HSBC Bank Malta has registered a pre-tax profit of €59.3m in the first half of this year, up by 238% or €41.8m from the same period last year.

The directors are recommending an interim gross cash dividend of six cents per share.

"The proposed interim gross dividend for 2023 is higher than the full-year gross dividend of 5.6 cents paid for 2022. This represents the highest interim dividend paid by HSBC Bank Malta in seven years," the bank said. 

In a statement on Tuesday, it said the financial performance in the first half of the year reflected the value of the bank’s large and diversified customer base, rising interest rates, strong risk management and credit quality of the loan book, improved performance of the insurance subsidiary and cost discipline, while still investing in the future of the business.

In its financial review, the bank said:

• Profit before tax increased by 238% or €41.8m to €59.3m, mainly driven by higher income on the placement of excess liquidity, lower credit recovery in view of a significant recovery reported in H1 2022, better performance reported by the insurance subsidiary and lower reported costs.
• Revenue increased by €43.5m or 69% driven by rising interest rates reflecting increased value from our large and diversified customer base and greater customer transaction volumes.
• Net interest income (‘NII’) increased by €43.4m to €89.7m compared with €46.2m in the same period in 2022. The increase in NII reported by the global businesses was due to interest rate rises. 
• A release of €2.6m on expected credit losses (‘ECL’) in view of better economic projections and curing of non-performing loans on which moratoria measures were extended during the COVID-19 period.
• Costs were €7.5m lower than the same period in 2022. This decrease was largely driven by higher regulatory fees booked in H1 2022 as a result of a change in the legislation regulating cash contributions towards the Depositor Compensation Scheme and an insurance refund received in 2023. 
• During the first six months, loans to customers and deposits were largely at the same levels reported at December 31, 2022.
• Profit attributable to shareholders of €38.5m for the six months ended June 30, 2023 resulted in earnings per share of 10.7 cents which compared favourably with 3.2 cents in the same period in 2022.
• Return on equity of 16.2% for the six months ended 30 June 2023 compared favourably with 5.1% for the same period in 2022.
• Non-funds income (fees and commissions and trading income) decreased by €2.3m. This was largely driven by the removal of the high balance fee in July 2022, which was a customer-driven decision taken by the bank in view of the rising interest rate environment. 
• Operating expenses decreased by €7.5m to €49.5m, compared with €57.1m in the same period in 2022. This was mainly due to higher regulatory fees reported in H1 2022 as a change in the Depositor Compensation Scheme legislation was enacted requiring banks to anticipate the cash contributions payable in 2023 and 2024. 
• Net loans and advances to customers amounted to €3,147 million, a marginal decrease of €28m or 0.9% when compared to December 31, 2022. The bank said it continued to improve asset quality by reducing non-performing loans by 10%.
• The bank’s investment portfolio increased by €97m to €1,101m and was composed of highly rated securities and continued to be conservatively positioned with the lowest investment grade of A-.
• Customer accounts were €5,930m as at June 30, 2023, a marginal decrease of €41m or 0.7% compared to December 31, 2022. The bank said it had a satisfactory advances-to-deposits ratio of 53%, and its liquidity ratios were well in excess of regulatory requirements. 

Life Assurance

HSBC Life Assurance (Malta) Ltd reported a profit of €1.6m compared to a loss of €3.2m in the same period last year. In H1 2023, we have seen lower volatility in the market compared to the same period last year. The volatility in market prices negatively impacted the insurance subsidiary results in 2022.

Geoffrey Fichte, the new Chief Executive Officer of HSBC Malta, said the bank was confident in the local economy, and continues to focus on growing its business, while investing in the future.

"Our main priority is improving customer services through better digital channels for customers while not losing the personalised service of our team."

He said the bank's new headquarters for Malta is now over 60% complete, representing a €30m investment.  Other major investments in the future  include upgrading and replacing ATMs and digital and future skills training.