As global equities tumble once again this week, HSBC Bank Malta plc announced strong results for 2008 despite an expected drop in profits.
This was another horrid week for global markets as the Dow Jones Industrial Average fell by 6.55%, the FTSE 100 index fell by 7.18% while the CAC 40 in Paris and the Xetra Dax in Frankfurt fell by eight and nine per cent respectively.
On Friday, rumours of the possibility of two US banks being nationalised led to widespread selling of banking shares which led to a White House statement reassuring the markets that it was committed to a private banking system. Markets fell as concerns on the worldwide economic recession deepened.
The Malta Stock Exchange index closed at 2863.007 points, a drop of 3.60% on the week. During the week, seven equities were negotiated, with one closing in positive territory, five closing in negative territory and one remaining stable. Fimbank plc was the best performer of the week as its share price rose 0.33 per cent, while Bank of Valletta plc (BoV) lost most ground as its share price plummeted 7.91%.
During the week, 257 deals were registered on the stock exchange for a turnover of just under €7.59m. In the equity market, 130 transactions were carried out for a total of €406,103. In the corporate bond market, 69 transactions for a total of €572,096 were executed, while in the government bond market, 40 transactions were carried out for a value of over €1.65m. Seventeen transactions totalling over €4.94m in value were carried out in the Treasury Bills market.
Malta Government Stock had a good week as only one bond fell in price out of all the traded stocks, while in the corporate bond market it was a mixed week for the traded bonds. In the equity market this was another bad week for the banking shares as the markets awaited the results of HSBC Bank Malta plc (HSBC).
BoV's share price closed the week at €2.247 as 114,252 shares changed hands across 75 deals. The equity lost 1.68% on Monday, a whopping 4.13% on Tuesday, a further 1.30% on Wednesday and 1.01% on Friday. The equity traded at a high of €2.42 but retreated very quickly at end the week at a low of €2.247.
Similarly, HSBC had a bad week, loosing 6.94% to close at €2.28 as 38,467 shares werenegotiated across 40 deals. On Monday, a mere 0.04% was shaved off the bank's share price but on Tuesday it fell by two per cent. The negative trend continued on Wednesday with the price dropping 0.42% as 5,000 shares changing hands across five deals. The share price fell further on Thursday by 1.67% and another 2.98% on Friday.
On Friday, HSBC announced its annual results for the financial year which ended 31 December. Profit before tax stood at €96.1m, down €18.6m, or 16.2%, when compared with €114.6m in 2007. The bank said this was a solid result achieved after taking into account the introduction of the euro and the volatility of world financial markets.
The board recommended that the annual general meeting be held on April 1, and approved the payment of a final ordinary dividend of €0.096 gross (€0.062 net) per share on April 20 to shareholders registered with the company as at March 4.
The share price of Lombard Bank Malta plc on Thursday reached a 37-month low as it dropped 5.77% to close at €2.45 as 17,088 shares changed hands across seven deals.
Fimbank plc by contrast was the best performer of the week as its share price appreciated by 0.33% to $1.50 on a single trade of 1,260 shares.
Maltapost plc held its annual general meeting on Tuesday during which shareholders approved its final accounts as at September 2008 and a final net dividend of €0.04 per share.
The share price of Middlesea Insurance plc dropped by 0.19% to €2.575 on a single deal of 160 shares on Thursday.
Malta International Airport plc was traded on Friday and lost some ground as its share price slipped 0.08% to €2.427 when 2,800 shares changed hands across five deals.
A single deal on Friday of 200 shares left the share price of Plaza Centres plc stable at €1.68.
In an interim statement on Thursday, Crimsonwing plc said that due to the financial markets turmoil during the third quarter it has been dealing with difficult trading conditions and this challenge has continued in the final quarter of the financial year. Crimsonwing business units will show a combined operational profit for the year of circa €100,000 before exchange rate effects, and this includes an allowance for losses of around €400,000 at VDA (acquired in July 2008). It said all the business units are profitable (apart from VDA), despite the difficult global economic conditions.
The further weakening of the pound sterling against the euro in the year's fourth quarter has compounded the effect of the general economic downturn that could have a material impact on the group's profitability. Unless there is significant recovery in the exchange rate over the remaining two months until the group's financial year-end it is likely that the group will make a loss of about €400,000 on exchange that will result in the Crimsonwing plc reporting overall losses of around €300,000 as at the end of 2008. Despite this, Crimsonwing consolidated revenues are expected to reach circa €12.5m by the end of the year (at an exchange rate of £1: €1.1) - a growth of just over 30% year-on-year.
This article, which was compiled by Jesmond Mizzi Financial Services Limited (JMFS), does not intend to give investment advice and the contents therein should not be construed as such. JMFS is licensed to conduct investment services by the MFSA. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this article. For further information contact JMFS at 67/3, South Street, Valletta or on Tel: 2122 4410 or e-mail jmizzi@jmfs.net.