HSBC Bank Malta plc - Full-Year Results
On 4 March, HSBC Bank Malta plc published its financial statements covering the year ended 31 December 2012 revealing an 8% increase in pre-tax profits to €95.3 million.
Performance Review
Net interest income grew by 3% to €133.1 million reflecting the growth in mortgage lending and improved results from management of the balance sheet. Meanwhile, non-interest income decreased by 1.6% to €64.6 million as the one-off gain registered in 2011 from the sale of the Group’s card acquiring business was not repeated during the year under review. Net fees and commission income dropped by 9.1% to €30.5 million reflecting lower card fees following the sale of the card acquiring business. However, this was mainly offset by the 63.6% improvement in the pre-tax profit of the Group’s life assurance business to €18 million and the 12.2% increase in trading profits to €9.3 million. Overall, the HSBC Malta Group registered a 1.4% increase in net operating income to €197.7 million.
On the expenditure side, HSBC Malta reported a 2% drop in its cost base to €96.3 million largely linked with the continued restructuring of the Group which offset the increase in amortisation costs related to the implementation of a new IT system. This also led to an improvement in the Group’s cost to income ratio from 50.4% in 2011 to 48.7% in 2012.
As a result, operating profits before impairment allowances amounted to just under €101 million representing a 4.6% increase over the comparable period and the highest level in the last five years.
Impairment allowances decreased by 31.7% to €5.6 million. However, it is important to highlight that the 2011 figure comprised a one-off impairment of €4 million taken on the Greek government bonds held by the life insurance subsidiary which was not repeated in 2012. In fact, loan impairments increased by €1 million to €5 million given the prevailing challenging economic environment. Non-performing loans remained stable at 5% of gross loans.
This led to a pre-tax profit figure of €95.3 million representing an 8% increase over last year’s figure and after accounting for a tax charge of €33.7 million (2011: €30.7 million), the Group’s net profit for 2012 amounted to €61.6 million representing a 7% increase over the previous year’s figure.
The balance sheet as at 31 December 2012 shows a 2.6% increase in deposits to €4,517 million and a meagre 0.3% increase in customer loans to €3,354 million. As a result, the advances to deposit ratio drifted to 74.3% from 76% in 2011. Shareholders’ funds surpassed the €400.6 million level for the first time in the Group’s history leading to a capital ratio of 12.4% – substantially higher than the required regulatory minimum.
Outlook
The Group’s CEO Mark Watkinson stated that HSBC Malta delivered another positive set of results in spite of the continued turmoil in the Eurozone, a low interest rate environment, heightened competition and softening demand. The CEO also explained that such challenges are expected to remain throughout 2013 and although the Maltese economy has proved to be very resilient, vigilance must be maintained.
Dividend
The Directors proposed a final gross dividend of €0.079 per share (net: €0.051) to all shareholders as at close of trading on Wednesday 13 March. The final dividend will be paid out on 27 April subject to shareholders’ approval during the upcoming Annual General Meeting scheduled to be held on 18 April 2013.
Combined with the gross interim dividend of €0.10 per share (paid out in August 2012), the total gross dividend with respect to the financial year ended 31 December 2012 amounts to €0.179 representing a 16.2% increase over the previous year’s total dividend.
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