performance considering the economic challenges we all face and reflects our active commitment to supporting the local economy,” said Mr Richards.
Customer deposits of €4,009.3 million at 30 June 2009 were down marginally by €7.3 million, or 0.2 per cent, compared with 31 December 2008.
Net interest income of €48.2 million represents a decline of 20.8 per cent compared to €60.8 million during the prior year period, reflecting a significant contraction in interest margin following ECB base rate cuts.
Fees and commission income of €15.2 million was slightly down on first half of 2008, as a result of the slowing economy.
Tax on profits was €12.3 million. Total tax payments including social security contributions and VAT totals €14.9 million.
The Board is declaring an interim gross dividend of 7.7 euro cents per share (5.0 euro cents net of tax). The ordinary dividend payment of €14.6 million is 65 per cent of current profits attributable to over 10,100 Bank shareholders. This will be paid on 27 August 2009 to shareholders who are on the Bank’s register of shareholders as at 12 August 2009.
“Although the banking system in Malta remains stable, the outlook for the near term is challenging. It is apparent that mortgage lending and corporate activity in some sectors are slowing, impairments are likely to increase as the credit cycle continues to turn and our investment markets businesses will continue to experience volatility.
We remain vigilant and continue to take a highly proactive approach to managing our balance sheet to remain liquid, well capitalised and able to support the domestic economy. HSBC’s commitment to strong capital and liquidity will stand both the Bank and the local economy in good stead,” concluded Mr Richards.
