The writing was on the wall. HSBC Bank Malta plc (HSB), in an interim directors' statement dated May 16, had spelled it out: "Profit before tax was lower for the period January 1 to May 16, 2008". It did not specify how much lower the profits were till then, but with only 36 business days left to the June 30 half-way mark, one could not reasonably expect the profits shortfall to be made up. In fact, they weren't. But at least the definition of 'lower' was substantially more palatable (a 21.1% drop in pre-tax profits), than Bank of Valletta plc's (BOV) 56% interpretation of the word 'lower', nearly three months earlier. Bang went my tentative titles - 'From pink champagne to plonk', or 'From filet mignon to fish fingers'.
HSB's interim unaudited financial statements for the six-month period ended June 30, 2008, were published on Friday just after the closing bell. These showed a pre-tax profit of €46.6 million - a 21.1% decrease over the €59 million registered in the same period in 2007. Earnings per share fell by 23.1% from €0.134 to €0.103. Net interest income declined by 3.9% to €60.8 million - a figure which includes a significant recovery from previously non-performing loans. Net operating income was down by €9.66 million or 9.8%, compared to the same six-month period last year.
Fees and commission income at €15.5 million were virtually unchanged from the first six months of 2007, even though Malta's adoption of the euro and the general elections reduced levels of business activity during the first quarter. The changeover to the euro also resulted in a drop of 56.5% in foreign exchange dealing income, or €4.8 million - from €8.5 million to €3.7 million. Life insurance business generated a profit before tax of €6.4 million - up 5.6%.
For the six months ended June 30, 2008: a) operating expenses of €42 million are 6.1% higher; b) the bank's cost efficiency ratio was 47.2%, compared to 40.1% in 2007; c) customer deposits increased by €18.8 million to €3,394.5 million; d) loans and advances to customers increased by 5.2% to €2,968.9 million; e) total assets increased by €205.8 million to €5,100.8 million.
The available-for-sale investments portfolio was marked-down by €7.7 million at the close of the period. The mark-down was charged to revaluation reserve, net of tax effect.
The board is declaring an interim gross dividend of €0.119 per share (€0.077 net of tax), which will be paid on August 22 to shareholders who are on the bank's register by August 6, i.e., those who will have purchased shares by next Friday.
For the record, HSB had an even worse drop in pre-tax profits - 23.5% - for the six months ending June 2001 when compared to the six months ending June 2000.
HSB did not trade on Monday, but ping-ponged between €3.83 and €3.80 from Tuesday to Friday. Volume, however, was still fairly subdued at just under 34,000 shares for the week with a value of €129,642. At the end of Friday's session, a bid for 263 shares was at €3.79 with supply for 1,892 shares at €3.80
BOV gained a cent on Monday, rising to €4.68, but retreated from Tuesday to Thursday, suffering the heaviest loss on Thursday, when it slumped to €4.60. Friday brought mild consolation as BoV managed to gain 2c towards the end of trading, but nonetheless closed the week 1.1% lower. Total turnover amounted to 57,890 shares for a value of €269,033. At the end of trading, the best bid was for 1,000 shares at €4.60, while supply started at 2,003 shares at €4.62.
GO plc only came to life mid-week, with 28,190 shares traded at the unchanged price of €2.50. It was stable on Thursday and rose a cent on Friday to end the week 0.4% higher at €2.51. Turnover for the three days consisted of 32,590 shares for a value of €81,512. At the end of Friday's session, demand for 2,140 shares was at €2.51 with substantial supply of 62,960 shares at €2.55.
International Hotel Investments plc started the week slightly lower at €1.04 but gained a cent on Tuesday and another cent on Wednesday. It closed Friday stable at €1.06. Turnover for the week totaled 29,683 shares for value of €31,200. At the close of business, the price was supported by a bid for 6,317 shares at €1.06 while supply was available at €1.07.
Malta International Airport plc's (MIA) encouraging half-yearly results spurred the price to a 1.9% gain on Monday as MIA advanced to €3.12. The equity only traded again on Thursday and Friday, maintaining the €3.12 price tag to close the week 1.9% ahead on turnover of 11,027 shares for a value of €34,334. At the end of the session, bids for 2,688 shares started at €3.062 while supply of 455 shares was at €3.12.
Fimbank plc was practically unchanged at $1.87 throughout most of the week, adding half a cent on Friday to close the week at $1.875, a faint 0.3% increase on the week. Turnover was more robust than of late, with 178,058 shares changing hands for a value of €209,972.
Lombard Bank plc traded at €2.89 and €2.90 on Monday, closing unchanged at the latter price on Tuesday, as no further trades took place for the rest of the week.
Grand Harbour Marina plc (GHM), Maltapost plc (MTP) and 6PM plc (6PM) were all active only on Thursday. GHM was the only positive performer of the three, adding 2% to €2.295 on the day's five deals for 6,000 shares. MTP, on the other hand, suffered a 3.75% drop on two deals for 4,033 shares, while 6PM suffered the worst drop, down a stinging 6.7%. It is relevant to point out, however, that this was on a single deal for 565 shares for a value of just over €500.
Close-ended investment scheme Santumas Shareholdings plc, advanced 3.4% to €2.65 earning the week's top performer spot. On Friday, trading was restricted to one deal for 4,400 shares; that day the company announced that following the preliminary agreement relative to the sale of certain immovable property to a third party, this sale has come to fruition and the company will now be accounting for the sale at a value of €3,185,865 net of final withholding tax. The advance payment of €1,362,583 has been accounted for in the interim report and financial statements for the six-month period ended October 31, 2007. This value has endured up to the last published net asset value per share and this will be enhanced when the sale is accounted for as stated.
On Monday, Middlesea Insurance plc (MSI) announced that the board is scheduled to meet on August 7 to consider and approve the financial statements for the half-year ended June 30. There were no deals in MSI this week.
Global Capital plc (GCL) held its AGM on Thursday. In addition to the ordinary business, resolutions relating to the appointment of Deloitte & Touche as auditors, and the approval of the employee share scheme, its applicability to eligible directors, and the directors' authority to issue and allot shares therein will be presented to shareholders for approval. All resolutions were approved. The board of directors was appointed in accordance with the Articles of Association and Nicholas Ashford-Hodges was appointed chairman. GCL did not trade this week.
In the Government Bond market, turnover by value amounted to €7.1 million with 71 deals struck in 17 stocks. In the corporate bond market there were 22 deals for a total turnover value of €368,105. Turnover value in the Treasury Bill market totalled €2.54 million.
This report was provided by J.G.P. Bonello, managing director of Financial Planning Services Limited, of Marina Court, G. Cali Street, Ta' Xbiex, which is licensed by the MFSA to provide investment services, including stockbroking (IS/3608). The company is involved in acting as sponsoring stockbroker and corporate stockbroker. The directors or related parties, including the company and their clients, are likely to have an interest in securities mentioned. E-mail: info@ bonellofinancial.com or 2134 4243.