HSBC Malta said Monday that its pre-tax profit in the first half of the year increased by €15.6m to €17.5m.
Revenue increased by 16% driven by favourable market movements (equity and interest rates) positively impacting the life insurance subsidiary results. (HSBC Life Assurance (Malta) Limited reported a profit of €4.2m compared to a loss reported in the same period last year of €8.9m.) Excluding the insurance subsidiary, revenue decreased by 5% as a result of lower interest rates and subdued demand for corporate borrowing, credit cards and personal loans.
The bank said the satisfactory financial performance in the first half of the year reflected favourable market movements which impacted the life insurance subsidiary and lower expected credit losses (‘ECL’) booked in relation to the bank’s lending portfolio.
"The underlying business performance continues to be adversely impacted by lower and negative interest rates and reduced demand for corporate borrowing, credit card utilisation and personal loans arising from customer behaviour directly influenced by the Covid-19 pandemic," it said.
Operating expenses increased marginally, principally due to increased regulatory fees as a result of higher customer deposits in 2020.
During the first six months, lending decreased marginally by €8.9m (0.3%) and deposits grew by €56.6m (1%).
Profit attributable to shareholders of €11.4m for the six months ended 30 June 2021 resulted in earnings per share of 3.2 cents compared with 0.3 cents in the same period in 2020.
The bank said no interim dividend is being proposed.
"As the European Central Bank continues to recommend extreme prudence with regard to dividend distributions and since uncertainty still prevails in the marketplace, no interim dividend is being proposed. Restrictions imposed on capital distribution will end after 30 September 2021 when the ECB’s current recommendation is due to expire."
Simon Vaughan Johnson, director and CEO of HSBC Malta, said the performance in the first half of 2021 reflected the favourable market impact on the life insurance manufacturing business as well as the continued unfavourable impact of further declining interest rates.
"During the first half of the year, we continued to provide stability and continuity of service to our customers in a highly uncertain environment. We have invested in new customer journeys with the aim of improving customer experience and successfully launched two-factor authentication via HSBC Malta’s existing mobile banking App, thereby providing customers with ease of execution. We will continue to be focused on the future and on successfully executing our Safe Growth strategy. We are confident that, despite the challenging external environment, there are many opportunities ahead for a bank with HSBC’s competitive strengths and we remain focused on delivering these services to the Maltese market, as we strive to open up a world of opportunity.”
Addressing a later press conference, Vaughan Johnson declined to give any details about two voluntary redundancy schemes accounced by the bank in June.
He denied when questioned that the schemes were party of a wider strategy to make HSBC Malta more attractive for a potential buyer.
On Malta's grey listing by the FATF, Vaughan Johnson said it was business as usual for HSBC Malta, and the impact on operations was expected to be "limited".