HSBC Bank Malta plc - Interim Results Publication

The Board of Directors of HSBC Bank Malta p.l.c. today announced the financial results for the six months ended 30 June 2004.

During the first six months of the year HSBC Bank Malta plc and its subsidiaries generated net interest income of Lm19 million, 10.4% higher than the Lm17.2 million earned during the same six months of last year. The Group’s net interest margin improved from 47.7% to 57.8%. Non-interest income increased by Lm1.5 million (15.5%) to Lm10.8 million, mainly as a result of net gains on disposal of non-trading financial instruments. Net fees and commissions receivable improved by 4.7% to Lm5.2 million. The Group’s total operating income increased by 12.2% during the review period to Lm29.8 million. Administrative expenses increased by 5% to Lm12.9 million. According to the Directors this was due to higher indirect taxes, new local regulatory fees, early voluntary retirement benefits and increased use of Group systems and processes overseas. The cost to income ratio improved from 50.8% in June 2003 to 47.8%.

The Group operating profit before impairment adjustments increased by 19.4% to Lm15.4 million. There was a net release in impairment provisions of Lm4.4 million. In the announcement of results, the Directors note that during the review period new specific provisions of Lm1.9 million were raised and bad debt write-offs of Lm2.1 million were effected. However due to an overall improvement in the credit quality of the lending book, there was a release of Lm8.6 million in specific provisions.

Group profit before tax amounted to Lm19.9 million, a 56.5% rise over the Lm12.7 million earned in the first six months of 2003. Similarly, profit after tax increased by 56.3% to Lm13.2 million, with earnings per share increasing from 23c2 to 36c2 per share.

The Group balance sheet as at the end of June 2004 shows a 2.8% increase in loans and advances to customers now totalling Lm948.7 million, with customer deposits increasing by Lm36.3 million (2.9%) to a level of Lm1,304 million. Shareholders’ funds as at the end of June amounted to Lm137.4 million resulting in a net asset value per share of Lm3.767.

The directors have declared an interim dividend of 19c4 per share (2003: 10c8), together with a special dividend of 35c4 per share, resulting in a total gross interim dividend of 54c8 per share. This dividend, net of tax, will be payable to all shareholders on the Company’s register as at close of trading on Friday 30 July 2004, and therefore the equity starts trading XD as from Monday 2 August.