HSBC Bank Malta plc yesterday announced interim profits before tax had increased by 21.4 per cent, up €7.4 million, to €42.2 million, compared with €34.8 million in the same period last year.
Chief executive officer Alan Richards described the bank's performance in the first half as "strong", saying that after a period of negative GDP growth, the Maltese economy has stabilised and is showing encouraging signs of sustainable growth.
He cautioned the wider crisis had still not blown over as the recent eurozone sovereign bond crisis has highlighted.
The bank would tread "relatively cautiously" in the light of lag effects of austerity programmes implemented across Europe possibly having an effect on Malta.
The board is declaring an interim gross dividend of 7.9 euro cent per share (5.1c net of tax). The ordinary dividend payment of €15 million is 55 per cent of current profits attributable to over 10,400 bank shareholders. This will be paid on August 24 to shareholders on the register as at August 10.
The dividend payout ratio has been trimmed from 65 per cent in view of anticipated regulatory requirements which are expected to request banks to hold more Tier I capital.
HSBC Bank Malta is both financially strong and well-positioned to support its customers and future growth in the economy, Mr Richards emphasised.
Operating expenses of €40.8 million for the six months ended 30 June were in line with those in the first half of 2009. The cost efficiency ratio improved to 48.4 per cent compared to 54.7 per cent for the same period in 2009. This was achieved through strict cost discipline, Mr Richards added.
Net loan impairment charges of €1.4 million were reported for the half-year, compared to a release of €0.9 million in the same period last year.
Total assets grew by €489 million to €5,606.8 million, with the main increases reported in treasury bills and debt securities investments as part of the bank's liquidity management.
Loans and advances to customers stood at €3.2 billion as at June 30, a decrease of €22.1 million (0.7 per cent), as borrowers looked to reduce debt levels. Demand for corporate lending was soft with new lending for the first six months of the year amounting to €306 million.
The lending portfolio's quality showed a minor deterioration with non-performing loans representing 3.2 per cent of gross loans by June, compared to 2.9 per cent at December 31, 2009. Liquidity and capital ratios were strong and well above regulatory requirements, Mr Richards pointed out.
Interestingly, following the recent spate of government and corporate bond issues, customer deposits increased by €59.4 million for the first six months to €4.1 billion. The bank's liquidity position remains strong with an advances-to-deposits ratio of 77.3 per cent, compared with 79 per cent at December 31, 2009.
Total tax payments including social security contributions and VAT total €17.8 million.
"We have made good progress during these six months and we continue to emphasise our competitive advantage as an international bank. We remain liquid, well-capitalised and well-positioned to support the local economy and future growth," Mr Richards said.