HSBC Bank Malta plc and its subsidiaries generated a profit on ordinary activities before tax of €96.1 million for the year ending December 31, down €18.6 million (16.2 per cent) on 2007. Profit after tax was down €13.2 million (17.3 per cent) to €63.1 million, compared with 2007's €76.3 million.
"Considering the introduction of the euro and the volatility of world financial markets, HSBC Bank Malta achieved a set of solid results in 2008," CEO Alan Richards told stockbrokers and the press at the presentation of the bank's results at the Chamber of Commerce on Friday.
Earnings per share stood at €0.216, down 17.2 per cent when compared to €0.261 for 2007.
The board has recommended the annual general meeting to be held on April 1. A final ordinary dividend of €0.096 gross per share (€0.062 net per share) is scheduled to be paid on April 20.
The final dividend will be payable to shareholders on the bank's register as at March 4. This, together with the gross interim ordinary dividend of €0.119 per share, results in a total gross dividend for the year of €0.215. The final dividend amounted to €18.2 million which, when taken together with the interim dividend paid last August, reached a total of €40.8 million.
Net interest income of €123 million in 2008 was down 2.5 per cent, from €126.2 million in 2007. Increases in loans and advances generated steady growth in receivable interest. This was off-set by the increase in interest payable on retail deposits, and margin pressure from a combination of increased competition and the lowering of base rates by the European Central Bank in the last quarter last year.
Net fees and commission income of €31.8 million in 2008, compared to €31 million in 2007, was achieved despite reduced levels of business activity during the first quarter of 2008 following Malta's adoption of the euro and the general election. Adopting the euro also affected foreign exchange dealing income which, at €7.9 million, was significantly lower than the €16.7 million earned in the previous year.
Strong organic growth in sales of regular premium term life and investment products, and flat costs contributed to the life insurance business generating a profit before tax of €16.4 million in 2008, up 25 per cent on 2007.
Operating expenses of €90.4 million in 2008 were €6.7 million, or 8.1 per cent, higher compared to the previous year, with a cost efficiency ratio of 48.0 per cent compared to 42.1 per cent in 2007. Employee compensation and benefits increased by €5.6 million in 2008 primarily due to an exceptional charge to support a voluntary early retirement scheme.
Loans and advances to customers increased by 10.3 per cent or €289.9 million in 2008 to €3,112.2 million, from €2,822.3 million in 2007, reflecting growth across both the personal and commercial sectors.
Short-term liquid money market placements in the form of loans and advances to banks increased by €441.3 million to €1,072.3 million as more new funds and maturing liquidity were placed safely with HSBC Group as a result of increasing market risks.
The available-for-sale investments portfolio was marked down by €9.7 million during the year. HSBC Malta believes that the credit quality of these assets remains strong and that this deficit will reverse over the long-term.
In September, the bank issued a €30.0 million, 5.9 per cent, subordinated bond to further strengthen its funding base and to support future business growth.
"This year will be a particularly challenging year as many parts of the world head into a recession which will leave its mark on Malta," Mr Richards pointed out.