HSBC Bank Malta reports lower profit, shifts focus to growth

The profit before tax for the six months ended 30 June of HSBC Bank Malta plc amounted to €16.2m, a decrease of €9.8m or 38% compared with the same period last year. The performance during the first six months of 2018 mainly reflected the continuing impact of low interest rates and prioritisation of risk management actions during 2017.

Profit attributable to shareholders amounted to €14.3m resulting in earnings per share of 4.0 cents compared with 4.7 cents in the first half of 2017. The board proposes to maintain the current dividend pay-out ratio of 65% and recommends an interim gross dividend of 4.0 cents per share (2.6 cents per share net of tax). The interim dividend will be paid on 18 September to shareholders who are on the bank’s register as at 17 August.

All three main business lines, Retail Banking and Wealth Management, Commercial Banking, and Global Markets, continued to be profitable during the six month period under review. Andrew Beane, Director and Chief Executive Officer of HSBC Malta, said: “Our profitability in the first half of 2018 was lower than the prior year reflecting four main factors: (1) The impact of essential de-risking actions taken during 2017. (2) The ongoing effect of negative interest rates. (3) Loan impairments arising where the sale of assets pledged as security by corporate borrowers in default for many years have been delayed by lengthy judicial processes which make the recovery of liabilities a very protracted exercise. (4) From investment in regulatory and risk programmes such as GDPR and customer due diligence.

“Looking to the future, the substantive elements of HSBC’s business model transformation are now complete and this enables the bank to move into a new strategic phase characterised by a return to growth and value creation. Over time, and without increasing our risk appetite, HSBC Malta will focus on growing revenue faster than costs in order to increase our return on tangible equity and, subject to our ongoing capital management processes, sustain our signature dividend,” Mr Beane said.