HSBC Bank Malta p.l.c. Half-Yearly Results for 2006

27 July 2006

The following is the text of an advertisement which is to be published in the press in Malta on 28 July 2006 by HSBC Bank Malta p.l.c., a 70.03 per cent indirectly-held subsidiary of HSBC Holdings plc.

Review of Performance

The published figures, which have been prepared in accordane with International Financial Reporting Standards for interim financial statements (IAS 34 ‘Interim Financial Reporting'), have been extracted from HSBC Bank Malta p.l.c.'s unaudited group management accounts for the six months ended 30 June 2006. The half-yearly results are being published in terms of Chapters 8 and 9 of the Listing Rules of the Listing Authority - Malta Financial Services Authority and the Prevention of Financial Markets Abuse Act 2005. These figures have been drawn up according to the accounting policies used in the preparation of the annual audited accounts.

All figures are stated in Maltese lira, the functional currency of HSBC Bank Malta p.l.c. The euro exchange rate ruling on 30 June 2006 was €1 = Lm0.4293. The US dollar and sterling exchange rates ruling on the same day were US$1 = Lm0.3375 and £1 = Lm0.6196. Average exchange rates for 2006 for euro, US dollar and sterling were €1 = Lm0.4293, US$1 = Lm0.3491 and £1 = Lm0.6251.< /EM >

HSBC Bank Malta p.l.c. and its subsidiaries recorded a profit before tax of Lm20.6 million for the six months ended 30 June 2006 which represents an increase of 11.3 per cent over the Lm18.5 million earned during the same period in 2005.

Profit after tax attributable to shareholders of Lm13.4 million, an increase of 11.0 per cent over the Lm12.1 million earned during the same period in 2005.

Net interest income increased by 7.1 per cent over prior year to Lm22.8 million.

Non-interest income increased by 24.8 per cent, contributing Lm15.1 million to net operating income.

Administrative expenses increased by 8.8 per cent, primarily due to higher performance-based compensation for all staff. However, the cost:income ratio improved from 47.5 per cent to 45.5 per cent.

Risk provisions were at low levels supported by an unchanged conservative policy in the assessment of credit risk and effective risk management. Impaired loans reduced from Lm61.7 million to Lm58.8 million.

Customer deposits increased to Lm1,407.2 million at 30 June 2006 compared with Lm1,367.2 million at 31 December 2005. Funds, life insurance contracts and amounts under custody increased by Lm53.0 million in aggregate during the period.

Loans and advances to customers increased to Lm1,075.2 million at 30 June 2006 - up Lm59.1 million or 5.8 per cent over 31 December 2005.

Total assets of Lm1.71 billion at 30 June 2006 when compared with Lm1.66 billion at 31 December 2005.

Earnings per share for the first six months ended 30 June 2006 increased to 4.6 cents compared to 4.1 cents for the first six months of 2005. Comparative data has been adjusted for the April 2006 three-for-one bonus share issue.

Return after tax on capital employed increased to 10.9 per cent compared with 8.3 per cent for the first six months of last year.

Shaun Wallis, Director and Chief Executive Officer of HSBC Bank Malta p.l.c., said:

"Our results for the first six months reflect continued business growth in all customer groups and across all product lines. Our focus continues to be on maximising customer relationships.

"The Board is recommending an interim gross dividend of 5.3 cents per share (3.4 cents net of tax) which equates to a cash payment of Lm10.1 million. This will be paid on 17 August 2006, to shareholders who are on the bank's register of shareholders as at 4 August 2006.

"We would like to thank our customers for their business during the first six months of this year, to thank our staff for their continued high level of customer service and to thank the community for their support.

"We remain optimistic about economic activity and HSBC's business prospects in Malta."

HSBC Bank Malta p.l.c. is a member of the HSBC Group, whose ultimate parent company is HSBC Holdings plc. Headquartered in London, HSBC Holdings plc is one of the largest banking and financial services organisations in the world. The HSBC Group's international network comprises over 9,500 offices in 76 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.

Read the full media release.