HSBC Malta pleased with performance although profits drop 25 per cent

HSBC Bank Malta's profits before tax plummeted by 25.3 per cent to €34.8 million for the first six months of the year, compared to the same period last year.

"The first half of 2009 has been difficult. As predicted, the bank's short-term financial performance has been affected. However, HSBC Malta remains in very good shape and we are actively working to support the local economy," HSBC CEO Alan Richards said yesterday.

Mr Richards defended the bank's performance saying this was resilient in the light of current market conditions.

The results were achieved despite a general slowdown in economic activity, continued low interest rates that led to significant margin compression and ongoing volatility in equity and bond markets that impacted the bank's investment-related businesses.

"Notwithstanding, overall profitability relative to history, peers and industry benchmark remains strong with a return on equity of 15.6 per cent," Mr Richards said.

Operating expenses of €41 million are 2.5 per cent lower compared to the same period in 2008. The cost efficiency ratio increased to 54.7 per cent from 47 per cent, primarily as a result of a 15.9 per cent decrease in operating income to €74.9 million.

Loans and advances to customers stood at €3,180.6 million at June 30, up €68.3 million, or 2.2 per cent, compared with December 31.

"This is a strong performance considering the economic challenges we all face and reflects our active commitment to supporting the local economy," he added.

Customer deposits of €4,009.3 million at June 30 were down marginally by €7.3 million, or 0.2 per cent, compared with December 31.

Net interest income of €48.2 million represents a decline of 20.8 per cent compared to €60.8 million during the prior year, reflecting a significant contraction in interest margin following the base rate cuts of the European Central Bank.

Fees and commission income of €15.2 million was slightly down in the first half of 2008 as a result of the slowing economy. Tax on profits was €12.3 million while total tax payments, including social security contributions and VAT, amounted to €14.9 million.

The HSBC board declared an interim gross dividend of 7c7 per share (5c net of tax). The ordinary dividend payment of €14.6 million is 65 per cent of current profits attributable to more than 10,100 bank shareholders. This will be paid on August 27 to shareholders who are on the bank's register as at August 12.