HSBC posts Lm33m record profit

HSBC Bank Malta plc yesterday announced a pre-tax record profit of Lm33 million last year, an increase of 26.3 per cent over 2003.

In its preliminary results for 2004 the bank is proposing a final gross dividend of 27c3 per share. This follows the gross interim dividend of 19c4 and a special dividend of 35c4 paid last August to mark the fifth anniversary of HSBC in Malta. This amounts to an overall dividend of 82c1.

The dividend totals Lm8.98 million including tax credits. The board said it would be recommending a "two for one" share split for approval at the bank's annual general meeting later on this year.

This recommendation follows a substantial rise in the value of HSBC Bank Malta shares since the acquisition of Mid-Med Bank plc in 1999. The share price performance in fact grew by 212 per cent since HSBC took over Mid-Med Bank with the share price rising sharply from Lm2.9 to Lm9.05. On the ground this means that the share price is within reach of more investors by having shares costing half the price that each share commands at the moment, the bank said.

The results were presented to the media and to stockbrokers by Shaun Wallis, HSBC Bank Malta's chief executive officer at the Chamber of Commerce, in Valletta.

Mr Wallis said the way forward for the bank was to go for greater automation while keeping costs down. So far 79 per cent of the customer base made use of electronic services and the rest resorted to personal services.

Since the bank launched internet banking a year ago, 22,900 customers used the service resulting in about 380,000 transactions every month.

On the other hand, the call centre set up in November 2003 had serviced about 400,000 a month.

Through the increased use of electronic services, the bank has managed to increase the selling time of its staff by 31 per cent and speeded up decision making by 10 per cent.

Speaking on the proposed pensions reform, Mr Wallis said that HSBC would support the government in what it chose to do in this sector. The bank was prepared to put "Lm100,000 on the plate" to start off a fund for a pension scheme for the bank's employees.

On a general scale, HSBC was in a position to provide a pensions proposition. The bank has a track record as a pensions provider in the Far East and in Europe, particularly in the UK and it would be backing on this experience to offer pension schemes here.

Asked whether the bank was lending too much money, pushing up the price of property, Mr Wallis said HSBC lent money against the client's ability to pay and not on the value of the property purchased, adding that there was a "very strong performance in the retail business". Mortgage balances grew by 21 per cent last year.

The bank had 50,000 credit cards in circulation showing an 11 per cent increase over 2003.

Mr Wallis described 2004 as "a very active and successful year" in terms of changes to strategy, structure and business development and led to record financial results, the establishment of a solid foundation on which to build for the future and a strong forward momentum across its sales force.

The profit attributable to shareholders is Lm22.1 million, following the deduction of Lm10.9 million in tax. Net interest income grew by 13.8 per cent, compared with 2003, and contributed Lm39.5 million to total operating income.

Non-interest income levels grew by 6.8 per cent, contributing Lm19.9 million to total operating income.

Administrative expenses stood at Lm27.4 million, a marginal increase of 0.3 per cent, or just Lm0.1 million. Depreciation was 3.9 per cent higher as a result of the increased carrying costs of tangible fixed assets. The group's cost to income ratio improved to 51.1 per cent from 56.8 per cent in 2003.

Tax paid over the past five years by HSBC amounted to Lm40 million compared with Lm20 million paid over a comparative period by Mid-Med Bank when the latter bank was bought by HSBC.

"These are excellent results. We are confident that there is good potential to continue to grow our business in 2005 and we will continue to focus on providing a comprehensive range of products and services to suit customers' needs while at the same time maximising efficiencies," Mr Wallis said.

Asked whether the bank would be closing down any branches in view of the widespread use of electronic services, Mr Wallis said that HSBC would be relocating branches in certain towns to be closer to the main commercial centre.