On 13 May, HSBC Bank Malta plc published its Interim Statement giving a review of the Bank’s performance since the start of the year. The Directors stated that HSBC Malta continued to perform well with revenue and profits in line with expectations. Nonetheless, the Bank has experienced a slowdown in the demand for loans due to prevailing economic conditions and increasing competition. HSBC noted that the level of deposits remained stable despite the competitive pressures in the market including stock issues by the Government of Malta.
Costs also increased during the period under review as the Bank continued to expand its business and transform its operations. However, the cost efficiency ratio remained broadly in line with that of that of the second half of 2010 as the growth in operating income outpaced the increase in costs.
Given the current economic scenario, loan impairments increased slightly over the same period last year but were lower than expected. HSBC Malta also incurred negative fair value markdowns on its available-for-sale portfolio as the renewed stress in the Eurozone and inflationary pressures caused spreads on EU sovereign paper to widen. This charge was directly deducted from revaluation reserves and does not impact the Group’s overall profitability level.
HSBC also confirmed that it maintained its strong liquidity position and a stable loans-to-deposit ratio together with capital ratios which are well above regulatory requirements.
The Bank’s CEO, Mr Alan Richards, stated the Board of Directors is encouraged by the Bank’s positive performance during the period under review. Looking forward, Mr Richards explained that the local economy continues to perform relatively well although a prolonged crisis in Libya may adversely impact Malta’s GDP growth rates. Moreover, in the short-term, risks to global growth remain including the elevated oil price and the uncertainty across the Eurozone.