HSBC Bank Malta plc - Interim Directors’ Statement

On 22 November 2019, HSBC Bank Malta plc issued an Interim Directors’ Statement updating the market on the bank’s performance since the start of 2019. In this respect, HSBC explained that, consistent with the interim results, the bank’s profit before tax was higher than the same period in 2018. On the negative side, revenues remained under downward pressure as the positive momentum in Retail Banking was offset by lower income from Commercial Banking due to the lower average loan balances as a result of the active reduction in non-performing loans and risk-related actions pursued in 2018. Moreover, revenue at the HSBC Life Assurance subsidiary was also adversely impacted by negative market movements during the third quarter of 2019.

On the other hand, expected credit losses remained well within management expectations and below 2018. In this respect, overall asset quality remained satisfactory with further reduction in non-performing loans achieved during the period.

In line with the interim results, operating expenses were lower than the same period in 2018 reflecting the bank’s continuous focus on cost control. Compared to December 2018, loans and advances to customers increased, driven by strong growth in mortgages. Customer deposits increased marginally since December 2018. The bank’s liquidity position remained exceptionally strong and regulatory capital ratios continued to exceed requirements.

Commenting on the bank’s performance, HSBC Malta CEO Mr Andrew Beane explained that: “Our profitability is higher than the same period in 2018 reflecting continued trading momentum in our retail business and strong cost and credit discipline. However, the operating environment has deteriorated since our last update with further reductions in interest rates which are now expected to remain low for the long term. At the same time we have observed acceleration in customer preference for digital banking solutions. Accordingly, and as announced in October, HSBC is taking decisive strategic action to position the bank to benefit from the changing customer usage of banks and to reduce the impact of negative interest rates on the bank’s profitability. I believe these are the right strategic choices to ensure the bank’s longer term success.”