HSBC Bank Malta said today it made a pre-tax profit of €40 million in the first six months of this year.

It said customer accounts reached €4,549m at 30 June 2014, up €31m, or 1%, compared with 31 December 2013.

Profit before tax was of €40m for the six months ended 30 June 2014, €13m lower than the same period last year but higher than the second half of 2013. The decline in first half profits was the result of reduced interest earnings and muted loan growth, as well as an increase in costs as a result of compliance investment and increased regulatory fees. In addition, the 2013 performance benefited from a one-off insurance gain, which was not repeated in the first half of 2014.

Profit attributable to shareholders reached €26m resulting in earnings per share of 7.9 cents compared with 10.6 cents in the same period in 2013.

Return on equity was 11.6% for the six months ended 30 June 2014, compared with 16.3% for the same period in 2013.

Net interest income declined to €58m compared with €64m in the same period in 2013. The fall in net interest income reflected a decline in interest earned on investments as proceeds of higher yielding maturing bonds were re-invested at the lower prevailing rates and the lower interest earned on reduced average lending balances. The decline in net interest income was partially offset by lower cost of funds as customers migrated to lower yielding short-dated deposits.

HSBC Life Assurance (Malta) Ltd. reported a profit before tax of €6m compared with €8m in the first half of 2013. The results in 2013 benefited from a one-off with-profits modelling reserves release not repeated in the first half of 2014.