HSBC Malta announces €53 million pre-tax profit for interim 2013

HSBC Bank Malta plc delivered a resilient performance in the six months ended 30 June 2013 reporting a profit before tax of €53 million in line with the comparable period in 2012.

The bank said this was principally the result of strong balance sheet management, effective cost control and a good performance from the life business offset by the impact of lower interest margin earned.

"We have continued to deliver resilient results for our shareholders against a very challenging European backdrop. Global conditions look to remain difficult for the medium term," CEO Mark Watkinson said.

"However as part of one of the world's largest banking groups, operating in 80 countries and territories, HSBC Malta is well positioned to assist its customers explore opportunities in some of the world's faster growing markets."

The board is declaring an interim gross dividend of 10.0 cent per share (6.5 cent net of tax). This will be paid on 5 September 2013 to shareholders who are on the bank's register of shareholders at 16 August 2013.

All the three main business lines, retail banking and wealth management, commercial banking and global banking and markets, were profitable during the period under review.

Net interest income reduced by 6% to €63 million compared with €68m in the first half of 2012. The fall in net interest income reflected the impact of lower yields as the loan portfolio repriced in the low interest environment and lower average lending balances. This was partially offset by a fall in the cost of funds resulting from a move by customers to more readily accessible, shorter-dated deposits.

In addition, a lower level of interest income was earned on debt securities as the proceeds of higher yielding maturing bonds were re-invested at lower yields.

Net fee and commission income of €16m for the six months ended 30 June 2013 was in line with first half of 2012.

HSBC Life Assurance (Malta) Ltd reported a profit before tax of €8m compared with €7m in the first half of 2012 reflecting a release in with profits modelling reserves as a result of improved product performance.

A net gain of €4m was reported on a higher level of disposals of available-for-sale securities compared to a net gain of €2m in the comparable period in 2012.

Operating expenses at €45m were well controlled and broadly in line with the first half of 2012. The increase of €1 million, or 9%, in administrative expenses reflected a higher contribution by the bank to the depositor guarantee scheme and a rise in compliance, security and fraud-risk related costs.

The continued investment to improve technology capabilities was funded by savings from simplification and re-engineering of processes. Cost efficiency ratio at 45.9% is in line with last year's ratio of 45.4%.

Loan impairments at €800,000 were in line with the comparable period in 2012. At a bank level, non-performing loans remained stable at 5% of gross loans and asset quality remains generally good.

Net loans and advances to customers at €3,336 million were only €18 million lower than at 31 December 2012. In spite of a softening in loan demand the bank provided gross new lending to customers of €318 million in the period, which the bank said reflected its continued support to the local economy.

Customer deposits declined by €70 million to €4,447 million, which the bank said reflected the normal volatility of corporate and institutional deposits. This fall was partially offset by higher levels of retail deposits achieved despite the heightened competition for deposits.

"The bank's available-for-sale investment portfolio remains well diversified and conservatively positioned. The bank's liquidity position remains strong with an advances-to-deposits ratio of 75% compared with 74% at 31 December 2012," HSBC said in its company statement.

"The bank continued to strengthen its capital ratio which was 12.9% at 30 June 2013, comfortably exceeding the 8% minimum regulatory capital requirement. The bank intends to maintain a conservative approach to capital and will continue to build its capital where considered appropriate."