HSBC Bank Malta said today that it made satisfactory progress in the period 1 January 2008 to 16 May 2008, but there was a general slowdown in business activity, and pre-tax profit was lower.

"The period under review was characterised by a general slowdown in business activity, primarily due to the currency transition to the euro and the general elections," the bank said in an interim directors' statement.

"Profit before tax was lower than for the period 1 January to 18 May 2007. Interest income in the period was below expectations because of tighter margins and heightened competition, while non-interest income was also lower, primarily due to significantly reduced foreign exchange dealing income as a result of Malta’s adoption of the euro on 1 January 2008."

The bank said it had kept operating expenses under tight control and it was reaping the benefits of past investments which had increased operational efficiency and improved customer service delivery.

"The quality of the overall loan book remains good, with loans and advances to customers continuing to increase. There was no deterioration in the quality of credit lending whilst liquidity and solvency indicators remain sound and above regulatory levels."

Good growth was recorded in total assets and customers’ deposits also showed significant growth.

Alan Richards, Director and Chief Executive Officer said that the bank was financially sound and had a conservative balance sheet policy with relatively low funding from the wholesale markets, and minimal investment in non-government securities.

"Hence, the turmoil that is being experienced in international markets has had no material impact on our business."