HSBC Malta has reported a profit before tax of €88m for the year ended 31 December 2011 – an increase of €5m, or 6%, compared with €83m in 2010.
It said that profit attributable to shareholders was of €58m, up €4m, or 7%, compared with €54m in 2010, resulting in earnings per share of 19.7 cent, up 7%.
Total assets reached €5,825m at 31 December 2011, up €174m, or 3%, compared with 31 December 2010.
Loans and advances to customers were €3,344m at 31 December 2011, an increase of €54m, or 2%, compared with 31 December 2010.
Customer accounts were €4,403m, a decrease of €60m, or 1%, compared with 31 December 2010.
The return on equity for the year ended 31 December 2011 was 15.7%, compared with 16.1% in 2010.
The cost efficiency ratio for the year ended 31 December 2011 was 50.4%, compared with 49.7% in 2010.
The Board of Directors resolved to recommend that the Annual General Meeting to be held on 18 April 2012 approves the payment of a final ordinary dividend of 7.2 cent gross per share (4.7 cent net per share). This will be paid on 27 April 2012 to shareholders who are on the company’s register of shareholders as at 19 March 2012.
REVIEW OF PERFORMANCE
HSBC said that on a like-for-like basis, excluding non-recurring items, profits were in line with the prior year’s performance.
The three main business lines, Retail Banking and Wealth Management, Commercial Banking and Global Banking and Markets all contributed positively to the bank’s overall performance.
During the year the bank continued to execute against its key transformation programme with a view to building long-term sustainability. In this light, and reflecting changing customer behaviour patterns, an announcement was made in relation to a branch optimisation programme and the launch of a staff voluntary retirement scheme.
In addition the bank disposed of its card acquiring business in line with HSBC Group global strategy for this business. The cost of the voluntary retirement scheme (€11m) was broadly offset by the proceeds from the sale of the card acquiring business.
The bank said it continued to invest in expanding its business and transforming its operations. A new banking computer system was introduced at a cost of €10m during the year and the roll-out of upgraded branches and ATMs at a cost of €11m continues.
Net interest income improved by 5% to €129m compared with €123m in 2010. The increase reflected growth in mortgage lending and improved balance sheet management.
Net fee and commission income of €34m in 2011 was marginally down on the prior year. Growth in account services fees were offset by a decline in stockbroking fees largely due to the slow-down in local capital markets bond issuance activity.
HSBC Life Insurance (Malta) Ltd generated a profit before tax of €11m compared to €13m in 2010. Underlying new business performance generation, particularly with respect to life insurance protection, was encouraging. The business benefited from a non-recurring gain of €7m as a result of a refinement in the methodology used to calculate the present value of in-force long-term insurance business. This benefit was eroded during the year as the yields on euro swaps continued to fall and the market value of investment holdings reduced.
In view of significantly heightened stress in the eurozone debt markets, the bank said it reduced its exposure to higher risk eurozone countries through selling holdings in the available-for-sale bond portfolio at a net loss of €2m.
Other than the exposures noted above and investments in Maltese government debt, the group has no exposure to southern European government debt.
HSBC said the group’s available-for-sale portfolio remains well diversified and conservative.
At a bank level, while there was a marginal deterioration in non-performing loans from 4% to 5%, in general asset quality remained good and loan impairments declined to €4m (11 basis points of the overall loan book) compared with €5m in 2010, HSBC said.
Mortgage market share remained stable. Gross new lending to customers amounted to €656m which, the bank said, reflected its continued support to the local economy.
Liabilities rose by €142m during the year and stood at €5,458m at the year end. The increase in liabilities reflected a rise in placements with the bank offsetting a the fall in customer deposits.
The bank said its liquidity position remained strong with advances to deposits ratio of 76%, compared with 74% at 31 December 2010.
The bank strengthened its capital ratio by 140 basis points to 11.6%. This exceeded the 8.0% minimum regulatory requirement.
Mark Watkinson, CEO, welcomed the results.
“The outlook for 2012 looks very challenging. While the Maltese economy has performed relatively well over the last 12 months the continuing uncertainty in the eurozone will likely act to slow the domestic economy," he said.
“That said HSBC Bank Malta remains confident in its abilities to rise to the challenges of the next 12 months."