Profit before tax dropped by €19.1m to €1.8m at HSBC Malta in the first half of the year due to higher than expected credit losses and lower revenue reflecting the impact of the Covid-19 outbreak.
In a statement to the Stock Exchange issued on Monday, the bank said the economic impact of the Covid-19 pandemic has been the main driver of the change in financial performance in the first half of 2020.
The party issued the following data:
• Profit before tax down €19.1m to €1.8m due to higher expected credit losses and lower revenue reflecting the impact of the Covid-19
outbreak.
• Revenue down 16% largely driven by revaluation losses within the Life Insurance subsidiary as a result of adverse market movements
(equity and interest rates). Excluding the insurance subsidiary, revenue declined by 1%.
• Expected credit losses increased by €9.7m to €8.7m due to the impact of Covid-19. In 2019 we benefited from a number of releases in
the first half of the year.
• Costs are 5% below same period in 2019 reflecting strong progress on the strategy announced in 2019.
• During the first six months, lending increased by €32m (1%) and deposits grew by €168m (3%).
• Profit attributable to shareholders of €1.2m for the six months ended 30 June 2020 resulted in earnings per share of 0.3 cents
compared with 3.8 cents in the same period in 2019.
• Common equity Tier 1 capital ratio of 16.6% as at 30 June 2020, up from 16.4% at the end of 2019, well above regulatory
requirements.
• Return on equity of 0.5% for the six months ended 30 June 2020, compared with 5.8% for the same period in 2019.
• In line with the European Central Bank recommendation that eurozone banks should not make dividend payments at this time,regardless of capital strength, no interim dividend is being declared.
The bank said that following the European Central Bank’s recommendation to all
Eurozone banks not to make dividend payments at that time, its board of directors considered it appropriate to withdraw its recommendation for the payment of a final 2019 dividend.
The board intends to provide an update on the dividend policy at the year-end results for 2020, when the economic impact of the Covid-19 outbreak is better understood.
Last Friday, Bank of Valletta said its pre-tax profit dropped by 75 per cent in the first six months of this year, as COVID-19 hit the economy hard.
The bank said its profit before tax for the first six months of this year was €13.8 million, down from €54.3 million in the same period last year.
HSBC International (parent of HSBC Malta) said Monday profits for the first half of 2020 plunged by 69 per cent on year as the banking giant was hammered by the coronavirus pandemic and spiralling China-US tensions.
The lender reported post-tax profit of $3.1 billion while pre-tax profit was $4.3 billion, a 64 per cent drop on the same period last year. Reported revenue was down nine per cent at $26.7 billion.