On 27 July, HSBC Bank Malta plc published its financial statements for the six months ended 30 June 2012. The half-year results reveal a 5.3% increase in net interest income to €67.6 million on the back of higher income from the Bank’s fixed income instruments as well as growth in the mortgage book achieved in the second half of 2011.
On the other hand, HSBC reported a 3.5% decline in non-interest income to €31.4 million for the first six months of 2012. This reflects the 6.7% drop in net fee and commission income to €15.8 million following the sale of the card acquiring business in December 2011. Moreover, the profit from the life assurance subsidiary dropped from €13 million during the first half of 2011 to €7 million during the period under review. However, the comparative figure includes a one-time gain of €7 million resulting from an accounting change (in line with HSBC’s global policy) in the life assurance subsidiary. These declines offset the 10% growth in foreign exchange business to €4.5 million and the €2.2 million gain on disposal of ‘available for sale financial instruments’ compared to the loss of €3.7 million recorded in the comparable period last year.
Overall, the HSBC Malta Group achieved a 2.4% rise in net operating income to a record €99.1 million.
Nonetheless, the rise in income was offset by increases in the Group’s cost base. Administrative expenses increased by 5.5% to €41.6 million although this was mainly due to the one-off release of a provision of staff costs in the first half of 2011. In fact, on a like-for-like basis, costs during the first six months of 2012 were broadly in line with the comparable period last year. Meanwhile, depreciation and amortisation grew by 10.1% to €3.3 million reflecting the Group’s investment in its IT infrastructure. The cost to income ratio was reported at 45.4% (H1 2011: 43.8%).
The Group’s operating profit before impairments amounted to €54.2 million which was marginally below the €54.6 million registered in the first half of 2011. Loan impairments amounted to only €0.80 million (representing just 0.05% of the overall loan book) compared to €1.8 million in the first six months of 2011 following some modest recoveries. The Group’s income statement also benefitted from the non-recurrence of a €2 million impairment on the ‘available for sale’ portfolio.
As a result, profit before tax amounted to €53.3 million representing a 5.9% increase over last year’s comparable figure. After accounting for a tax charge of €18.8 million, the net profit attributable to shareholders of €34.5 million (earnings per share of €0.1182) is also 6% higher compared to €32.6 million in the first half of 2011.
The balance sheet reveals that net loans and advances to customers increased marginally by €20 million to €3.36 billion as the mortgage market share remained stable despite a slight softening in demand for loans given the prevailing challenging economic conditions. On the other hand, customer deposits grew by €257 million to €4.66 billion mainly reflecting an increase in corporate and institutional deposits. As a result, the advances to deposits ratio dropped to 72% from 76% as at 31 December 2011. Apart from maintaining a strong liquidity position ,the Bank is also well capitalised with a capital ratio of 11.8% which is above the minimum regulatory requirement of 8%. The Tier 1 ratio continued to improve and was at 7.8% as at 30 June 2012.
In conclusion, the Group’s CEO Mark Watkinson stated that despite the difficulties being encountered by the Group due to the prevailing difficulties in Europe, the HSBC Malta Group maintains a clear strategy focused around simplifying its business, reducing bureaucracy and improving efficiency.
The Directors declared a gross interim dividend of €0.10 per share representing a 22% increase over last year’s interim dividend of €0.082 per share. Shareholders as at the close of trading on Friday 3 August will be eligible to receive this dividend which will be paid on 22 August.
Download a copy of the HSBC Bank Malta plc 2012 Interim Results