HSBC Bank Malta plc - Interim Directors’ Statement

On 9 May 2019, HSBC Bank Malta plc issued an Interim Directors’ Statement on the performance of the bank in the first three months of 2019. In this respect, HSBC explained that pre-tax profits were in line with management expectations but lower than the corresponding period last year due to a higher level of expected credit loss releases registered in Q1 2018 compared to the first quarter of 2019. Moreover, although revenues from the Retail Banking segment were higher than the same period in 2018, this growth was offset by lower revenue in the Commercial Banking segment due to lower loan balances than Q1 2018 as a result of the active reduction in non-performing loans and risk-related actions that HSBC undertook in 2018. Meanwhile, the bank further explained that its effective management of non-performing exposures resulted in continued expected credit loss recoveries in both the retail and commercial divisions. In addition, the performance of the bank was boosted by certain cost reductions on the back of HSBC’s commitment towards the creation of operational efficiencies through digitalisation and process optimisation.

With respect to its balance sheet, HSBC noted that loans and advances to customers increased when compared to the end of 2018, largely reflecting strong growth in mortgages while commercial lending stabilised and also registered a marginal growth over December 2018. Furthermore, HSBC continued to maintain its robust liquidity position and took further action during the period to reduce the cost of holding surplus liquidity in the prevailing negative interest rate environment. The bank’s capital base also remained strong with all ratios above regulatory requirements.

Commenting on these results, HSBC’s CEO Mr Andrew Beane said: “In the first quarter, the bank made further progress with implementation of our strategic plan, particularly in retail banking where our growth actions are gaining traction. Investments in propositions and customer experience are yielding results with, for example, new accounts opened up more than 100% versus the prior year. In Commercial Banking we have positioned the business to reduce risk and while there were positive signs of stabilisation in the first quarter, the environment and outlook remain challenging. The local economy continues to demonstrate resilient performance and government finances are in a strong position. We welcome the actions announced by the Central Bank of Malta to promote sustainability in the housing market.”