HSBC today reported a profit before tax of €36 million for the six months ended June 30 compared with €40m for the same period a year ago.
The board declared an interim gross dividend of 5.1c per share (3.3c net of tax). This will be paid on September 10 to shareholders on the bank’s register of shareholders at August 14.
In a notice on the Malta Stock Exchange, the bank said this performance reflected the continuing low interest rate environment as a result of record low European Central Bank rates, muted commercial lending growth and an increase in costs as a result of compliance investment and new regulatory charges.
The 2014 performance benefited from a bigger gain on the sale of securities.
All three main business lines, retail banking and wealth management, commercial banking and global banking and markets, were profitable during the six month period under review.
Net interest income increased to €60m compared with €58m in the same period in 2014. The increase in net interest income was primarily driven by a lower interest expense as deposits rates reduced.
Interest income decreased as well as a result of diminishing lending margins. Interest income on investment portfolio declined as proceeds of higher yielding maturing bonds were re-invested at the lower prevailing rates.
HSBC Life Assurance (Malta) Ltd reported a profit before tax of €7 million compared with €6 million in the first half of 2014.
Operating expenses of €50m were €4 million, or seven per cent, higher than the first half of 2014 largely due to compliance investment, regulatory fees and costs attributable to regulatory obligations and the increased cost of outsourced services as a result of currency fluctuations and new services related to the transferred insurance portfolio.
Net loans and advances to customers were €3,249 million, €24 million lower than at December 31.
However, the bank said the lending pipeline remained robust and newly sanctioned loans amounted to €462 million, reflecting the bank’s continued support of the local economy.
Customer deposits increased by €331 million to €5,198 million reflecting the growth in both retail and corporate deposits.
As deposit rates decrease, the shift from longer- dated to shorter-dated deposits continued.
The bank’s liquidity position was further strengthened with an advances-to-deposits ratio of 62 per cent compared with 67 per cent at December 31.