The chief executive office of HSBC Bank Malta, Andrew Beane, is confident about the future of the bank in Malta – despite the fact that its return on equity is down to 8.5 per cent.

HSBC Group had set a benchmark of 10 per cent ROE by 2017 for its operations but this was recently revised by chairman Douglas Flint “in light of the current uncertain economic and geo-political environment”, coupled with the bank’s view that interest rates will remain low for a long time.

HSBC Bank Malta CEO Andrew Beane

Mr Flint said that while the overall target remained intact and appropriate, the current guidance to reach this level by the end of 2017 “is no longer considered achievable”.

Mr Beane, director and chief executive officer of HSBC Bank Malta, who took over eight months ago, told The Business Observer (distributed with Times of Malta) that the focus on ROE was ‘through the cycle’:

“We have to recognise that the negative interest rate environment has changed the structural profitability of banks. I remain confident in our ability to deliver a return on equity greater than 10 per cent over time. Equally as we set out this morning, we have a clear strategy to rebuild profitability, which is encouraging as well. I stand here feeling confident about the future.

The bank’s chief financial officer Rashid Daurov pointed out during the presentation of the results that most banks in Europe were only managing a return on equity of between six and eight per cent.

The bank made a profit before tax of €41.3 million for the six months ended June 30, 2016, saved by a one-off €10.8 million gain from the sale of its investment in Visa Europe. Without the Visa Europe gain, the figure drops to €30.5 million, 15.9 per cent down compared to the same period in 2015. 

More in The Business Observer, carried with Times of Malta.