HSBC Bank Malta performance ‘satisfactory’ – interim statement

HSBC Bank Malta’s financial performance between July and mid-November remained satisfactory with revenue and profits continuing the positive trend reported in the first half of 2010, the bank said in its interim directors’ statement.

However, chief executive officer Alan Richards warned that global economic challenges remained, and slow growth in Europe will have an impact on Malta.

“Following a good tourist season, the local economy is performing well and we anticipate continued growth for the foreseeable future,” Mr Richards said.

“However, challenges within the global economy clearly remain. 2011 is likely to see softer growth across Europe, not least because of the impact of a number of austerity packages announced across the European region. We will continue to monitor the current situation closely as any slowdown in growth in Europe will inevitably impact the economy in Malta.”

The bank has seen a slight softening in loan demand due to economic conditions, and increasing competition in the market. Deposits increased despite growing competitive pressure, including from a number of local government and corporate bond issues.

Profits from the life insurance business remain volatile, reflecting the downward movement in the euro yield curve which affects underlying actuarial valuations and impacts the level of reserving. The bank said it continues to provide support for its borrowers and security for its depositors.

HSBC Bank Malta continued to invest in expanding its business and transforming its operations in the period while maintaining a focus on cost control. As a result, the cost-efficiency ratio was broadly in line with the first half of 2010 and remains well within the bank’s target range.

The bank continues to focus on building a high quality asset base for the future and it is encouraging that loan impairments were only modestly higher than the same period last year and in line with expectations.

The credit quality of the available-for-sale investments portfolio, which has improved over the period, remains satisfactory.

The bank has maintained a strong liquidity position and a stable loans to deposits ratio in the period. The capital ratio remains well above regulatory requirements.