HSBC Malta has declared an interim gross dividend of 8c2 per share (5c3 net of tax) to be paid on August 24 to shareholders who are on the bank’s register of shareholders on August 10.
HSBC’s reported profit before tax of €50m increased by 19 per cent, or €8m, over the comparable period in 2010, the bank said today.
In its interim financial report for the six months ending June 30, the bank said that its cost efficiency ratio improved to 43.9 per cent compared to 48.4 per cent in the first half of last year.
Return on equity improved to 18.5 per cent from 16.9 per cent in the comparable period in 2010.
The bank’s net interest income improved by six per cent to €64m compared to €61m in the first half of 2010 attributable to effective balance sheet management and the unwinding of higher interest term deposits.
Net fees and commission income of €17m for the six months ended June 30 were in line with the first half of 2010.
Growth in lending and account services fees were offset by a decline in stockbroking fees largely due to the slow-down in local capital markets bond issuance activity.
The life insurance subsidiary performed well during the period under review generating a profit before tax of €13m for the first half of 2011, up €9m, compared to €4m for the same period in 2010.
A refinement of the methodology to the projection assumptions used in calculating the present value of in-force long-term insurance business contributed €7m to the growth from insurance activities.
In view of significantly heightened stress in the eurozone debt markets, the bank reduced its risk exposure through the sale of holdings in higher risk eurozone countries from the available-for-sale bond portfolio at a net loss of €4m.
The bank continued to invest in expanding its business and transforming its operations. As a result, costs increased by €2m, or four per cent, to €43m. The cost efficiency ratio improved to 43.9 per cent compared to 48.4 per cent in the first half of 2010 as growth in operating income outpaced the increased expenditure.
Net impairments of €4m included an impairment of €2m relating to higher risk debt securities within the available-for-sale investment portfolio.
The bank continued to focus on building a high quality base and the level of loan impairments of €2m, although slightly higher than the same period last year, were lower than expected. Loan impairments remained at 11 basis points of the overall loan book.
As borrowers looked to reduce debt levels, net loans and advances to customers reduced marginally by €8m to €3,296m. The mortgage market share remained stable. Gross new lending to customers amounted to €355m.
This reflected the bank’s continued support to the local economy and was a modest increase on the same period last year. The quality of the lending portfolio showed a marginal deterioration with non-performing loans representing four per cent of gross loans on June 30 compared to three per cent on December 31.
Customer deposits of €4,281m on June 30 reduced by €182m compared to December 31 reflecting the levels of volatility of deposits from the institutional sector. Retail deposits were broadly stable despite continuing competitive pressure for deposits including from local government bond issuances.
The bank’s available-for-sale investments portfolio remained well diversified and conservative with limited exposure to sovereign debt in the peripheral eurozone countries following the sale of holdings in the higher risk eurozone countries during the period under review.
The bank’s liquidity position remained strong with advances to deposits ratio of 77 per cent, compared with 74 per cent on December 31.
CEO Alan Richards said: “A strong performance from the bank in the first half of 2011 which saw pre-tax profit increase by 19 per cent and our cost efficiency ratio drop further to 43.9 per cent. Return on equity improved to 18.5% per cent. The local economy continues to perform relatively well although a prolonged crisis in Libya in particular and the eurozone sovereign debt crisis may yet affect projected GDP growth rates.
“Nonetheless, HSBC has made excellent progress during these six months as we continue to transform the bank, and we continue to emphasise our competitive advantages as an international bank. The fundamentals of HSBC remain in excellent shape. We remain strongly capitalised, liquid and well placed to service the needs of our customers and to support the local economy.
“The successful financial results for the first half of 2011 are testimony to the professionalism, commitment and hard work of our staff who again performed admirably in demanding circumstances.”