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HSBC Bank Malta plc – Full-Year Results

Jonathan Falzon

February 19, 2025

19 February, 2025
7 min read
19 February, 2025
7 min read

Following last week's article detailing the performance of the S&P 500 index in 2025, it is worth devoting time to review the developments across the European equity markers in my last article of the year.

Financial Performance

On 19 February 2025, HSBC Bank Malta plc published its Annual Report for the financial year ended 31 December 2024.

Net interest income increased by 5.2% to €206.1 million (2023: €195.8 million) as the 8.5% (or €18.2 million) increase in gross interest income to €232.1 million outweighed the higher level of interest costs which surged by 44% (or €7.9 million) to €26.0 million.  The Bank explained that the increase in net interest income was largely driven by higher interest rates as well as the higher level of average customer deposits held throughout the year.

Excluding insurance operations, non-interest income increased by 12.6% to €30.5 million higher net fee income and net trading income.

Furthermore, HSBC Life Assurance (Malta) Limited reported a profit before tax of €14.4 million compared to €6.2 million in 2023. The improvement in profitability was attributed to a re-assessment of a tax obligation estimate on the with-profit portfolio. The performance of the insurance company also benefitted from positive market movements.

The Group’s net operating income before changes in expected credit losses (ECL) climbed by 9.0% to €252.6 million compared to €231.7 million in the last financial year.

The financial performance was also boosted by the release of ECL’s amounting to €14.6 million, which was higher than the release of €4.6 million in the previous year. HSBC Malta explained that the release of 2024 was across retail and commercial banking and reflected various factors including an improved economic outlook.

On the expenditure side, operating costs rose by 10% to €112.8 million as the Group continued with investments in human resources, IT infrastructure, and its new headquarters.

Overall, HSBC Malta reported a profit before tax of €154.5 million, which is 15.4% higher than the pre-tax profit of €133.9 million generated in the previous year. After accounting for a tax charge of €54.4 million, the net profit for the year amounted to a record of €100.1 million (equivalent to €0.2778 per share) which translates into a return on average equity of 17.5%.

The Statement of Financial Position as at 31 December 2024 showed that total assets increased by 1.1% (or €80.8 million) to €7.74 billion. Financial investments increased by 74% (or €975 million) to €2.29 billion. In contrast, customer loans dropped by 6.8% (or €211 million) to €2.87 billion and balances with the Central Bank of Malta, treasury bills and cash declined by 36% (or €603 million) to €1.07 billion.

On the liabilities side, customer deposits remained virtually unchanged at €6.16 billion. As a result of the contraction in customer loans, the loans-to-deposits ratio dropped to a multi-year low of 46.7%.

Total equity increased by 10.7% to €600.9 million. This translates into a net asset value per share of €1.6678 compared to €1.5071 as at 31 December 2023. The bank’s capital ratios strengthened with the Common Equity Tier 1 capital ratio increasing to 22.6% from 20.6% as at 31 December 2023. Similarly, the Total Capital Ratio rose to 25.6% from 23.5% as at the end of 2023. HSBC Malta noted that it continues to have a strong capital base and is fully compliant with regulatory capital requirements.

 

Dividend

The Board of Directors is recommending a final net dividend of €0.078 per share. The dividend will be paid on 20 May 2025 to all shareholders as at close of trading on 9 April 2025 subject to approval by the Annual General Meeting scheduled for 13 May 2025.

Coupled with the net interim dividend of €0.065 per share paid in September 2024, the total net dividend attributable for the 2024 financial year amounts to €0.143 per share, which represents a payout ratio of 51.5% (2023: 40.5%) and is the highest dividend in over a decade.

Outlook

HSBC Malta’s CEO Mr Geoffrey Fichte stated that looking ahead, HSBC will remain focused on growing and improving business to support the dynamic needs of the customers and the community, while delivering strong returns to shareholders. He explained that the Bank will continue to invest in continuous improvements to make banking easier and simpler for customers, with the upgrade of the ATM network expected to be completed by the end of 2025.

The CEO noted that although HSBC Bank Malta’s major shareholder (HSBC Continental Europe) is reviewing its strategic options regarding its shareholding in HSBC Malta, no decisions have been made at this stage and the market will be kept informed in accordance with local Capital Market Rules.

The article contains public information only and is published solely for informational purposes. It should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in this article. Rizzo, Farrugia & Co. (Stockbrokers) Ltd (“Rizzo Farrugia”) is under no obligation to update or keep current the information contained herein. Since the buying and selling of securities by any person is dependent on that person’s financial situation and an assessment of the suitability and appropriateness of the proposed transaction, no person should act upon any recommendation in this article without first obtaining investment advice. Rizzo Farrugia, its directors, the author of this article, other employees or clients may have or have had interests in the securities referred to herein and may at any time make purchases and/or sales in them as principal or agent. Furthermore, Rizzo Farrugia may have or have had a relationship with or may provide or has provided other services of a corporate nature to companies herein mentioned. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security mentioned in this article. Neither Rizzo Farrugia, nor any of its directors or employees accepts any liability for any loss or damage arising out of the use of all or any part of this article. Additional information can be made available upon request from Rizzo, Farrugia & Co. (Stockbrokers) Ltd., Airways House, Fourth Floor, High Street, Sliema SLM 1551. Telephone: +356 2258 3000; Email: info@rizzofarrugia.com; Website: www.rizzofarrugia.com © 2021 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved. This article may not be reproduced or redistributed, in whole or in part, without the written permission of Rizzo Farrugia. Moreover, Rizzo Farrugia accepts no liability whatsoever for the actions of third parties in this respect.

This article was produced by Edward Rizzo, Director at Rizzo Farrugia, which is a company licensed to undertake investment services in Malta by the MFSA under the Investment Services Act, Cap. 370 of the Laws of Malta and a member of the Malta Stock Exchange. The company’s registered address is at Airways House, Fourth Floor, High Street, Sliema SLM 1551, Malta.

The article contains public information only and is published solely for informational purposes. It should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in this article. Rizzo, Farrugia & Co. (Stockbrokers) Ltd (“Rizzo Farrugia”) is under no obligation to update or keep current the information contained herein. Since the buying and selling of securities by any person is dependent on that person’s financial situation and an assessment of the suitability and appropriateness of the proposed transaction, no person should act upon any recommendation in this article without first obtaining investment advice. Rizzo Farrugia, its directors, the author of this article, other employees or clients may have or have had interests in the securities referred to herein and may at any time make purchases and/or sales in them as principal or agent. Furthermore, Rizzo Farrugia may have or have had a relationship with or may provide or has provided other services of a corporate nature to companies herein mentioned. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security mentioned in this article. Neither Rizzo Farrugia, nor any of its directors or employees accepts any liability for any loss or damage arising out of the use of all or any part of this article. Additional information can be made available upon request from Rizzo, Farrugia & Co. (Stockbrokers) Ltd., Airways House, Fourth Floor, High Street, Sliema SLM 1551. Telephone: +356 2258 3000; Email: info@rizzofarrugia.com; Website: www.rizzofarrugia.com © 2021 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved. This article may not be reproduced or redistributed, in whole or in part, without the written permission of Rizzo Farrugia. Moreover, Rizzo Farrugia accepts no liability whatsoever for the actions of third parties in this respect.

This article was produced by Edward Rizzo, Director at Rizzo Farrugia, which is a company licensed to undertake investment services in Malta by the MFSA under the Investment Services Act, Cap. 370 of the Laws of Malta and a member of the Malta Stock Exchange. The company’s registered address is at Airways House, Fourth Floor, High Street, Sliema SLM 1551, Malta.

On 19 February 2025, HSBC Bank Malta plc published its Annual Report for the financial year ended 31 December 2024.

Net interest income increased by 5.2% to €206.1 million (2023: €195.8 million) as the 8.5% (or €18.2 million) increase in gross interest income to €232.1 million outweighed the higher level of interest costs which surged by 44% (or €7.9 million) to €26.0 million.  The Bank explained that the increase in net interest income was largely driven by higher interest rates as well as the higher level of average customer deposits held throughout the year.

Excluding insurance operations, non-interest income increased by 12.6% to €30.5 million higher net fee income and net trading income.

Furthermore, HSBC Life Assurance (Malta) Limited reported a profit before tax of €14.4 million compared to €6.2 million in 2023. The improvement in profitability was attributed to a re-assessment of a tax obligation estimate on the with-profit portfolio. The performance of the insurance company also benefitted from positive market movements.

The Group’s net operating income before changes in expected credit losses (ECL) climbed by 9.0% to €252.6 million compared to €231.7 million in the last financial year.

The financial performance was also boosted by the release of ECL’s amounting to €14.6 million, which was higher than the release of €4.6 million in the previous year. HSBC Malta explained that the release of 2024 was across retail and commercial banking and reflected various factors including an improved economic outlook.

On the expenditure side, operating costs rose by 10% to €112.8 million as the Group continued with investments in human resources, IT infrastructure, and its new headquarters.

Overall, HSBC Malta reported a profit before tax of €154.5 million, which is 15.4% higher than the pre-tax profit of €133.9 million generated in the previous year. After accounting for a tax charge of €54.4 million, the net profit for the year amounted to a record of €100.1 million (equivalent to €0.2778 per share) which translates into a return on average equity of 17.5%.

The Statement of Financial Position as at 31 December 2024 showed that total assets increased by 1.1% (or €80.8 million) to €7.74 billion. Financial investments increased by 74% (or €975 million) to €2.29 billion. In contrast, customer loans dropped by 6.8% (or €211 million) to €2.87 billion and balances with the Central Bank of Malta, treasury bills and cash declined by 36% (or €603 million) to €1.07 billion.

On the liabilities side, customer deposits remained virtually unchanged at €6.16 billion. As a result of the contraction in customer loans, the loans-to-deposits ratio dropped to a multi-year low of 46.7%.

Total equity increased by 10.7% to €600.9 million. This translates into a net asset value per share of €1.6678 compared to €1.5071 as at 31 December 2023. The bank’s capital ratios strengthened with the Common Equity Tier 1 capital ratio increasing to 22.6% from 20.6% as at 31 December 2023. Similarly, the Total Capital Ratio rose to 25.6% from 23.5% as at the end of 2023. HSBC Malta noted that it continues to have a strong capital base and is fully compliant with regulatory capital requirements.

Dividend

The Board of Directors is recommending a final net dividend of €0.078 per share. The dividend will be paid on 20 May 2025 to all shareholders as at close of trading on 9 April 2025 subject to approval by the Annual General Meeting scheduled for 13 May 2025.

Coupled with the net interim dividend of €0.065 per share paid in September 2024, the total net dividend attributable for the 2024 financial year amounts to €0.143 per share, which represents a payout ratio of 51.5% (2023: 40.5%) and is the highest dividend in over a decade.

Outlook

HSBC Malta’s CEO Mr Geoffrey Fichte stated that looking ahead, HSBC will remain focused on growing and improving business to support the dynamic needs of the customers and the community, while delivering strong returns to shareholders. He explained that the Bank will continue to invest in continuous improvements to make banking easier and simpler for customers, with the upgrade of the ATM network expected to be completed by the end of 2025.

The CEO noted that although HSBC Bank Malta’s major shareholder (HSBC Continental Europe) is reviewing its strategic options regarding its shareholding in HSBC Malta, no decisions have been made at this stage and the market will be kept informed in accordance with local Capital Market Rules.