HSBC: How Shaun Builds Confidence

Sir John Bond may no longer be HSBC's international chairman, however, the first name of HSBC Bank Malta's CEO is the same as that of the original, and best, actor to play Ian Fleming's James Bond - Sean Connery.

Except that the first name of HSBC Malta's "001" is spelt "Shaun". Sean Connery was great with figures (female). Shaun Wallis - whatever else he may be great with - is a winner with figures - the numerical kind.

HSBC Bank Malta plc's (HSB) results were published after the close of trading on Friday. They showed a pre-tax profit of Lm41.4 million for the year ending December 31, 2006 - a 12.8% increase over the same period in 2005. Earnings per share increased 12.2% from 8c2 (adjusted for the April 2006 three-for-one bonus share issue) to 9c2.

Net interest income increased by 5.4% to Lm47 million, while non-interest income increased by 18.8%. The 5.5% increase in administrative expenses mainly reflects the higher, so-called "performance-based compensation" for all staff. What's in a name? Shakespeare's Juliet tells Romeo "That which we call a rose, by any other name, would smell as sweet." Is "commission" too crude?

For the year ending December 31, 2006: a) the bank's cost to income ratio improved from 46.7% to 45.5%; b) customer deposits increased by Lm108.2 million to Lm1,475.5 million; c) loans and advances to customers increased by 10.8% to Lm1,126.1 million; d) total assets increased by Lm231.4 million to Lm1.88 billion.

The board of the largest capitalisation stock on the MSE is recommending a final gross dividend of 5c3 per share (3.45 cents net of tax) with the reintroduction of a special identical dividend of 5.3 cents gross per share.

This gross total dividend of 10c6, will be paid on April 21, to shareholders who are on the bank's register as at March 2, i.e. who will have purchased shares three trading days earlier, by Tuesday, February 27.

When added to the gross 5c3 interim dividend paid last August, the 15c9 full gross dividend per share for 2006 amounts to a total cash payment of Lm46.4 million. You should ask your stockbroker to explain where the money comes from to pay a 15c9 dividend per share when earnings per share stand at 9c2. Finally, at Friday's closing price of Lm2.135, this equals a price to earnings ratio of 23.2 and a gross dividend yield of 7.45%.

On the market, HSB started the week on a level footing at Lm2.135, slipping to Lm2.13 by the end of Monday. It traded slightly lower on Tuesday ending at Lm2.124. While volume picked up slightly on Wednesday, the price continued to ease, closing at Lm2.12. Thursday saw this trend reversed as HSB advanced from a Lm2.121 open to Lm2.14, closing at Lm2.139. Friday's open took the price to Lm2.145 and then to Lm2.149. However, after the initial spurt, trading only took place in odd bursts; the price slithered slightly lower to settle at Lm2.135 for HSB to end the week unchanged.

Total volume for the week at 102,238 shares for a value of Lm217,714 accounted for a massive 66% of the week's total equity turnover by value. At the end of trading, the price was supported by a bid for 1,500 shares at Lm2.135, while the best offer for 4,725 shares stood at Lm2.14.

Bank of Valletta plc (BOV) opened Monday optimistically at Lm3.72; however thin trade did not sustain the price, with BOV closing at Lm3.705. All of Tuesday's trade - 554 shares! - was carried out at this price, while Wednesday saw the price lose 5 mils to Lm3.70. Thursday was a one cent see-saw between Lm3.69 and Lm3.70, with the final two deals traded at Lm3.699. Friday's trade was similarly uneventful with all of the six trades matched at this latter price for BOV to end the week 0.5%, or 2c, lower.

In total, an unusually low 13,070 shares changed hands for a value of Lm48,384. At the end of trading, best bids totalled 850 shares at Lm3.68, while supply of 1,075 shares started at Lm3.699.

Maltacom plc (MLC) was listed in June 1998, nearly nine years ago. This week saw an unprecedented event in that MLC did not trade at all for a whole week! This struck an even more jarring note, in the light of the announcement on Tuesday that MLC had acquired the entire shareholding in the local Digital Terrestrial Television (DTTV) network operator, Multiplus Ltd.

While acknowledging that MLC faces several competitive threats, it is now capitalising on opportunities to counter Melita Cable's virtual monopoly, with a direct entry to the TV market. This will enable the company to offer various bundled packages to consumers.

A question to the company's chairman about the voluntary early retirement scheme, yielded the very encouraging news that MLC has approved approximately 200 such requests. If you will excuse the pun, it looks like MLC is finally getting smart. Shouldn't investors do likewise?

At the end of Friday's session, the best bid was for 500 shares at Lm1.431 and the best offer for 2,300 shares at Lm1.472 - 8mils lower than the last close at Lm1.48.

Malta International Airport plc traded minimally lower on Monday at Lm1.399, skipped Tuesday and was only active again on Wednesday when one deal for 1,400 shares was effected at Lm1.398. Turnover for the week was a poor 6,400 shares for a value of Lm8,952. At the end of the session, best bids were for 1,000 shares at Lm1.351 while offers for 600 shares started at Lm1.394.

International Hotel Investments plc (IHI)'s winning spell came a cropper this week. It opened at €1.155 rising to €1.16 on Monday. It did not trade on Tuesday but rose to an intra-day all time peak of €1.17 on Wednesday, slipping back to €1.16 for the final trade. Thursday's sole matched deal for 10,000 shares dragged the price 3.45% lower to €1.12 for the day and for the week, since Friday's three trades were also struck at this price.

Simonds Farsons Cisk plc was the only equity to end the week in positive territory. It first traded on Tuesday, static at 82c, advancing to 83c for Friday's single trade for 1,590 shares, ending the week 1.2% ahead.

Plaza Centres plc was only active on Monday when an inconsequential 400 shares changed hands at the unchanged price of 71c. Lombard Bank plc only traded on Wednesday and Thursday, not rocking the boat in terms of volume and price with 2,560 shares traded at Lm5. Likewise, Fimbank plc traded on Wednesday and Thursday unchanged at $1.74. Middlesea Insurance plc was equally quiet with 132 shares dealt on Friday, flat at Lm1.98.

GlobalCapital plc closed lower for the second consecutive week falling from Lm2.05 to Lm2 to end the week 2.4% lower.

Medserv plc did not trade. On Tuesday it announced that negotiations have been concluded with Misurata Free Zone in Libya, and a joint stock company by the name of Medserv Misurata FZC has been submitted for registration with Misurata Free Zone.

The Close Ended Investment Scheme Santumas Shareholdings plc traded for the first time since November 22, unchanged at Lm1.15. Turnover was restricted to just 125 shares.

On the Alternative Companies List, Datatrak plc was static at 24c5. There was only one deal for 5,000 shares.

The Government bond market was comparatively active with a turnover value of Lm2,131,635. The 7.8% MGS 2018 was the most active, accounting for 38% of the total. In the corporate bond market turnover reached Lm158,925 spread over 26 deals.

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