HSBC Bank Malta plc - Full-Year Results

Friday, February 18th, 2011

On 18 February, HSBC Bank Malta plc published its 2010 financial results. The financial statements show that the HSBC Malta Group generated a pre-tax profit of €83.1 million representing a 16.7% increase over the pre-tax profit recorded in the previous financial year. This growth in profitability is mainly attributable to improved levels of revenue particularly the 17% rise in net interest income to €122.8 million as deposits continued to re-price. Moreover the Bank also reported a 5.9% increase in net fee and commission income to €32.4 million mainly on the back of strong growth in card issuance and usage fees as well as increased business from trust and retail brokerage trading activities.

Also on the revenue side, HSBC registered a marginal increase in pre-tax profit from its life insurance business despite the challenging economic environment. In fact, the life insurance business generate a profit before tax of €12.6 million compared to a level of €11.7 million reported in 2009.

Following the investments undertaken by the Bank in various areas such as branch refurbishments, customer segmentation, channel and process migration and system improvements as well as its staff complement, HSBC incurred a 4.6% rise in operating expenses to €87.6 million. Nonetheless, the Bank’s cost efficiency ratio improved from 52.5% in 2009 to 49.7% in 2010 as revenue growth outpaced the increased expenditure.

Furthermore the Bank incurred a €1 million increase in loan impairments to €5.3 million with the ratio of non-performing loans to the overall loan book remaining low at the 3% level. After taking account of taxation, HSBC’s net profit for the 12 months ended 31 December 2010 of €53.8 million represents a 17.2% increase over the €45.9 million profits reported in the previous financial year.

On the Balance Sheet side, total assets grew by 10.6% to almost €5.7 billion as HSBC increased its exposure to treasury bills following the larger growth in deposits than in loans. In fact, loans and advances increased by €77.4 million to €3.3 billion while customer deposits increased by €376.2 million to almost €4.5 billion with a loan to deposit ratio of 74% (2009: 79%).

HSBC’s CEO Mr Alan Richards commented that 2010 was a difficult year but the Bank is “pleased with the headline results and the progress we have made in transforming the bank for sustainable long-term growth”. The CEO also commented that the local economy is performing relatively well and the Bank anticipates continued growth for the foreseeable future. However the CEO warned that challenges within the global economy remain. As such, the CEO concluded that there is still a lot to be done as 2011 will be another challenging year.

The Directors of HSBC declared a final gross dividend of €0.077 per share (net: €0.05) which together with the interim gross dividend of €0.079 per share give a total gross dividend for 2010 of €0.156 per share. If approved at the upcoming Annual General Meeting scheduled for 7 April 2011, the final dividend will be paid on 21 April to all shareholders as at close of trading on Thursday 3 March 2011.

Download a copy of the 2010 HSBC Bank Malta plc Preliminary Results.

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