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27 Jul 2012

HSBC Bank Malta plc half-yearly results for 2012

The following is the text of an announcement made today by HSBC Bank Malta plc, a 70.03 per cent indirectly held subsidiary of HSBC Holdings plc.

  • Profit before tax of €53m for the six months ended 30 June 2012 - an increase of €3m, or 6%, compared with €50m for the same period in 2011.
  • Profit attributable to shareholders of €35m for the six months ended 30 June 2012 - up €2m, or 6%, compared with €33m for the same period in 2011.
  • Total assets of €5,972m at 30 June 2012, up €147m, or 3%, compared with 31 December 2011.
  • Loans and advances to customers of €3,364m at 30 June 2012, an increase of €20m, or 1%, compared with 31 December 2011.
  • Customer accounts of €4,660m at 30 June 2012, an increase of €257m, or 6%, compared with 31 December 2011.
  • Return on equity for the six months ended 30 June 2012 of 17.8%, compared with 18.5% for the first half of 2011.
  • Cost efficiency ratio for the period ended 30 June 2012 of 45.4%, compared with 43.8% for the same period in 2011.
  • Capital adequacy ratio of 11.8% at 30 June 2012, compared with 10.6% at 30 June 2011 and 11.6% at 31 December 2011. Tier 1 ratio of 7.8% at 30 June 2012, compared with 6.7% at 30 June 2011 and 7.4% at 31 December 2011.

Commentary

HSBC Bank Malta p.l.c. delivered a positive performance in the six months ended 30 June 2012. Reported profit before tax of €53m increased by 6%, or €3m over the comparable period in 2011.

All the three main business lines, Retail Banking and Wealth Management, Commercial Banking and Global Banking and Markets, contributed positively to the bank's overall performance.

Net interest income increased by 5% to €68m compared with €64m in the first half of 2011. The increase reflected growth in mortgage lending and improved positioning of the balance sheet management available-for-sale portfolio.

Net fee and commission income of €16m for the six months ended 30 June 2012 compared with €17m in June 2011. Growth in funds under administration and higher levels of custody fees more than off-set lower card fees following the sale of the merchant card acquiring business in December 2011.

HSBC Life Assurance (Malta) Ltd reported a profit before tax of €7m compared with €13m in the first half of 2011. The first half of 2011 benefitted from a non-recurring gain of €7m as a result of the refinement in the methodology used to calculate the present value of in-force long-term insurance business. New business particularly with respect to life-insurance protection and higher investment income as a result of improved global market conditions partially offset this non-recurring gain.

A net gain of €2m was reported on the disposal of available-for-sale securities compared to a net loss of €4m in the comparable period in 2011.

Operating expenses at €45m increased by €3m or 6%, impacted by the non-recurring staff cost recoveries in the first half of 2011 of €2m, mainly relating to the release of an early voluntary retirement provision. On a like-for-like basis, costs were well controlled and broadly in line with the first half of 2011 with the increase in amortisation due to the impact of the implementation of a new banking and accounting system introduced during December 2011. Cost efficiency ratio reported at 45.4% compared with 43.8% in the prior period.

At a consolidated level, net impairments reduced from €4m to €0.8m in 2012. This was principally due to a €2m impairment taken on Greek government bonds held by the life insurance subsidiary in its available-for-sale bond portfolio in 2011. Following the Greek bonds restructuring programme, the life insurance subsidiary sold its Greek debt exposure and holds no other Southern European country government debt.

Loan impairments declined to €0.8m (five basis points of the overall loans book) compared with €1.8m in 2011 as the profit or loss benefitted from modest recoveries. At a bank level, non-performing loans remained stable at 5% of gross loans and asset quality remains good.

Net loans and advances to customers increased marginally by €20m to €3,364m. Mortgage market share remained stable. The bank has seen a slight softening in loan demand due to slowing economic conditions. Gross new lending to customers amounted to €274m which reflects the bank's continued support to the local economy.

Customer deposits rose by €257m to €4,660m as at 30 June 2012 reflecting an increase in corporate and institutional deposits. The levels of retail deposits were broadly unchanged despite significant competitive pressure for deposits including from local government bond issuance.

The bank's available-for-sale investments portfolio remains well diversified and conservative.

The bank's liquidity position remains strong with advances to deposits ratio of 72%, compared with 76% at 31 December 2011.

The bank continued to strengthen its capital ratio to 11.8%. This exceeds the 8% minimum regulatory capital requirement. The bank intends to maintain a conservative approach to capital and will continue to build capital where appropriate.

Mark Watkinson, Director and Chief Executive Officer of HSBC Malta, said: "We have delivered another positive set of results that saw pre-tax profit increase by 6% with a return on equity of 17.8%. The bank's capital and liquidity position remain strong and we have a firm grip on risks and costs at a time when we are seeing continuing pressure on revenue as a result of the challenges in the eurozone.

"Despite the difficulties in Europe we have a clear strategy focused around simplifying our business, reducing bureaucracy and improving efficiency. As part of the world's largest international bank we are well placed to service the needs of our customers and to support the local economy.

"I would like to take this opportunity to thank our staff, directors and shareholders for their commitment, hard work and support during the first half of 2012."

The board is declaring an interim gross dividend of 10.0 cent per share (6.5 cent net of tax). This will be paid on 22 August 2012 to shareholders who are on the bank's register of shareholders at 8 August 2012.

Read the full release.

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