HSBC posts higher pre-tax profit

HSBC Malta yesterday posted a pre-tax profit of €114.7 (Lm49.2) million last year, an €18.3 (Lm7.8) million increase over 2006.

The bank and its subsidiaries generated a profit of €76.4 million (Lm32.8 million) after tax.

Earnings per share went up to €0.262 (11.2 cents) from €0.214 (9.2 cents) in 2006.

The post-tax return on average shareholders' funds went up to 26.7 per cent from 20.8 per cent the year before.

An increase in cash deposits has improved the bank's liquidity, HSBC Malta chief executive officer Shaun Wallis said.

In fact, the bank registered an increase of 17.5 per cent in deposits which amounted to some €4.03 (Lm1.73) billion. It also saw a 7.6 per cent rise in the amount given out as loans or advances.

"We are giving out loans, but we are also very prudent with our shareholders' money," he said in reference to the loan crisis in both the UK and the US.

During the launch of the financial results, Mr Wallis described last year as a "transformational" one, with record volumes of business activity across all consumer groups and businesses leading to "excellent results".

Pre-tax profit has been increasing steadily since 2001, he said.

The bank was attracting substantial new institutional and corporate business to Malta from international consumers.

In fact, business brought to Malta from international banking contributed €8.74 (Lm3.75) million to profits, while another €1.63 million (Lm700,000) came from the rental of premises for the HSBC Global Call Centre and the services provided.

The bank saw an 8.7 per cent increase in non-interest income levels, which were driven by growth in business activity, more cards issued and increased card usage, trust services and new equity and bond listings on the market.

The bank had seen an increase in businesses asking for Epos machines with more people using them. In fact, Epos use has gone up by 20 per cent as did internet banking.

A significant contributor to the bank's profits came from its life insurance activity, with registered a 43 per cent increase in profitability over 2006, with a pre-tax profit of €13 (Lm5.6) million.

At the same time, the bank was successfully implementing major projects and structural changes which put it in a good position for the future.

"All shareholders will also benefit from a continuing high dividend payout policy," he said.

The bank has paid some €43.56 (Lm18.7) million in taxes, including VAT and national insurance contributions.

It also contributed some €1 million (Lm450,000) to the local community as part of its Corporate Social Responsibility.

Speaking about the future, Mr Wallis said 2008 will be a challenging year considering the current global market conditions, Malta's EU and eurozone membership and the resulting increase in competition.

The board of directors has recommended to the annual general meeting, convening in April, a final ordinary dividend of €0.148 (6c) gross per share that will be paid on April 28.

Together with the gross interim ordinary dividend of €0.154 (6c) and gross interim special dividends of €0.093 (4c), paid on August 22, 2007, this produces a total gross dividend for the year of €0.395 (17c) per share resulting in a cash payout of €75 (Lm32.2) million.

This dividend is in excess of 2006 gross payout of €70.3 (Lm30.2) million.