HSBC Malta said today it made a pre-tax profit of €95m for the year ended 31 December 2012 – an increase of €7m, or 8%, compared with €88m in 2011.
Profit attributable to shareholders was of €62m – up €4m, or 7%, compared with €58m in 2011, resulting in earnings per share of 21.1 cent, up 7%.
Total assets totalled €5,886m, up €61m, or 1.0%, compared with 31 December 2011.
Customer accounts at the end of the year reached €4,517m, an increase of €114m, or 3%.
Return on equity for the year was 15.4%, compared with 15.7% in 2011.
The cost efficiency ratio improved to 48.7%, compared with 50.4% in 2011.
Capital adequacy ratio was 12.4%, compared with 11.6% at 31 December 2011.
The bank said the main factors driving the improvement in profit before tax were a strong performance from the life insurance company reflecting a recovery in investment returns and available-for-sale gains as a result of the repositioning of the bond portfolio. This performance more than offset the non-recurring gains made in 2011 on the sale of the card acquiring business and the refinement in the methodology used to calculate the present value of in-force long-term insurance policies.
All the three main business lines, Retail Banking and Wealth Management (RBWM), Commercial Banking (CMB) and Global Banking and Markets (GBM), were profitable in 2012.
Mark Watkinson, Director and Chief Executive Officer of HSBC Bank Malta, said: “HSBC Malta has delivered another positive set of results that saw pre-tax profit increase by 8% with a return on equity of 15.4%. This performance was achieved in spite of the continued travails of the eurozone, a low interest rate environment, heightened competition and softer demand.
“Despite all the current global and regional challenges, HSBC Malta has a clear strategy in place of assisting our customers, and Malta, to access broader global markets with faster growth, simplifying our business, improving the customer experience and driving greater organisational efficiency.”
The bank said its net interest income increased by 3% to €133m compared with €129m in 2011. The increase reflected growth in mortgage lending from new business and improved balance sheet management returns.
Net fee and commission income fell to €30m in 2012 compared with €34m in 2011. Growth in fee income for payments and cash management was more than offset by lower card fees following the sale of the merchant card acquiring business in December 2011.
A net gain of €4m was reported on the disposal of available-for-sale securities compared to a net loss of €2m in 2011.
Operating expenses of €96m were €2m or 2% lower than the previous year.
Net impairments were reduced from €8m to €6m in 2012. This was principally due to the non-recurrence of a €4m impairment taken on Greek government bonds held by the life insurance subsidiary in its available-for-sale bond portfolio in 2011. During 2012, following the Greek bonds restructuring programme, all Greek debt exposure was sold and no Southern European country government debt is now held in this portfolio.
Net loans and advances to customers increased by €10m to €3,354m. The bank’s share of the mortgage market was stable. Despite a softening in loan demand in the challenging economic conditions, gross new lending to customers amounted to €507m. This reflects the bank’s continued support to the Maltese economy.
Customer deposits rose by €114m during the year and stood at €4,517m at year end, reflecting an increase in both corporate and institutional deposits. The levels of retail deposits were marginally higher despite heightened competition for deposits.
The Board is declaring a final gross dividend of 7.9 cent per share (5.1 cent net of tax). This will be paid on 27 April 2013 to shareholders who are on the bank’s register of shareholders at 19 March 2013.