HSBC Bank Malta has reported a profit before tax of €42.2 million for the six months which ended on June 30.
This represented an increase of 21.4 per cent or €7.4 million compared to same period in 2009, substantially driven by an improved level of revenues while keeping costs flat.
Net interest income increased by 26.2 per cent to €60.8 million, compared to €48.2 million in the first half of 2009, as a result of the re-pricing of loans last year and the unwinding of term deposits.
However, liability margins remained under pressure given the low interest rate environment.
Net fees and commission income of €16.9 million for the six months which ended on June 30 increased by 11.2 per cent or €1.7 million compared to €15.2 million recorded in the first half of 2009.
Strong growth was recorded in lending, card issuance and usage fees and from trust and retail brokerage trading activities.
Profits from life insurance business, weakened by recent market conditions, at €3.7 million for the first half of 2010 was 32.5 per cent lower than for the same period in 2009.
Operating expenses of €40.8 million for the six months which ended on June 30 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.
Net loan impairments charges of €1.4 million were reported for the six months which ended on June 30 compared to a release of €0.9 million in the comparable period in 2009.
Total assets grew by €489 million to €5,606.8 million, compared to €5,117.8 million at 31 December 2009. The main increases were reported in treasury bills and debt securities investments as part of the bank’s liquidity management.
The credit quality of the available-for-sale investments portfolio remained satisfactory with an increase in fair value of €6.8 million during the current period compared to €3.8 million for the six months ended 30 June 2009. This increase in fair value is credited directly to the revaluation reserve, net of tax.
During the first half of 2010 net loans and advances to customers fell by €22.1 million as, in the current economic environment, borrowers looked to reduce debt levels.
However, where lending opportunities arose, the bank continued to support its customers’ financial needs while maintaining asset quality.
Consumer lending showed resilience and good growth was registered in new mortgages.
Demand for corporate lending was soft. The quality of the lending portfolio showed a marginal deterioration with non-performing loans representing 3.2 per cent of gross loans as at June 2010 compared to 2.9 per cent as at December 31, 2009. Liquidity and capital ratios remain strong and are well above regulatory requirements.
In a period of growing competitive pressures, characterised by a number of local government and corporate bond issues, deposit levels of €4.1 billion were maintained. The bank’s liquidity position remaineds strong with an advances-to-deposits ratio of 77.3 per cent, compared with 79 per cent at December 31.
HSBC CEO Alan Richards said:
“We are encouraged by the bank’s strong performance during the first half of 2010. After a period of negative GDP growth, the local economy is showing clear signs of stability and we anticipate continued growth in the foreseeable future.
“However, challenges within the international economy remain and the broader Eurozone recovery is at best fragile, as the recent sovereign bond crisis has highlighted.
“We have made good progress during these six months and we continue to emphasise our competitive advantage as an international bank. We remain well capitalised, liquid and very much open for business.”
The board declared an interim gross dividend of €0.07,9 per share (€0.05,1 net of tax).
This will be paid on August 24 to shareholders on the bank’s register of shareholders as at August 10.
Highlights
• Profit before tax of €42.2 million for the six months ended 30 June 2010 – an increase of 21.4 per cent, or €7.4 million, compared with €34.8 million for the same period in 2009.
• Profit attributable to shareholders increased by 21.8 per cent, or €4.9 million, to €27.4 million, compared with €22.5 million in the comparable period in 2009.
• Earnings per share for the six months ended 30 June 2010 were 9.4 euro cent, compared with 7.7 euro cent for the same period in 2009.
• Total assets of €5,606.8 million at 30 June 2010, an increase of €489.0 million, or 9.6 per cent, compared with 31 December 2009.
• Loans and advances to customers were €3,204.3 million at 30 June 2010, a decrease of €22.1 million, or 0.7 per cent, compared with 31 December 2009.
• Customer deposits were €4,146.0 million at 30 June 2010, an increase of €59.4 million, or 1.5 per cent, compared with 31 December 2009.
• Return on equity for the six months ended 30 June 2010 was 16.9 per cent, compared with 15.6 per cent for the first half of 2009.