HSBC Bank Malta plc - Interim Directors’ Statement

On 29 October 2024, HSBC Bank Malta plc issued an Interim Directors’ Statement updating the market on its performance during the nine-month period ended 30 September 2024.

The Bank explained that revenue increased by €19.0 million or 11% when compared to the comparable period last year. This was mainly driven by higher customer activity amidst the higher interest rate environment. The Directors stated that average interest rates in the first nine months of 2024 were higher than the same period in 2023.

Non-interest income increased by €2.8 million compared with the same period last year with an improvement registered in net fee income, international trade services, foreign exchange and insurance income.

The financial performance of HSBC Malta was also boosted by the improvement in the credit quality of its loan book, resulting in a release in Expected Credit Losses of €10.8 million in the first nine months of 2024, which is higher than the release of €3.7 million in the same period last year. The 2024 release reflected recovery on non-performing loans, a release of provisions held for inflationary pressures which did not materialise as well as a general improvement in the credit quality of the book.

Operating expenses increased by 12% compared to the same period last year. HSBC Malta explained that while there were some one-off items, the underlying drivers were increases in staff costs, IT expenses and real estate costs as the Bank continues to invest in people, customer experience, technology and new headquarters in Qormi. In this respect, the Bank implemented a new mortgage system and the roll-out of new ATMs also commenced.

HSBC Malta reported a profit before tax for the first nine months of 2024 amounting to €118.0 million, an increase of 17% over the €100.8 million in pre-tax profits reported in the same period last year.

In terms of financial position, HSBC Malta explained that net loans and advances to customers decreased marginally when compared to those as at 31 December 2023. Likewise, customer deposits also decreased from the end of 2023. The Bank explained that this was mainly driven by a decrease in operational corporate deposits which can be seasonal. In fact, customer deposits increased when compared to 30 September 2023.

The Directors’ statement highlighted that the Bank’s liquidity position remained strong and regulatory capital ratios continued to exceed regulatory capital requirements.

The Directors also referred to the recent announcement that that HSBC Holdings plc will undertake a strategic review of its indirect 70.03% shareholding. HSBC Holdings plc informed the Board that the review process will consider a range of options and no decisions have yet been made. The Directors remarked that Bank remains focused on running its business and will provide further updates as required.

Commenting on the performance up to September 2024, HSBC Malta’s CEO Mr Geoffrey Fichte explained that: “We continued our strong business momentum focused on supporting our customers with a 17% growth in pre-tax profit over prior year. We’re pleased to report higher customer activity, the launch of new products including in wealth management, investment funds and insurance and continued to invest in our people and technology in order to make banking simpler, easier and safer for our customers. Our levels of capital and liquidity remain robust amongst the highest in the market. HSBC remains fully open for business, providing the full range of lending services from mortgages, personal loans, cards to long term lending to companies, including energy efficiency loans. On behalf of the entire HSBC Bank Malta team, I would like to thank our customers for their business and our colleagues for their professionalism and support.”