HSBC Bank Malta plc - Interim Results

On 31 July 2024, HSBC Bank Malta plc published its interim results covering the six-month period ended 30 June 2024.

Net interest income rose by 19% to €106.6 million (H1 2023: €89.7million) driven by the strong growth in gross interest income (+23%% to €119.7 million), which offset the higher interest expense (+69% to €13.1 million). In this respect, HSBC explained that the performance benefitted from higher average interest rates in the first half of 2024 compared to those prevailing in the corresponding period in 2023.

Meanwhile, non-interest income surged by 27.3% to €21.1 million (H1 2023: €16.6 million) mostly driven by an improved performance of HSBC Life Assurance (Malta) Ltd which reported a profit of €4.5 million compared to €1.6 million reported in the same period last year. The improvement largely relates to positive movements on the prices of financial securities.

On the expenditure side, total operating costs increased by 13.3% to €56.1 million (H1 2023: €49.5 million) with the material drivers being higher staff costs, IT expenses and real estate costs. Nonetheless, due to the Group’s improved performance the cost-to-income ratio improved to 43.9% from 46.6% in the first half of last year.

The financial performance was also positively impacted by a net reversal of expected credit losses of €7.0 million, which higher than the reversal of €2.6 million recorded in the same period last year. The 2024 reversal reflected a release of provisions held for inflationary pressures as well as an improvement in credit quality.

HSBC’s profit before tax surged by 32.6% to a record of €78.6 million compared to €59.3 million in the first half of the previous year. After accounting for a tax charge of €27.9 million, HSBC reported a net profit of €50.7 million (H1 2023: €38.5 million) which translates into an annualised return on average equity of 18.3% (H1 2023: 16.2%).

The Statement of Financial Position as at 30 June 2024 compared to the financial position as at 31 December 2023 shows that total assets remained practically unchanged at €7.7 billion. Customer loans decreased by about €100 million to €2.98 billion and balances with the CBM, T-Bills and cash dropped by €177 million to €1.5 billion. Meanwhile, financial investments increased by almost €400 million to €1.7 billion. Total liabilities also remained practically unchanged at €7.1 billion principally composed of customer deposits, which declined minimally by €83 million to €6.1 billion. As a result, the loan-to-deposit ratio decreased slightly to 49.2% from 50.2% in December 2023. Shareholders’ funds amounted to €575.7 million which translates into a net asset value per share of €1.5977. The Bank’s capital ratios strengthened with the Common Equity Tier 1 capital ratio standing at 21.1% (31 December 2023: 20.6%) and the Total Capital ratio at 24.1% (31 December 2022: 23.5%).

Dividend

The Board of Directors declared a net interim dividend of €0.065 per share, which represents the highest interim dividend paid by HSBC Malta in over 10 years. The dividend is payable on 17 September 2024 to all shareholders as at close of trading on 13 August 2024.

Outlook

HSBC Malta’s CEO Mr Geoffrey Fichte explained that the Company is growing revenue across all its businesses and continuing to invest for the long term with a focus on robust management of risk and high-quality long-term customer relationships. Furthermore, he explained that HSBC signed a three-year collective agreement to energise talent on customer service. The CEO also mentioned that HSBC had accelerated investments in technology, sustainability, and new ATMs to support customers.