HSBC Malta has reported profit before tax of €20.9m for the six months ended June 30, 2019, an increase of €4.8m or 30% compared with the same period last year.
It said on Monday that 2019 results have benefited from the non re-occurrence of a significant expected credit loss taken in 2018.
In its financial performance report, HSBC said its common equity tier 1 capital ratio was 16.2% as at June 30, 2019, up from 14.6% at the end of 2018 and well above regulatory requirements.
The cost-efficiency ratio improved to 73% for the six months ended June 30, 2019 from 74% for the same period in 2018. Operating expenses were reduced by 2% to €53.6m compared with €54.9m in the same period in 2018. This reduction, the bank said, reflected its continuous focus on cost control and the implementation of initiatives at cost base streamlining through outsourcing and processes optimisation.
The return on equity was 5.8% for the six months ended 30 June 2019, compared with 6.1% for the same period in 2018.
Net loans and advances to customers were €3,183m, up €73m compared with December 31, 2018.
Customer deposits reached €4,850m on June 30, 2019, down €38m compared with 31 December 2018.
The advances to deposits liquidity ratio increased from 64% at December 31, to 66%.
Profit attributable to shareholders amounted to €13.6m resulting in earnings per share of 3.8 cents compared with 4.0 cents in the first half of 2018.
Net interest income (‘NII’) decreased marginally to €53.6m compared with €54.1m in the same period in 2018 with contraction in the commercial bank loan book interest and further decline in the average yield on the investment book. The decline was largely offset by the growth in NII within the mortgage book and effective management of excess liquidity.
The board proposed to maintain the current dividend payout ratio of 30% and recommended an interim gross dividend of 1.7 cents per share (1.1 cents per share net of tax). The interim dividend will be paid on September 18, 2019 to shareholders who are on the bank’s register as at 16 August 2019.
"Successful risk management strategy has positioned the bank to manage the range of risks facing the financial system, supporting growth in profitability," the bank said.
The bank had a tax expense of €7.3m, €5.5m higher than the same period in 2018. During the first six months of 2018, the bank benefited from a specific tax treatment applied on a one-off transaction.
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 Bank Malta said: “These are a good set of results as the bank emerges from the implementation of its successful risk management strategy with increasing momentum. Strategically we are now focused on delivery of world-class customer service to support growth.
Progress in retail banking is ahead of expectations with significant market share gains achieved in new customer acquisition and home loans without increasing risk appetite. Retail Banking will also benefit from a number of digital innovations the bank will launch in the second half of the year.
He added: “Progress on costs is encouraging and the bank is committed to further reduce its cost efficiency ratio over time. Additionally, HSBC’s signature credit discipline has delivered further reductions to the risk profile of our portfolio. While Malta’s economic performance and outlook remain positive, we are positioning the bank for the long-term economic cycle and remain cautious in growing exposure to higher risk sectors such as corporate real estate.
"We welcome actions being taken by the local authorities to reform corporate insolvency practices and augur this be completed at pace. The bank’s capacity to better use its capital to support lending into the economy and, if appropriate, higher dividends will significantly increase once these reforms are concluded.”