HSBC Malta reports €96.1m profit
Alan Richards
HSBC Malta has reported a pre-tax profit of €96.1 million for the year ended 31 December 2008 – down €18.6 million, or 16.2 per cent, compared with €114.6 million in 2007.
It said profit attributable to shareholders was down 17.3 per cent, or €13.2 million, to €63.1 million, compared with €76.3 million in 2007.
Earnings per share were €0.216, down 17.2 per cent compared to €0.261 for 2007.
Loans and advances to customers reached €3,112.2 million at 31 December 2008 – up €289.9 million, or 10.3 per cent, compared with 31 December 2007.
Core customer deposits totalled €3,407.5 million – up €33.7 million, or 1.0 per cent, compared with 31 December 2007.
Total assets reached €5,296.1 million, up €401.0 million, or 8.2 per cent, compared with 31 December 2007.
The return on equity was 22.3 per cent for the year ended 31 December 2008, compared with 27.6 per cent in 2007.
The bank said while its profit represented a decline of 16.2 percent compared to 2007, it was a solid result achieved after taking into account the introduction of the euro and the volatility of world financial markets. Overall, profitability was still strong with a return on equity of 22.3 per cent.
Net interest income of €123.0 million in 2008 was down 2.5 percent, from €126.2 million in 2007. Increases in loans and advances generated steady growth in interest receivable. This was off-set by the increase in interest payable on retail deposits, and margin pressure from a combination of increased competition and the lowering of base rates by the ECB in the last quarter of 2008.
The bank said strong organic growth in sales of regular premium term life and investment products, and flat costs contributed to the life insurance business generating a profit before tax of €16.4 million in 2008, up 25.0 per cent on 2007.
The loss of €29.4 million in net income from insurance financial instruments designated at fair value was offset by a corresponding increase in other operating income, a reduction in net insurance claims incurred and movement in policyholders’ liabilities.
During the year, gains from property disposals and a revaluation gain on investment property generated €3.5 million in other operating income.
Loans and advances to customers increased by €289.9 million in 2008 to €3,112.2 million, from €2,822.3 million in 2007, with growth across both the personal and commercial sectors. The quality of the overall loan book remained good with non-performing loans at the 2008 year end representing 2.3 percent of gross loans, an improvement from 2.7 per cent at the end of 2007, the bank said.
Short-term liquid money market placements in the form of loans and advances to banks increased by €441.3 million to €1,072.3 million as more new funds and maturing liquidity were placed with HSBC as a result of increasing market risks.
The available-for-sale investments portfolio was marked down by €9.7 million during the year. The bank said it believed that the credit quality of these assets remained strong and that this deficit would reverse over the long-term.
Alan Richards, director and chief executive officer said 2009 was expected to be particularly challenging.
“Profitability will be under pressure as the economy slows, margins contract further in a low interest rate environment and impairments are likely to increase as the credit cycle continues to weaken.
“Whilst some of the challenges we face may be unprecedented, we are in good shape. I am confident that with our track record, the backing of the HSBC Group, our enduring commitment to liquidity, strong capital and a conservative approach to risk management, we are well positioned to build on our strengths and support our customers to drive future growth.
The Board is declaring a final gross dividend of €0.096 per share (€0.062 net of tax). This will be paid on 20 April 2009 to shareholders who are on the bank’s register of shareholders at 4 March 2009. This, together with the gross interim ordinary dividend of €0.119 per share, results in a total gross dividend for the year of €0.2
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Graham Powell
Mar 19th 2009, 09:02
I lived in South Africa for 15 years. There you are charged for depositing cash at 3 to 5%! And charged for everything, including debit cards, cheque books, statements, writing a cheque, using ATM, internet banking monthly fee, using other ATMs monthly acount service fees, etc etc. Absolutely nothing is for free. The current base interest rate is around 17% and you generally get lent money at between prime and plus 4%! The highest it went was 24% APR in the late 90's!!!! I paid a property on a mortgage over 20 years and paid for it 5 times!!!! HSBC Malta offers excellent deals to consumer banking. I know it is not great for savings but borrowing and banking they are really good! But in difficult times money in the bank with HSBC is a conservative and relatively safe option. They are surviving and showing a profit. You have other options with higher returns but with that comes higher risk? You can not have your cake and eat it in these times.....well done HSBC for being responsible and safe when most banks are going out of business.
S. Calleja
Feb 22nd 2009, 21:10
What are you guys complaining about? Do you know that some banks abroad even charge for ATM cash withdrawals? It stupefies me how many people still expect everything for free. Would you work without expecting a salary? As long as you answer no to this question, then you cannot expect to get free services and products.
And. at the end of the day, the bank is not stealing your money. You are giving it your money willingly yourself.
T Frendo
Feb 22nd 2009, 11:06
Despite many negative comments on this article I think that the bank's results are good. There are many ways to compare Banks results and while year-on-year is an important comparison when most factors remain equal, peer comparison is another important comparison. While results for 2007 show that BoV (€101m) and HSBC (€114), were very close (+13%), for 2008 the difference is abyssal, with HSBC (€96m) and BoV (€40m), (+140%)!
In respect of the €6 charge I would just like to point out that HSBC is also doing a clear distinction between online and over-the-counter transactions. If one effects a SEPA payment at a branch they will be charged €30 whereas through the internet banking service the charge is only €4. So there you have it, with 1 payment one will save the equivalent of 4 years subscription fees!
While I understand the frustration for new charges, one has to remember that banks (like-all-other-enterprises) are in the business of making money so they have to price every service they offer. Just like no one expects to walk into a shop and take whatever they need without paying, one should not expect free services just because they were free before.
J Farrugia
Feb 20th 2009, 17:58
@ C or J Camilleri You're right! Definitely such 80s work practices are unacceptable in a banking environment. But 2 wrongs won't ever make 1 right! The blue eyed boys concept is still in vigore.... Let me enlighten you... Just have a look around you and you can easily find the answer ... Certain HSBC high ranking officials ihabbtu mall-perspex fil-counting hall favur il-PN! Or escorting this or that HSBC official in a PN activity. And voila' these persons get the cushy jobs with HSBC ... pretty well sure that you know what I mean.
c.camilleri
Feb 20th 2009, 17:38
You mentioned just one case and we do not know how it ended. What is sure is that you are relying on labour's media speculation at that time. What is known for a fact is that interfering in the banks' business has never been the Nats Govt's policy as used to happen during the labour Administration.
G Attard
Feb 20th 2009, 17:02
G. Xuereb if you feel so strongly about the 6 euros and the way HSBC is treating you I suggest you change banks! Nobody is forcing you to stay with HSBC.
Adrian Sciberras
Feb 20th 2009, 15:43
a drop of 16% is a very good result in the scenario where banks are turning from profits to losses... or compared to the 40% drop expected in BOV.
If you don't follow the stock markets just don't try to form an opinion. HSBC has made huge profits and helps Malta's business community grow (obviously at a cost, i.e. their profit).
eric saliba
Feb 20th 2009, 15:41
@ c camilleri. thank you for your enlightening comment. you think we have forgotten the 10 million lira unsecured loan given by another leading bank to a local car importer???which btw were written off as bad debts by the said bank. and this happened during a PN administration!!
George Farrugia
Feb 20th 2009, 15:35
If one considers the prevailing global financial and economic situation, the bank did very well. On the other hand if one considers only last years profits, one comes to the conclusion that it was a really bad year; and that heads should be rolling.
J.Bonnici
Feb 20th 2009, 15:32
Open a savings account with HSBC and get 0.25% interest per annum. Take a Flexi Credit Loan and expect to pay 7%. It's the World's Locust Bank.
laurence schembri
Feb 20th 2009, 15:02
@ G. Attard, sorry I do not think that you have read my contribution.
Gianni Xuereb
Feb 20th 2009, 14:56
@G Attard
Read well the article. Remember Euro change over ? That cost the bank millions.
"it was a solid result achieved after taking into account the introduction of the euro and the volatility of world financial markets."
Yes indeed, it was a solid result, thanks to our pockets. It's no joke when you compare it to the disaster in profits BOV is recording.
I don't think I should be the one to pay for the expenses in Euro change over. I'm already being punished enough with the lower interest rates on my deposits. The €6 charge is just a symbolic insult.
If your business study books make you feel jolly with the €6 Euro charge then they must be better than cocaine (they give you better hallucinations)
My business books tell me to give a better service to make a better profit in the long term. Your business books must be short sighted (get a couple of prisms).
c.camilleri
Feb 20th 2009, 14:53
@Berty Farrugia. Who told you that the Govt would have made such a profit? HSBC is making profit because it is serious institution with good expertise in management with no blue eyes boys being put on the top. HSBC works on the principle of what you know and not whom you know as it was done when the bank was in Govt's hands. This applies more when Labour was in Govt and loans were given to labour thungs and supporters without any guarantees at all. Because of this policy HSBC inherited millions in bad debts. Presently Govt is getting mcuh more in taxes fthan it used to make from profit. Govt used to make about Lm12 profits this time it received more than 35 euros without any effort at all.
Ludwig Flask
Feb 20th 2009, 14:51
Down by 16.2 per cent - Get your money out NOW!
G Attard
Feb 20th 2009, 14:38
Somehow I feel that my computer is displaying a different message than all you bloggers are receiving! I am perplexed!
The bank is reporting an 16% drop in profits - which in business terms is no joke. If this happens abroad the head count is the first to be hit.
So revise your business study books before you commit yourself to such statements!
Gianni Xuereb
Feb 20th 2009, 14:29
The €6 charge per annum HSBC introduced on each and every online banking accounts was a big thank you from the bank for the successful year it just had. Of course if it's making all this profit from the money we deposit, why not make some more ?
In a situation where credit is so much limited, the bank should kiss my back for depositing money in their bank, not punish me with the symbolic €6. After all if it were not for our deposited money, addios profit, addios bank. Shame!
Thank you HSBC!
J Farrugia
Feb 20th 2009, 14:20
@ L Muscat
You're perfectly right! Only a few weeks ago HSBC introduced the 6euro charge on their internet banking.
A simple rip off!
You send them an email today via internet banking and you get an answer exactly the week after!
I have no problem in saying this in public.
I placed an enquiry about a 1400 euro fraud and I got some sort of phone call 7 days after.
3 days ago I sent them another email to reverse an entry which they passed erroneously and as at todate I have no answer.
They claim that they are understaffed. And very recently 'sinjura wara min imissek hux ghax ghandna back log u mhux qed inlahhqu'.
What the hell ... recruit people! I understand that it shouldn't be a problem now that you publicly declared that you made a profit.
And pls HSBC don't give us anymore B*** shit by telling us that 'even BOV have such tariffs'.
I do have an account with BOV and honestly never had such problems.
Shame on you.
laurence schembri
Feb 20th 2009, 14:16
Please look before you leap. HSBC made a loss of €18.6 million = to 16.2% down on 2007.
Adrian Sciberras, €18.6 million down is by no measure a good result, it is the opposite.
A boost? If anything the opposite will happen.Banking is not a game of football 1-0 or 1-20 means a win. If this happen anywhere in Europe or the States, they will be sacking people by now.
A Camilleri
Feb 20th 2009, 14:12
This does not surprise me one little bit!
With the meagre interest rates that HSBC gives it's investors and the myriad of fees for every trifling of a service that it charges its customers this was to be expected.
It's a pity that there are only a handful of banks here in Malta. The outcome would be much different had there been a bigger choice. It's all about competitiveness; this would quickly put an end to HSBC.s arrogant attitude.
s schembri
Feb 20th 2009, 14:02
@bertu farrugia et. al.
It is a known fact that an enterprise, when privitised, works much better. It shows how much resourses get wasted in the public sector. Take the shipyards. It is a pit where money gets dumped. Hopefully not for much longer.
Robert Agius
Feb 20th 2009, 14:01
@l.muscat - spot on.
bertu farrugia
Feb 20th 2009, 13:54
That`s how much money Malta is losing,because the Government sold it to the private sector.
Alex Spiteri
Feb 20th 2009, 13:50
and the government sold it at Lm60!!!
D Sant
Feb 20th 2009, 13:35
@maria falzon
Why are you trying to instigate fear after such a great performance?? Rumours are just that... rumours.
maria falzon
Feb 20th 2009, 13:26
This bank is absorbing an average of €240 per capita from the maltese market. Making money is perfectly ok, but an institution making huge profits with no real social conscience has not place.
Adrian Sciberras
Feb 20th 2009, 13:05
Great results in such a volatile world, and these results prove what a solid country we have.
This will definitely give a big boost to its share price and reverse the negative trend instilled by fear of BOV's recent worrying statements.
The new bull market is going to start soon.
L.Muscat
Feb 20th 2009, 12:53
And then they introduced a charge of 6 ewro for using the 24/7.