On 31 May 2022, HSBC Bank Malta plc published a Quarterly Update providing information about its performance in Q1 2022 when compared to the same period in 2021. In this respect, HSBC explained that net interest income decreased as a result of a marginal contraction in customer loans, tighter margins, as well as an increase in cash placements at negative interest rates. In fact, customer deposits increased to €5.74 billion compared to €5.62 billion as at the end of 2021 and €5.3 billion as at 31 March 2021.
On the other hand, HSBC reported improvement in net fee income driven by increased activity across cards, payments, and foreign exchange. Nonetheless, total revenues still contracted by €6.2 million largely due to adverse movements in the value of financial assets which had a negative impact of circa €5 million on the contribution from the insurance subsidiary (compared to a fair value gain of €13.8 million in Q1 2021).
On the expenditure side, HSBC noted that it continued to implement effective cost management discipline as operating expenses dropped by €1.1 million. In this respect, the Bank added that cost savings also continued to be realised through the implementation of the transformation programme rolled out in mid-2021 as well as lower regulatory fees. Meanwhile, expected credit losses were broadly maintained at the levels booked as at 31 December 2021 whilst a marginal release for the retail business was taken in view of the improvement in customers’ performance.
Overall, HSBC reported a profit before tax of €4.8 million compared to €9.9 million in Q1 2021 which, in turn, translates into an annualised post-tax return on average equity of less than 3%.
In terms of financial position, HSBC explained that its liquidity position remained strong and regulatory capital ratios continued to exceed requirements. Nonetheless, the Russian invasion of Ukraine has led to elevated geopolitical, financial, and economic instabilities. While the Bank has very limited exposure to Russia or Russian nationals, it is using its sanctions compliance capabilities to respond to the new sanctions regulations. HSBC noted that it will continue to closely monitor the situation as this unfolds further.
Commenting on the results, HSBC Malta’s CEO Mr Simon Vaughan Johnson explained that: “Whilst profits decreased compared to Q1 2021 due to the marked increase in financial market volatility over the period, we continue to successfully implement our strategy. In Q1 2022, we launched the new cards platform which provides customers with enhanced features, services, and security. The card fraud management system has also been upgraded, enabling us to better protect our customers and the bank.”
“We continue to implement our Environmental, Social and Governance (‘ESG’) strategy. We have commenced work on the transformation of our offices in Qormi which is currently the biggest real-estate project of its kind for HSBC in Europe. This important capital investment in Malta will create a modern, fit-for-purpose business environment for all who work in or visit the campus and will facilitate a number of carbon net zero initiatives that are fully aligned to our published targets.”