HSBC Bank Malta plc - Interim Directors’ Statement

On 17 November 2020, HSBC Bank Malta plc issued an Interim Directors’ Statement updating the market on its performance during the nine-month period ended 30 September 2020. HSBC explained that profits before tax were lower than the same period in 2019. Although Q3 results were better than those achieved in each of the prior two quarters, the bank’s performance continues to be dented by the impact of COVID-19. HSBC reported that underlying net interest income was relatively stable when compared to the same period last year, but the bank’s revenues were negatively impacted by the losses incurred by the life assurance subsidiary mainly as a result of adverse market movements.

Expected credit losses were significantly higher than those reported in the same period last year as the bank assessed the likely impact of COVID-19 on its customers reflecting the worsening forward economic outlook due to the pandemic. On the other hand, however, operating expenses have been lower than the same period in 2019 on the back of the bank’s strategic plan aimed at increasing focus on digital banking services, modernising the branch network, and creating operational efficiencies.

Compared to December 2019, loans and advances to customers increased, driven by growth in mortgages, but commercial banking balances remained stable. Similarly, customer deposits also increased. As a result, the bank’s liquidity position remained exceptionally strong whilst regulatory capital ratios continued to exceed regulatory capital requirements.

Commenting on the performance up to September 2020, HSBC Malta’s CEO Mr Simon Vaughan Johnson explained that: “The year-to-date results were dominated by the COVID-19 pandemic, which had a negative impact on the local economy, affecting our business and that of our customers. Considering the backdrop of this pandemic, the underlying results are satisfactory. I am pleased with the continued progress on cost reduction, which reflects our efforts to apply robust cost management discipline. I am proud of the hard work, resilience and team spirit shown by my colleagues in these unprecedented times as we continue to adapt to challenges presented by COVID-19 and to a different way of living and working. As announced recently, we are making changes to our branch network and enhancements to our service offering. These initiatives are aligned to our strategic vision for ‘Safe Growth’, which runs in parallel with our drive to continue meeting and exceeding client expectations in the market we serve.”